Assemblymember Phil Steck (D-Colonie) announced that legislation he sponsored (A.6932) to hold an out-of-state corporation liable for unpaid wages if the company goes bankrupt has passed the Assembly unanimously. Current law only applies to corporations formed in New York State. The ten largest shareholders are required to compensate the employees if the corporation has no assets left to pay the workers. This bill would expand the provisions to any corporation regardless of where it was established.
Protections to workers of corporations that go out of business should be given to all employees, not just those who work for one created in this state, Assemblymember Steck said. This legislation would close a loophole, and provide assurance to individuals that, if their employer closes up shop, they will not be shorted what they are owed. Right now the law favors foreign corporations over New York corporations. For example, a corporation which does all its business in New York but files its incorporation papers in Delaware can escape responsibility for unpaid wages. That is wrong and must end. Steck noted that one federal court called the foreign-domestic distinction an historical anachronism.
Currently there can be a situation where two people who work side by side, one employed by a corporation formed out of state, and the other by a corporation established within the state, will not have the same protection if the business closes up shop without paying their wages. This bill would give both employees the same assurance they would be compensated for their work if something were to happen to the company Steck added.