Legal Analysts

Monday, May 09, 2022

NYS Studying Protections in Payroll Services Industry under New Law

Does your company blindly outsource HR to your payroll company? Aren't you concerned whether they are getting it right? You do know that you remain liable even if you outsource?   

In acknowledging that many NYS employers blindly outsource their payroll services, the Governor signed, A7786 into law on May 6, 2022, and ordered the Superintendent of Financial Services to review the industry. 

Specifically, the law requires a review of:

  1. Employee protections in the industry;
  2. Small business employer protections in the industry;
  3. Incidence of fraud or misappropriation of payroll funds; 
  4. Number of NYS small businesses that use payroll services;
  5. Number and size of NYS payroll service providers;
  6. Specific causal or facilitative facts regarding instances of fraud or misappropriation by providers;
  7. Feasibility & advisability of requiring providers to obtain insurance, post bonds, or utilize other risk management tools to address potential situations in which payroll monies owed to employees on behalf of businesses are stolen, misappropriated, or otherwise rendered unavailable after being transmitted from an employer to a provider; &
  8. Feasibility & advisability of the DFS having regulatory oversight over third-party payroll service providers.
A report is coming by September 3, 2022. Do you think the industry is about to get regulated? Should it be regulated? 

Remember, employers are liable for not paying wages. 

In fact, a second violation within 6 years is a felony. Plus, under the state's Wage Theft Prevention Act, an employee can recover double what they are owed if the employer violated the law in bad faith.