On December 29, 2014, New York State Governor Andrew Cuomo signed into law Assembly Bill 8106-C / Senate Bill 5885-B (the “Act”). Among other changes to current law, the Act renders the ten members with the largest percentage ownership interest of each limited liability company (“LLC”) in New York State personally liable, jointly and severally, “for all debts, wages or salaries due and owing to any of [the LLC’s] . . . laborers, servants or employees, for services performed by them for” the LLC. Act of Dec. 29, 2014, N.Y. Assembly Bill 8106-C, § 11 (codified at N.Y. Ltd. Liab. Co. Law § 609(c)).

The Act took effect on February 25, 2015. The Act amends section 609 of the New York Limited Liability Company Law by adding new subsections (c) and (d) to that statutory provision.

In effect, the Act extends, to the ten largest members of each limited liability company in New York, the same individual, joint and several liability for unpaid wages that is borne by the ten largest shareholders of every privately held corporation in New York. Specifically, Section 630 of the New York Business Corporation Law renders every privately held corporation’s ten largest shareholders personally liable, jointly and severally, “for all debts, wages or salaries due and owing to any of [the corporation’s] . . . laborers, servants or employees other than contractors, for services performed by them for such corporation.”  N.Y. Bus. Corp. Law § 630(a).

In New York State, members of a limited liability company generally may not be held personally liable for causes of action against the LLC.  N.Y. Ltd. Liab. Co. Law § 609(a).  The new Act, by imposing individual liability on the ten largest members of each LLC in New York, creates an exception to this shielding of an LLC’s members from personal liability. In other words, the Act pierces the corporate veil of LLCs in New York with regard to the LLCs’ workers’ claims for unpaid wages.

Under the Act, in order for a worker to hold the ten largest members of a limited liability company in New York personally liable for compensation owed to the worker, the worker must, within 180 days after he ceases working for the LLC, give notice to those members that the worker intends to hold those members liable for his or her unpaid compensation.  Act of Dec. 29, 2014, N.Y. Assembly Bill 8106-C, § 11 (codified at N.Y. Ltd. Liab. Co. Law § 609(c)).

This 180-day notice requirement, too, closely resembles the notice requirement, preexisting the Act, for holding the ten largest shareholders of a privately held corporation in New York individually liable for wages or salaries owed to the corporation’s workers.  In particular, under section 630 of the New York Business Corporation Law, in order for a worker to hold the ten largest members of a privately held corporation in New York personally liable for wages owed to the worker, the worker must, within 180 days after he stops working for the LLC or within 60 days after the worker has demanded and received the opportunity to examine the corporation’s books and records, whichever is later, give notice to those members that the worker intends to hold those members liable for his or her unpaid wagesSee N.Y. Bus. Corp. Law § 630(a).

As per the Act, before a worker may enforce an LLC’s ten biggest members’ personal liability for the worker’s unpaid compensation, (i) the worker must recover a judgment against the LLC for such unpaid compensation, and (ii) an execution against the LLC for that judgment recovered against the LLC must be returned unsatisfied.  Upon the return, unsatisfied, of that execution against the LLC, the worker must, within 90 days, file a lawsuit to enforce the LLC’s members’ personal liability.  Compare Act of Dec. 29, 2014, N.Y. Assembly Bill 8106-C, § 11 (codified at N.Y. Ltd. Liab. Co. Law § 609(c)) with N.Y. Bus. Corp. Law § 630(a).

Call the Law Offices of David S. Rich, LLC at (212) 209-3972 to consult with a knowledgeable labor and employment attorney about ensuring that your company complies with overtime pay and other wage and hour laws, or to retain a skilled overtime lawyer to defend your company in overtime pay lawsuits or other wage and hour litigation.

What Are The Elements Of Fraud In New Jersey?

In New Jersey, the elements of common-law fraud are: "(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages." Gennari v. Weichert [...]

In September 2014, the respective Mayors of four municipalities in New Jersey -- the Cities of East Orange, Passaic, and Paterson and the Township of Irvington -- signed into law paid sick leave ordinances for private employees (collectively, the "Sick Leave Ordinances" or the "Ordinances"). Effective January 2015, the East Orange, Irvington, Passaic, and Paterson [...]

In New York, "In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the defendant's misconduct." Kurtzman v. Bergstol, 40 A.D.3d 588, 590, 835 N.Y.S.2d 644 (2nd Dep't 2007); see also Pokoik v. Pokoik, 982 [...]

On September 30, 2014, New York City Mayor Bill de Blasio signed an executive order,Executive Order No. 7 (the “Executive Order”), requiring companies or individuals who receive, from the City of New York or from a City economic development entity, financial assistance of one million dollars or more and which have annual gross revenues of [...]

In New Jersey, common law conversion is defined as ” ‘the exercise of any act of dominion in denial of another’s title to . . . chattels, or inconsistent with such title. ‘ ”  Marsellis-Warner Corp. v. Rabens, 51 F. Supp. 2d 508, 525 (D.N.J. 1999) (quoting Mueller v. Technical Devices Corp., 8 N.J. 201, [...]

On August 11, 2014, New Jersey Governor Chris Christie signed into law the New Jersey Opportunity to Compete Act, Pub. L. 2014, ch. 32 (the “Opportunity to Compete Act,” the “NJOCPA,” or the “Act”), which takes effect on March 1, 2015.  The Opportunity to Compete Act prohibits employers in New Jersey from requiring applicants for [...]

In New York, the elements of conversion are “(1) intent, (2) interference ‘to the exclusion of the owner’s rights,’ and (3) possession, or the right to possession in plaintiff.”   2 Leon C. Lazer, et al., New York Pattern Jury Instructions – Civil § 3.1 (2d ed. 2006) (quotingEmployers’ Fire Ins. Co. v. Cotten, 245 N.Y. 102, 156 N.E. [...]

On July 7, 2014, New York Governor Andrew Cuomo signed into law the New York Compassionate Care Act, N.Y. State Senate Bill S07923, N.Y. State Assembly Bill A06357E(the “NYCCA” or the “Act”), which, effective immediately, legalizes and comprehensively regulates the manufacture, sale and use of medical marijuana in New York State. The New York State Assembly had [...]

In New York, within every contract is an implied covenant of good faith and fair dealing.  The covenant is breached when a party acts in a manner that deprives the other party of the right to receive benefits under their agreement.  The covenant encompasses any promises which a reasonable person in the position of the promisee would [...]

Effective June 14, 2014, certain unpaid interns in New York City gained the right to sue their employers for discrimination in employment or workplace harassment.  However, the effect of this new statute is quite limited, because most unpaid trainees in New York City fall outside the new statute’s definition of an ” ‘intern.’ ”  As a result, [...]