Did you know that FLSA violations could land employers in jail?

Most wage and hour violators are met with fines and damage penalties, but did you know that it is also possible to go to jail for wage and hour violations?  Abdul Jamil Khokhar found out the hard way.  Together with BMY Foods Inc, they owned nine Papa John’s franchises throughout the Bronx in New York.  Khokhar is facing 60 days in prison, and will have to pay $510,000 in restitution.   

Under the Fair Labor Standards Act (FLSA), any employer who violates minimum wage or unpaid overtime compensation laws may be liable for both the shortfall and liquidated damages, which means double the damages.  To avoid FLSA violations and personal liability, employers need to be sure to comply with all the relevant minimum wage, overtime, and other salary-and benefit related regulations.  If an employer is not fully compliant, be prepared to pay a steep price like Khokhar has.

As a franchisee, Abdul Jamil Khokhar failed to pay overtime wages to more than 300 current and former employees, which is required by law.  Khokhar knowingly avoided paying the overtime wages.  To avoid the additional compensation, such as “time and a half,” Khokhar created fictitious employees to take credit for the hours that were worked over 40 hours, so the employees never received the additional wages that they should for working overtime.  Khokhar pleaded guilty to a misdemeanor charge for failing to pay wages, and his company pleaded guilty to a felony charge of falsifying business records.

Khokhar is not the only person to be jailed for wage and hour violations.  In Minnesota, the president of a sheetrock company was sentenced to 2 years in jail, and a potential fine of $3.3 million for intentionally underpaying employees overtime hours, and union pension and benefit contributions.  In another case, the owners and officers of an Illinois security company were fined over $200,000 for violating overtime and record keeping provisions. 

The US Department of Labor is getting tougher, and FLSA violations can see you be fined, and even sent to jail.  This means that as an employer:

·         It is necessary to properly classify an employee, to decide whether they are an employee or independent contractor. 

·         Be up to date on state employment laws.

·         Review payroll and job classifications.

 For just a low monthly fee per employee, myHRcounsel will be sure that your business is compliant with FLSA laws and other employment laws to avoid fines and potential jail time.