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Could Failing to Pay Your Workers Properly Land You in Jail?

You may know you can face significant monetary penalties for not paying your workers minimum wage and overtime as required by law.  But did you know you can also face arrest and jail time for these violations?  While this has always been a remote possibility, some government entities are becoming more aggressive in pursuing criminal penalties.

The New York Attorney General recently announced the arrest of the owner of a Port Chester, New York restaurant for wage and hour violations.  The owner could receive as much as a year in jail.  The owner allegedly failed to pay five former employees minimum wage and overtime as required under New York’s Labor Law.  According to the Attorney General, she underpaid the employees by $35,000.

Both the federal Fair Labor Standards Act (“FLSA”) and the New York Labor Law provide for criminal penalties for failure to properly pay minimum wage and overtime.  Under state law, a first offense is a misdemeanor punishable by a fine of up to $20,000 or up to one year’s imprisonment (on top of civil penalties such as payment of the owed amounts and liquidated damages).  Subsequent offenses occurring within six years of the date of the first conviction are felonies.  Violations of the FLSA are punishable by a fine of up to $10,000, up to six months’ imprisonment, or both.

While criminal penalties for wage and hour violations have always been on the books, it used to be very rare for business owners to actually face criminal prosecution.  The New York Attorney General’s actions are consistent with the government’s general trend to step up enforcement of wage and hour laws and crack down on practices such as non-payment of minimum wage and overtime and employee misclassification.  It may be that this represents the next step in this process, and state and federal agencies may be more aggressive in bringing criminal penalties against business owners who do not comply with wage and hour laws in the future.

Brody and Associates regularly advises management on complying with state and federal employment laws including wage and hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.