Senate Majority Announces Sweeping Payroll Legislation To Safeguard Hard Working New Yorkers

September 18, 2019

(Albany, NY) The Senate Democratic Majority today introduced sweeping legislation to address concerns with the payroll industry and respond to the crisis caused by MyPayrollHr. The payroll company recently shut down leaving thousands of hardworking New Yorkers without pay. The Senate Democratic Majority bills will establish criminal penalties and liability for misappropriating payroll funds, empower wronged employees to take civil action and receive tax credits, ensure employees’ funds are not wrongfully withdrawn, and launch a study into the payroll services industry.

“New Yorkers depend on their paychecks and deserve to know they will be paid for their hard work,” Senate Majority Leader Andrea Stewart-Cousins said. “The abrupt closure of MyPayrollHr has left thousands of workers across New York and the United States without pay, and has severely damaged our confidence in the entire payroll industry. The legislation announced today by the Senate Democratic Majority will help protect hardworking New Yorkers and provide safeguards against future payroll company caused crises.”

The legislation introduced by the Senate Democratic Majority includes:

  • Protections Against Misappropriating Payroll: This bill, sponsored by Senator David Carlucci, establishes criminal penalties for intentionally misappropriating payroll and payroll tax funds. This bill also allows companies to be held criminally liable for these crimes.
  • Payroll Company Accountability: This bill, sponsored by Senator Kevin Thomas, allows employees who miss a paycheck due to the wrongful acts of a payroll processing company to hold that company liable for compensation up to three times the value of the paycheck.
  • Tax Credit for Lost Wages: This bill, sponsored by Senator Brian Benjamin, provides a refundable personal income tax credit of up to $250 for losses and penalties incurred due to the loss of a paycheck by an employee due to the actions of a payroll service company.
  • Payroll Deductions Accountability: This bill, sponsored by Senator Jessica Ramos, clarifies that deductions cannot be made from employee accounts if they do not constitute overpayment or are dispersed at an improper time. This prevents employees from being affected in the situation where a company makes a clerical error harmful to the company but the employee receives wages they were rightfully owed.
  • Insurance Study Bill: This bill, sponsored by Senator Neil Breslin, requires the Superintendent of DFS in consultation with the Commissioner of the Dept. of Taxation and Finance to study the payroll services industry and make recommendations to the legislature and governor.

 

Bill Sponsor, Senator Brian Benjamin said, “The legislation that I have introduced will allow employees to receive a refundable income tax credit of up to $250 for losses and penalties incurred because of a missed paycheck due to the malpractices of a payroll service company. This legislation will ensure that payroll service companies are held accountable for their actions and help mitigate the financial hardships they have put on hardworking New Yorkers.”

Bill Sponsor, Senator Neil Breslin said, “It is vital that we take a closer look at the payroll services industry in light of what occurred at MyPayrollHR. By further studying this industry we can better assess whether additional consumer protections are necessary and whether any legislative and/or regulatory changes are needed to ensure the credibility of this industry.”

Bill Sponsor, Senator David Carlucci said, “MyPayrollHR exposed how vulnerable New Yorkers are to direct deposit fraud. We must update our laws to protect New Yorker’s hard earned money and hold unscrupulous payroll companies accountable.”

Bill Sponsor, Senator Jessica Ramos said, “Workers should not be punished for business malpractice. The MyPayrollHR incident should never happen again and that is why I am I introducing the Payroll Deductions bill to prohibit employers from stripping employees’ wages when there’s a clerical error. My colleagues and I will continue to stand up for workers across New York and find ways to prevent future incidents like this from occurring again.”

Bill Sponsor, Senator Kevin Thomas said, “A missed paycheck can significantly disrupt workers’ lives and burden them with financial uncertainty. Payroll companies must be held accountable when they fail to distribute the payroll as required. This legislation allows those hurt by a payroll processing company to seek compensation for missed paychecks.” 

senate Bill S6727

2019-2020 Legislative Session

Relates to the liability of payroll processing companies

download bill text pdf

Sponsored By

Current Bill Status - In Senate Committee Rules Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Sep 18, 2019 referred to rules

S6727 (ACTIVE) - Details

See Assembly Version of this Bill:
A8653
Current Committee:
Senate Rules
Law Section:
General Obligations Law
Laws Affected:
Add §11-108, Gen Ob L

S6727 (ACTIVE) - Summary

Relates to the liability of payroll processing companies; provides that payroll processing companies that intentionally prevent the distribution of payroll shall be liable to employees that failed to receive an expected payment for an amount up to three times the expected amount; and provides an action to recover damages may be maintained as a class action.

S6727 (ACTIVE) - Sponsor Memo

S6727 (ACTIVE) - Bill Text download pdf


                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6727

                       2019-2020 Regular Sessions

                            I N  S E N A T E

                           September 18, 2019
                               ___________

Introduced  by  Sen.  THOMAS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the general obligations law, in relation to the  liabil-
  ity of payroll processing companies

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The general obligations law is  amended  by  adding  a  new
section 11-108 to read as follows:
  § 11-108. LIABILITY  OF  PAYROLL PROCESSING COMPANY.   NOTWITHSTANDING
ANY OTHER PROVISION OF LAW TO THE CONTRARY, ANY PERSON UNDER CONTRACT TO
AN EMPLOYER TO DISTRIBUTE  THE  EMPLOYER'S  PAYROLL  THAT  INTENTIONALLY
PREVENTS  THE DISTRIBUTION OF SUCH PAYROLL PURSUANT TO THE CONTRACT WITH
THE EMPLOYER SHALL BE LIABLE TO AN EMPLOYEE OF THE EMPLOYER THAT  FAILED
TO  RECEIVE  AN  EXPECTED  PAYMENT  FOR  AN AMOUNT UP TO THREE TIMES THE
EXPECTED PAYMENT.  LIABILITY UNDER THIS SECTION IS IN  ADDITION  TO  ANY
OTHER  APPLICABLE  PENALTIES  AND CAUSES OF ACTION. AN ACTION TO RECOVER
DAMAGES UNDER THIS SECTION MAY BE MAINTAINED AS A CLASS ACTION, NOTWITH-
STANDING SUBDIVISION B OF SECTION NINE HUNDRED ONE OF THE CIVIL PRACTICE
LAW AND RULES.
  § 2. This act shall take effect immediately.




 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD13797-01-9