SWEAT BILL A5501: HOW THE WAGE LIEN WORKS

THE BASICS
An Employee1 with a wage claim2 can file a lien within 6 years of the end of his or her employment on the
employers property. The property can be:

Real property, just as with the existing mechanics lien for construction workers; or

Personal property,3 but not bank accounts or goods for sale.4

HOW TO GET AN EMPLOYEE LIEN

Filing: The Employee prepares a Notice of Lien with: 1) the name, residence or business address of the
Employer, or the Employers attorney; 2) the property subject to the lien; and 3) the amount of the wage claim.

To put the lien on real property, the Employee files the Notice of Lien with the county clerk where the
property is located, just as with notice of a mechanics lien in current law.

To put the lien on personal property, the Employee files a financing statement with the Department of State
(DOS) following existing procedures - UCC 9-501, using the UCC-1 form, available on the DOS website.

Service: The Employee serves the Notice of Lien and the financing statement, if applicable, on the Employer,
either five days before filing the lien or 30 days after, and then files proof of service within 35 days of service.

HOW LONG DOES THE EMPLOYEE LIEN LAST?

One year. It can be extended for another year by filing a document with the county clerk for real property, or
with the DOS for personal property. The document has similar information as the Notice of Lien.
Extension through Litigation or Filing DOL Claim: The wage lien can also be extended if, within one year
of filing the lien, one of four things happen: 1) the Employee files a civil wage-and-hour action in court; 2) the
Employee files a claim at the New York State Department of Labor (DOL); 3) the New York Attorney
Generals office or the DOL initiates an investigation into the Employees wage claim; or 4) the Employee files
a foreclosure action. The lien is then extended during that litigation until 120 days after that action or
investigation has concluded. The Employee must file a notice of extension under any of these circumstances.

ENFORCEMENT OF THE LIEN

The Employee can, as under current law for mechanics liens, file a foreclosure action within a year of filing the
lien (or an extension of the lien); or file a foreclosure action after obtaining judgment on the lien in another
litigation or through the DOL process.

EMPLOYERS REMEDIES
The current lien law provides several mechanisms for Employers to challenge a lien, and those mechanisms are
also available for an employees lien. The Employer can demand an itemized statement requiring the employee
to provide more details about the wage claim. If the lien appears invalid on the face of the documents filed, the
Employer can begin an action in court to contest the liens validity.
The Employer also can dispute the lien by sending a notice to the Employee stating that she must either file a
foreclosure action or an action to obtain judgment in 90 days (Employee could also file a claim with the DOL).

The Employer can also post a bond in the amount of the wage claim while a court determines the validity of the
wage claim. If a court determines that the amount stated in the wage lien is willfully exaggerated, the lien is
void.

Defined according to the New York Labor Law (NYLL) and the Fair Labor Standards Act
(FLSA).
1

Defined as claims under NYLL and FLSA, including minimum wage, overtime, illegal deductions,
spread-of-hours, unlawful retention of tips, gratuities or other charges meant to be tips, unpaid
commissions, unpaid contract claims; includes liquidated damages, attorneys fees and costs; and
includes the same remedies the Department of Labor or the Attorney Generals office could
enforce.
2

Defined in section 9-108 in the Uniform Commercial Code (UCC).

Defined in section 9-102 in the UCC.