Governor Kathy Hochul today signed into law S.3577/A.7786 to require the Department of Financial Services to conduct a study of the payroll services industry, following the MyPayrollHR scandal that caused major financial disruption for workers and small businesses. The Department of Financial Services, in consultation with the Department of Taxation, will conduct a study regarding insurance or other risk mitigation tools and third party payroll managers providing these services to ensure the health of the industry and the existence of sufficient protections for consumers. The Superintendent of Financial Services will then submit a report of findings and recommendations to the Governor, the Provisional Speaker of the Senate, and the Speaker of the Assembly.
“New York City workers and small business owners have been devastated by the collapse of MyPayrollHR and it’s crucial that we have all the information to understand what led to this crisis,” Governor Hochul said. “The first step in any process is to gather all the information about what is happening and use that data to create a plan moving forward and that is exactly what this legislation will do.”
In 2019, federal authorities discovered that the president of upstate New York payroll management company MyPayrollHR redirected $26 million in payroll funds to his personal account. This led to MyPayrollHR accounts being frozen and paychecks being distributed with funds that did not exist. These transactions were later reversed, resulting in heavy overdraft fees for the workers involved. This legislation will require the New York State Department of Financial Services to work with the Department of Taxation and Finance to conduct an industry study, a first step to review this incident and see what possible prevention techniques can to exist.
State Senator Neil D. Breslin said: “In light of the MyPayroll HR scandal that occurred in 2019, which left thousands of employees and small employers without their salaries or funds, it has become very clear that we need to look at the provider industry. payroll services to determine what additional consumer protections need to be put in place to ensure that a situation like this does not happen again.I commend Governor Hochul for signing this important piece of legislation.
Assemblyman Kevin A. Cahill said: “Three years ago we watched in horror as a payroll company stole tens of millions of dollars from New York businesses and employees. Families couldn’t even figure out how to pay rent and bills because their salaries were could not be found and their employers were not replacing the missing funds. We want to make sure that no family has to deal with this situation. That’s why we need to take a close look at the third-party payroll services industry to see how this happened and what steps we can take to make sure no one loses their paycheck again I commend Governor Hochul for joining us in protecting our residents by signing this bill into law and I look forward looking forward to the full study.