June 26, 2018
By Chris Opfer
When a business doesn’t pay workers minimum wages or overtime, it usually risks a government investigation or private lawsuit. In some states, companies and their officers may also be looking at criminal charges that could land them behind bars.
“We prosecute companies that have institutionalized theft as a business model,” Manhattan Assistant District Attorney Diana Florence said.
Prosecutors in New York and California are starting to view wage violations as an actual crime more often, as opposed to a matter for civil courts. Their approach could be a model for other states looking to beef up enforcement in an era when the federal wage-and-hour watchdog is shifting its emphasis to voluntary compliance.
Also changing the landscape are a recent U.S. Supreme Court decision that’s likely to increase private arbitration and an immigration crackdown that may make some workers less likely to come forward with complaints.
“Companies take criminal cases more seriously,” Rena Steinzor, a University of Maryland professor who wrote a book about corporate criminal prosecutions, told Bloomberg Law. “If you’re an executive and the cops come to your door, you don’t soon forget it.”
Prosecutors are focusing on particular industries-such as construction, restaurants, janitorial services, garment makers, and home care providers-where they say low wages, temporary job assignments, and businesses that pop up and shut down with little notice leave workers especially vulnerable to abuse. Prosecutors are also packaging “wage theft” investigations as part of a wider look that encompasses health and safety violations, payroll tax fraud, and human trafficking.
Defense lawyers say the threat of criminal prosecution for what has largely been handled in civil courts may give prosecutors too much leverage.
“They can come in with these outrageous demands knowing that there’s no basis in reality,” Allan Bahn, a partner at FordHarrison in New York, told Bloomberg Law. “At times, they can hold” criminal charges “over a contractor and say, ‘If you don’t settle, we’re going to refer you for prosecution.'”