Wage and hour violations not only costly they can lead to jail as well

by Michael Haberman on December 7, 2015 · 0 comments


Starting a company can quickly make you a criminal

Willful violations of the FLSA can land you in jail.

On December 2nd I wrote about the rise in the number of wage and hour lawsuits and the rising cause of settling those suits. Now we have a story of a wage and hour violations leading to jail time for the business owner.

Improper dough

According to a report by Josh Cline of McAfee &Taft A pizza franchisee “…failed to pay overtime wages to more than 300 current and former employees. To make matters worse, he attempted to cover up his failure to pay.” In an elaborate scheme, the franchisee “created fictitious employees to take credit for hours worked over 40. He would then pay real employees their regular pay rate, no matter how many hours they worked per week.”

Under the Fair Labor Standards Act any person who purposely violates the law is subject to a misdemeanor charge and fines. In this case the pizza franchisee pled guilty to the crime and he was sentenced to 60 days in jail in addition to paying $230,000 in restitution to his employees because of multiple violations. He could have been fined $10,000 as well. The company pled guilty to falsifying records and that was a felony violation.

Trend to imprison?

When Hilda Solis was the Secretary of Labor she claimed that “employers were thieves” and she was going to punish them appropriately. Cline said that recently political candidate Hillary Clinton has espoused a similar position by saying ““I’m going to make sure some employers go to jail for wage theft.” He feels that various state officials are also starting to pay attention and as a result we may see more situations of governments pursuing jail in addition to fines. OSHA has also announced an increase in fines and pursuing criminal prosecution.

If you don’t want to spend time in jail in addition to paying large amounts of money the better course of action is to pay attention to the laws. In reality it is not that hard to do with proper guidance.


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