Dissatisfied Employees Unable to Recover Penalties from Investors under New York Law


A New York statute that requires a corporation's largest investors to guarantee employee wage payments does not require such investors to satisfy penalties owed workers under Indiana law.

Employees of Waste Reduction, Inc. sued the bankrupt company for overdue wages and penalties, as permitted under Indiana law, but were unable to recover their award for penalties because of the former firm's limited assets. Waste Reduction was incorporated in New York, however, which requires the 10 largest shareholders of a corporation to guarantee employee wages and benefits. The employees sued Waste Reduction's largest investors, arguing that New York law requires these investors to satisfy the penalties owed workers under Indiana law. The district court dismissed and appeal followed.

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