Summary
In 2022 the State of New York passed a Wage Theft statute[1] that includes authorizing suits against contractors to recover the unpaid employee wages and benefits of their subcontractors. In 2023 a union benefit fund sued a general contractor under the Wage Theft statute in New York State, seeking payment of nearly three million dollars resulting from the subcontractor’s failure to remit benefit fund contributions pursuant to its collective bargaining agreement.[2]

On April 29, 2025, a United States District Court ruled that the Wage Theft Law cannot authorize such a suit. Following the arguments raised on behalf of the general contractor, the court concluded that such claims are the subject of federal law and therefore cannot be controlled by a state statute. The suit by the benefit fund was therefore dismissed against the contractor.

More specifically, the court held that ERISA (the Early Retirement Income Security Act) preempts New York’s Construction Industry Wage Theft Statute (New York Labor Law § 198-e). In other words, where both federal and state law address an issue, federal law prevails, or “preempts,” the state law from operating. In this case, ERISA barred a union benefit fund from seeking payment from a general contractor for the delinquent benefit fund contributions owed by a subcontractor pursuant to a collective bargaining agreement.