New York State Advances Bill that Would Allow Liens on Employer Property for Wage and Hour Claims

The New York State Assembly and Senate have passed a bill that would allow employees to obtain liens on their current or former employers’ personal and/or real property for the value of a wage claim, plus liquidated damages. If signed into law by Governor Andrew Cuomo, employees would be able to file a wage lien that would encumber an employer’s property solely on the basis of mere allegations that the employer did not properly pay the employee, rather than a finding of liability.

The bill allows an employee to file a lien when the employee has a wage “claim.” A wage claim includes claims under the New York Labor Law and the Fair Labor Standards Act for unpaid wages, overtime, spread of hours, call-in pay, uniform maintenance pay, withheld gratuities, unlawful deductions from wages, unpaid charges that purport to be gratuities, or improperly taken meal and tip credits, as well as unpaid compensation pursuant to an employment contract or any claim that the employer violated a wage order promulgated by the Commissioner of Labor.

The lien may be filed at any time, but not later than three years following the end of the employment giving rise to the wage claim. The lien is filed for one year, which can be extended by court order. Further, if the employee brings an action for the wage claim that forms the basis of the lien within one year after the lien is filed, the lien will be automatically extended until the final resolution of such claim. If the employee does not file an action for the underlying wage claim, the employee has one year to foreclose on the lien. Absent court approval, if the employee does not commence the foreclosure action within one year, the lien will automatically extinguish.

An employer may purchase a bond to discharge the lien at any time or seek court intervention to remove the lien. In the event the employer can prove that the employee willfully exaggerated the lien, the lien will be discharged and the employee will not be able to obtain another lien against the employer.

If signed by the Governor, the bill will become effective 30 days after signing. Should the bill become law, employers must audit their employee compensation policies and practices to ensure strict compliance with all wage and hour laws, in order to avoid risk. We will continue to monitor the status of this bill and keep you apprised of same.