BILL NUMBER: S5467
SPONSOR: COMRIE
 
TITLE OF BILL:
An act to amend the general obligations law, in relation to the liabil-
ity of payroll processing companies
 
PURPOSE OR GENERAL IDEA OF BILL:
To provide compensation for workers who miss paychecks through no fault
of their own by imposing liability for up to three times the amount of
the paycheck on payroll processing companies who intentionally prevent
the distribution of the payroll.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill amends the general obligations law by adding a new
section 11-108.
Subsection 1 defines "payroll processing company" as a person or busi-
ness entity that contracts with an employer to 1) calculate, process,
and produce wage payments under the employer's federal employer iden-
tification number, 2) remit taxes to the government under the employer's
federal employer identification number, 3) issue income tax forms under
the employer's federal employer identification number and 4) conditions
wage payment on the employer's advance deposit of funds to the payroll
processor.
Subsection 2 of the bill provides that a payroll processing company that
intentionally and without good cause prevents the remittance of taxes or
payment of wages shall be liable to employees for up to three times the
expected amount of any missed payments. A payroll processing company has
a grace period of one business day to cure any remittance delay.
Subsection 4 states that employees would be able to maintain a class
action.
Section 2 provides the effective date, which is immediately when this
bill becomes the law.
 
JUSTIFICATION:
When payroll processing company MyPayrollHR abruptly shut down in
September of 2019, it left employees of 4,000 businesses in New York
State and around the country without a paycheck. After its abrupt
closure, there were many cases where it appeared that an employee
received a paycheck in their bank account, only to have the transaction
reversed once it became clear that MyPayrollHR would not deposit the
funds. This led to some employees carrying a negative balance in their
account, leaving them unable to pay for food, rent, or other necessary
expenses.Workers, especially those living paycheck to paycheck, rely on
receiving a regular paycheck for their work, and even one missed or
delayed payment can throw their lives into chaos.
This bill seeks to hold payroll processing companies accountable when
they intentionally disrupt workers lives by failing to distribute the
payroll as required. By imposing the threat of treble damages and class
action lawsuits on these companies, this legislation ensures they will
take every step possible to ensure that each worker receives their
paycheck in full and on-time, as expected.
 
PRIOR LEGISLATIVE HISTORY:
2023-24: S.533 (Thomas) / A3791 Fahy - Referred to Judiciary.
2021-22: S.761 (Thomas) / A.3478 (Fahy) - Referred to Judiciary.
2019-20: S.6727 (Thomas) / A.8653 (Fahy) - Passed Senate.
 
FISCAL IMPLICATION:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.