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Enforcement is on the Rise – Are You Ready?

We recently wrote about U.S. Secretary of Labor, Hilda Solis’s warning to all non-compliant employers that the Department of Labor is stepping up enforcement. It appears states are following suit and collecting millions of dollars in penalties. A staggering example of this is the recent lawsuit filed by New York Attorney General Andrew Cuomo against a New York City contractor, Michael Mahoney.

The suit alleges Mahoney, through six entities he controlled, violated New York wage and discrimination laws and failed to pay dozens of minority employees over $4 million in wages and overtime since 2002.

Among other things, Mahoney is alleged to have set pay rates based on ethnicity. White, Irish employees received an average of $25 per hour, African Americans received $18 per hour, and Hispanic employees received $15 per hour.

Additionally, Mahoney’s companies routinely failed to pay overtime to its employees who consistently worked up to between 50 and 60 hours per week. According to the allegations, these companies attempted to cover up these violations by issuing multiple paychecks from different accounts, failing to provide pay stubs, and improperly recording hours.

Mahoney, during the investigation, invoked his Fifth Amendment rights in response to almost every question, which, unlike in criminal cases, may give rise to an inference of liability in civil cases.

While New York appears to have nabbed a “big fish,” Andrew Cuomo described this lawsuit as a “message to all businesses in New York.” Cuomo further declared, “you play by the rules, or you face the legal consequences.”

While this was a message directed at employers with New York operations, states all across the country are taking similarly tough stances on violations of their workplace laws. With today’s economic conditions, states may see such enforcement as not only appropriate, but a great way to make up budgetary shortfalls by collecting penalties from non-compliant employers. If you have not recently done so, have your HR policies and practices audited by competent legal counsel or HR consultants to ensure compliance with state and federal laws.

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