Employees who earn hourly wages are entitled to minimum wage and time-and-a-half for overtime, among other guarantees. When employers skirt this rule by misclassifying workers as independent contractors (whether intentionally or negligently), most penalties are limited to the civil realm. In other words, the employers will have to pay the difference to all affected workers, a fine to the U.S. Department of Labor, and other expenses arising out of the episode. For the first time, the Office of the New York State Attorney General recently secured criminal charges in a wage theft case, over and beyond these civil penalties.
Abdul Jamil Khokhar owns nine Pizza Papa John’s franchises in Bronx, NY, under his company BMY Foods, Inc. Mr. Khokhar had been under investigation since 2013 for failing to pay and report overtime premiums. While his workers appear to have been lawfully paid for regular hours, Khokhar’s criminal scheme involved making overtime payments in cash, under fictitious names corresponding to the workers on the payroll, and at the regular hourly rate. Furthermore, Khokhar’s filed tax returns did not include any references to the pseudonymous workers, meaning that Khokhar represented that his workers worked up to, but not past, the overtime threshold—which Attorney General Eric T. Schneiderman disproved.
On July 15, 2015, Khokhar pled guilty to his scheme. He will be sentenced on September 21. As a result, Khokhar will spend sixty days in jail, pay $230,000 in back pay to his employees, pay the same amount in additional liquidated damages, pay another $50,000 in other civil penalties, and BMY Foods, Inc. will have to designate an internal compliance officer and submit to independent audits.
Wage theft is a crime that can result in substantial liability to the employer. Meanwhile, hourly employees are entitled to minimum wage and overtime premiums. The requirements placed on employers by the Wage Theft Prevention Act go much further however, than merely ensuring an employee is paid minimum wage and time and a half for overtime. If you need help in pursuing or defending a wage theft claim, do not hesitate in calling the Gilbert Law Group, (631)630-0100.
Contributed by Michael B. Engle