New York — Assembly Bill 453, effective February 10, 2020, amends Sec. 609 of the New York Limited Liability Company Law to provide that the ten largest members of foreign LLCs may be held personally liable for unpaid wages owed to their employees who performed services for the LLC in New York.
More specifically, pursuant to AB 453, the ten members with the largest percentage ownership interests, as determined as of the beginning of the period during which the unpaid services are performed, of every foreign LLC, when the unpaid services were performed in New York, shall be jointly and severally personally liable for all debts, wages, or salaries due and owing to any of its laborers, servants, or employees for services performed by them for the LLC.
The employee (or laborer or servant) must try to recover from the LLC first. Only if a judgment is obtained against the LLC and the execution remains unsatisfied can the employee (or laborer or servant) try to recover from the member. In addition, the employee, laborer or servant must provide notice to the member of the intention to hold the member personally liable under Sec. 609.
Wages includes, but is not limited to salaries, overtime, vacation, holiday and severance pay; employer contributions to or payments of insurance or welfare benefits; employer contributions to pension or annuity funds; and any other moneys properly due or payable for services rendered by such employee, servant or laborer, including any concomitant liquidated damages, penalties, interest, attorneys’ fees or costs.
New York already extended such potential liability to the ten largest shareholders of privately held domestic and foreign corporations and to the ten largest members of domestic LLCs.
The members and managers of foreign LLCs with employees, laborers or servants performing services in New York, or intending to hire such workers to perform services in New York, and lawyers who advise such foreign LLCs should be aware of this new development, as compliance with New York’s wage laws is now more important than ever.