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September 18, 2012

Seven taken into custody and facing criminal prosecution after allegedly violating the New York State Labor Law

While many New York Labor Law provisions provide for criminal penalties and prosecution in the event they are violated by an employer, historically such action was a rare occurrence. However, on Friday, September 7, 2012, after a seven month investigation by the Onondaga County District Attorney's Office, seven individuals were arrested and held in custody for having allegedly committed unlawful pay practices.

The defendants in the case were arraigned on several charges, including: violating the New York Construction Industry Fair Play Act, which penalizes employers in the construction industry for misclassifying employees as independent contractors; violating New York's prevailing wage law, which requires that all contractors and subcontractors pay prevailing wage rates and supplements (fringe benefits) to all workers performing work under a public work contract; and for a felony count of falsifying business records.

The charges stemmed from operation of a commercial painting business through which the defendants allegedly underpaid employees and/or hired illegal immigrants in order to offer substantially lower bids on public works jobs than unionized employers who were lawfully paying their employees prevailing wage rates and supplements. The defendants were arrested and held in custody for their actions in attempting to cover up the unlawful activities by falsifying business records.

Although this is not the first time that a New York State employer has been criminally prosecuted for violations of the New York Labor Law, hopefully this does not represent a "watershed" decision on the part of law enforcement to file criminal actions against employers for violating the Labor Law.

If you have any doubts about your compliance with either the New York State or federal wage and hour laws, review your practices against the published rules and regulations. And, if you have any questions or require assistance in reviewing your policies, please contact the Hiscock & Barclay lawyer with whom you normally work or any other attorney in our Labor & Employment practice area.

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