Wage and hour · WARN Act
When the Paychecks Bounce: What New York Workers Can Do When an Employer Collapses
A company that stops paying and then shuts its doors does not make its workers’ claims disappear. Three sets of laws, and sometimes the owners themselves, stand behind the wages.
In the late summer of 2024, security guards working out of an office in Throggs Neck, in the Bronx, New York, got paychecks that bounced. Then they got none at all. On September 12, 2024, according to a federal court’s later order, the company closed the office at 5:00 p.m., and its chief executive acknowledged that it could not make payroll.
I represent those guards, with my co-counsel Alex Rissmiller. On March 16, 2026, Judge Analisa Torres of the Southern District of New York certified the case, Rodriguez v. Westech Security and Investigation Inc., No. 25-cv-00123, as a class action. The class covers hourly workers at the Throggs Neck location between June 10 and September 30, 2024 whose paychecks were dishonored or never issued, or who did not get advance notice of the shutdown. The case is pending, and nothing here predicts how it will end. But the order is a useful map of the law that protects workers when an employer runs out of money.
1. A bounced paycheck is an unpaid wage
A paycheck that bounces is not a payment. Wages are not “paid” until the worker can actually get the money. Under the New York Labor Law, an employer that fails to pay wages owes the unpaid amount, prejudgment interest and the worker’s attorney’s fees, plus liquidated damages equal to 100 percent of the unpaid wages unless the employer proves it acted in good faith (Labor Law § 198). Workers generally have six years to sue. The claims in Westech that the court certified include those wage claims under Labor Law §§ 190, 191, 198 and 663.
If you get a check that bounces, keep it, along with the bank’s return notice and any fees the bank charged you. Those documents are evidence.
2. A shutdown without notice can owe you 60 days of pay
The federal WARN Act requires larger employers, generally those with 100 or more employees, to give 60 days’ written notice before a plant closing or mass layoff. New York’s own WARN Act goes further: it covers employers with 50 or more full-time employees and requires 90 days’ notice before, among other things, a closing that costs 25 or more full-time employees their jobs.
An employer that closes without the required notice can owe each affected worker back pay and benefits for the period of the violation, up to 60 days (or half the days the worker was employed, if that is shorter). Both laws together pay no more than that; the worker does not collect twice. And under New York law, these payments do not reduce your unemployment benefits. WARN pay is often the largest single item a worker has when a business collapses, and it is owed even to employees who were paid in full up to the last day.
Employers sometimes argue that a sudden financial collapse excuses notice. The statutes do contain narrow exceptions, including for business circumstances that were not reasonably foreseeable, but the employer has to prove them. A company that has already stopped meeting payroll will have trouble arguing that its closing came as a surprise.
3. Why a class action matters here
One guard’s unpaid wages and 60 days of back pay may not justify a lawsuit on their own. Hundreds of guards’ claims do. That is the point of a class action, and it is what the court found in certifying Westech: the common question of whether the employer complied with WARN predominated over individual differences in damages, and a class action was superior to separate suits that individual workers would have little incentive to bring.
Certification also means that every class member gets notice and can share in any recovery without hiring a lawyer or filing a case of their own.
4. When the company has no money, look to the people who ran it
A closed company may have nothing left to collect. New York law does not always stop there.
- Individual employers. Under the federal Fair Labor Standards Act, an owner or executive with operational control over the workers’ employment, for example by hiring, setting pay or controlling payroll, can be personally liable as an “employer.” Being an owner or officer is not enough by itself. Courts in New York generally apply the same test under the state Labor Law. The Westech complaint names the company’s CEO as a defendant.
- Shareholders of closely held corporations. Business Corporation Law § 630 makes the ten largest shareholders of a privately held corporation personally liable for unpaid wages. Limited Liability Company Law § 609(c) does the same for the ten largest members of an LLC. Both reach out-of-state companies when the work was done in New York.
There is a trap. To hold shareholders or members liable under those two statutes, the worker must give them written notice within 180 days after the work ended. The courts treat that deadline as a condition that cannot be extended, even for good reason (Ingvarsdottir v. Gaines, Gruner, Ponzini & Novick, LLP, 144 A.D.3d 1099 (2d Dep’t 2016)). And the clock runs from the last day you actually worked, which can be earlier than the day you were formally let go.
What to do if it happens to you
- Keep everything: bounced checks, bank notices, pay stubs, your schedule, texts or emails about payroll or the closing.
- Write down dates: your last day of actual work, the last check that cleared, and when you learned of the closing.
- Find out who the employer really was. The name on your pay stub, and whether it is a corporation or an LLC, decides who can be held liable.
- Talk to a lawyer quickly. The 180-day notice for owner liability starts running on your last day of work, not when you find out the company has no money.
- Stay in touch with coworkers. A group of workers with the same problem may have a class or collective case, and the more people who come forward, the clearer the picture.
If your employer stopped paying or shut down without warning, you can reach me through the contact page.
This article is general information, not legal advice, and it does not create an attorney-client relationship. Rodriguez v. Westech is a pending case; the facts described come from the court’s public certification order. Attorney Advertising. Prior results do not guarantee a similar outcome.