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What Happens If Employers Violate Labor Laws?

Labor law is one of the thorniest issues with which employers must comply.

Specifically, most businesses are subject to a host of regulatory and legal requirements at the federal, state, and local levels. Cumulatively, these regulations are intended to protect workers. For example, the Civil Rights Act of 1964 protects workers from discrimination, while the Fair Labor Standards Act  (FLSA) of 1938 establishes a federal minimum wage and overtime pay for certain employees. Labor or employment law refers to any and all regulations of this sort.

The government takes these laws seriously, no matter how onerous or difficult they may be for employers, and failure to comply can result in a host of serious consequences. What do employers who violate labor law risk?

Financial Penalties
Most labor laws allow for penalties. For example, according to the Department of Labor, employers who willfully violate minimum wage laws may be liable for a civil penalty of up to $1,000 for each violation. Violations of child labor protections carry a civil penalty of up to $10,000 per employee subject to a violation. Depending on the specific compliance requirement, employees may also be entitled to back pay, the value of lost benefits, and interest payments.

Legal Costs
Further, violations of employment law may offer grounds for employees to file private lawsuits against the employer, which means the employer may become responsible for legal fees and, if they lose the case, damages. In one case, an employer’s “failure to maintain accurate time records” resulted in a $5.8 million FLSA jury award that was upheld by the Supreme Court, according to the Society for Human Resource Management.

Unfavorable Legal Rulings
In addition to court costs, settlement fees, or jury awards, litigation that results from violations of employment law can have other legal consequences for employers. For example, in 2018 the National Labor Relations Board (NLRB) urged its regional offices to more “aggressively pursue temporary injunctions to stop categories of potentially unfair labor practices.” in other words, legal findings can infringe on an employer’s ability to conduct business as normal. In extreme cases, courts can even effectively shut businesses down.

Reputational Problems
Some labor law violations can even attract the attention of the media and result in increased public scrutiny of business conduct. For example, Starbucks made national news after complaints about some of its labor practices. The impact of this media coverage can vary widely, but no employer wants to find itself in a public relations crisis that could potentially disrupt business and discourage customers.

 

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today. 

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