Legislative bills were introduced in September 2019 in response to the MYPayrollHR incident.  S. 6727, for example, would create a private right of action, including class actions and triple damages, for any delay in payroll payments caused by a payroll service provider. It will be necessary to carefully define the circumstances and provide for good cause exceptions (e.g., invalid payroll input, NSF, etc.). 

S. 6725   Establishes the crime of misappropriation of payroll funds.

…guilty of misappropriation of payroll funds when he or she knows that funds are designated for use as employee payroll funds or as payment of payroll taxes, and intentionally prevents the funds from being used for their designated purpose…

S. 6726  Relates to the overpayment of wages.  Amends Labor law to clarify that recovery of wages from employees is prohibited other than actual overpayments or other inaccuracies in wages paid.

S.6727  Relates to the liability of payroll processing companies.  Creates a private right of action with compensation of three times the amount of any paycheck prevented by a payroll processing company.  Provides for class action suits.  

S. 6728  Provides for a study by NYDFS and DT&F (NY tax authority) regarding insurance or other risk mitigation tools and third-party payroll service providers.

In addition to the legislative proposals, NPRC members are working with the NY Department of Financial Services to consider regulatory oversight by DFS under the Money Transmitter Act.