"AIG was categorically wrong when it claimed that state labor law compelled payments of these outrageous, unconscionable bonuses," Blumenthal said in a statement.
"A provision in Connecticut law requiring double payment for failure to pay wages does not apply to AIG bonuses," he said, calling it "a joke of a justification to reward financial failure and fiasco."
Last week, Liddy told a House subcommittee that he had urged the AIG bonus recipients to return at least half of any retention payments of $100,000 or more.
On Thursday, the House of Representatives passed a bill that would impose a 90% tax on bonuses that bring an employee's pay above $250,000 in 2009.
The Senate took up a bill to add a 35% tax on the bonuses, but Assistant Minority Leader Jon Kyl (R-Ariz.) blocked a vote, saying lawmakers should not pass "another piece of hastily crafted legislation in this toxic atmosphere."
Senate Majority Leader Harry Reid (D-Nev.) said he would try again to bring a bill this week.
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david.savage@latimes.com
