Rising stakes in wage-and-hour suits: Jail time for employers
While the Fair Labor Standards Act (FLSA) says wage and hour violators could face imprisonment, that punishment was rarely levied. But ultra-aggressive enforcement efforts have raised the stakes.
Until now, the remedies for violations were primarily limited to fining employers and collecting damages and back wages for wronged employees.
But times, they are a-changin’.
Government agencies like the Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC) and even some state labor entities have become more aggressive in their efforts to seek out employers breaking the law and bring them to justice.
As a result, we’re beginning to see more and more instances in which federal and state agencies are exercising their abilities to imprison company owners, partners, directors, officers, shareholders, managers and supervisors for violations of wage and hour laws.
First offender facing jail time
The latest example: A Port Chester, NY, restaurant owner, Elisa Parto, was arrested and arraigned on charges that she failed to pay minimum wage and overtime to employees who sometimes worked in excess of 70 hours per week.
She faces several counts of wage and hour violations, and faces a maximum jail term of one year, plus fines of $5,000 for each count, as well as restitution to five employees, who were cooks, cleaners and cashiers at her restaurant Elisa’s Food & Plus, Inc.
Under New York law, wage and hour violators could receive a fine of up to $20,000 or up to one year in prison (on top of civil penalties) for a first offense.
Putting other New York employers on notice, state Attorney General Eric Schneiderman had this to say about Parto’s arrest and charges:
“My office will take aggressive action, including criminal charges, where appropriate, against business owners who fail to properly compensate their employees for hours worked. Protecting the livelihoods of hardworking New Yorkers is a priority for my office.”
Parto’s case in New York is particularly interesting — and should be particularly troubling to employers — as her actions didn’t seem to occur as part of a pattern of misconduct, according to employment law attorney James M. Lemonedes of the firm Fox Rothschild LLP.
Lemonedes said there was no indication of her having been a part of any prior DOL investigations.
He commented:
“Simply put, within four years of opening a business, the owner may be facing jail time for failing to comply with Wage and Hour regulations.”
FLSA not as harsh
Under the FLSA, imprisonment couldn’t be levied until a person’s second offense.
Plus, a person can only be imprisoned under the FLSA if he or she was found to have intentionally, deliberately and voluntarily disregarded requirements under the law.
Still, laws in some states (like New York) can be much more stringent.
Bottom line: The dangers associated with falling out of compliance with wage and hour laws are growing. Now violations are much more likely to result in more than having to write some big checks.
