It Isn’t Just the Fines You Have to Worry About


I’ve written before about the risk of individual liability under the labor laws. In a nutshell, if you’re a corporate officer, there’s a chance you could be found individually responsible for wage and hour violations of the company.

Well, turns out that having to pay a fine and ante up some back wages might not be the worst thing that could happen to you in that situation.

You might also find yourself behind bars.

Doin’ the Jailhouse Rock

According to a press release issued by the U.S. Department of Labor, High Performance Ropes of America (a Texas-based company that makes heavy duty wire rope used in construction, mining, oil and gas, bridge suspension and ski lifts) underpaid their workers. As a result of not one, but two investigations, they company was ordered to pay over $165,000 in back wages, $12,000 in civil penalties and an additional court-imposed fine of $10,000. And the company was found guilty of a felony — making false statements.

Perhaps more notable, though, was what happened to the company owner, plant manager and office manager.

They were also convicted of felonies — including aiding and abetting illegal re-entry into the U.S. and withholding information about a crime — and served actual jail time. Now, fortunately for them, the court didn’t impose a lengthy sentence — they were all sentenced to “time served” plus probation, but “time served” does mean they spent at least some time behind bars. And they’ll have to report in to their probation officers for a while, too.

Depending on the facts of the case, an overtime lawsuit may not be as simple as “pay the fine and get back to work.”

Just the Facts, M’am

One reason criminal penalties were involved: this case was particularly eggregious. According to the DOL, the employer:

  • Had their employees work up to 96 hours per week with no overtime.
  • Submitted false evidence to the DOL investigators, indicating they had paid workers back overtime.
  • Forced employees to kick back to the company the claimed back overtime payments.
  • Maintained a separate second set of records they tried to conceal from the investigators.

Honestly, looking at that list, it’s no wonder they got the book thrown at them!

Lessons Learned

So, what can we learn from this?

Well, to start with, it’s a bad idea to lie to the DOL investigators. If you are investigated, keep your legal counsel informed from the start. And if they’ve already “dinged” you once, it’s probably a good idea to stop doing whatever it was that got you in trouble in the first place. Fix it, promise to go forth and sin no more, and hope the DOL lets you off with only forking over back pay and maybe a small fine.

Especially don’t double-down on the original violation, plus adding additional violations to the mix.

In any case, your totally best bet is to keep accurate time records and to pay your employees properly for all the time they work (including overtime premiums if applicable). And forget about keeping a “secret” second set of books. That’s just asking for trouble.

If you need help tracking employee work time, we’ve got a ton of solutions that could make your life a lot easier. Check out our online store and find the one that’s right for your business.

So, did you realize individual company managers could actually face criminal prosecution as the result of a DOL investigation? What do you think about this?

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