Misclassification of Workers - Proskauer Rose LLP
Misclassification of Workers - Proskauer Rose LLP
Misclassification of Workers - Proskauer Rose LLP
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D. CRIMINAL PROSECUTIONS<br />
© 2010 <strong>Proskauer</strong> <strong>Rose</strong> <strong>LLP</strong><br />
1. In March 2009, New York’s Attorney General Andrew M. Cuomo<br />
announced the first arrest stemming from a NY Task Force “sweep” <strong>of</strong><br />
employers suspected <strong>of</strong> misclassifying workers. 32<br />
2. Charged with several felonies and misdemeanors in criminal court, the<br />
owner <strong>of</strong> a bakery in Bronx, New York, allegedly violated labor laws by,<br />
among others, failing to pay unemployment insurance taxes and failing to<br />
pay over $350,000 in wages to employees. 33 According to the complaint<br />
filed, the bakery owner failed to pay the minimum wage to at least 25<br />
workers, while requiring them to work up to 80 hours a week with no<br />
overtime pay. 34<br />
3. In a second arrest, Attorney General Cuomo charged a Bronx-based gas<br />
station owner with failure to pay more than $225,000 in wages, failure to<br />
pay into the state’s unemployment insurance system, and failure to cover<br />
workers with <strong>Workers</strong>’ Compensation insurance. 35 The complaint, filed in<br />
criminal court, alleged that the gas station owner paid his employees as<br />
little as $4.00 per hour for working 12-hour days, with no overtime, and<br />
failed to secure workers’ compensation insurance for his employees,<br />
which is a felony <strong>of</strong>fense in New York. 36<br />
V. LITIGATION AND SETTLEMENTS<br />
A. COSTLY SETTLEMENTS<br />
1. In addition to the recent proposed settlement between America Online and<br />
its Community Leader volunteers (see supra at Section IV(B)(4)), other<br />
large organizations have opted to pay out expensive settlements rather<br />
than litigate misclassification issues.<br />
a. Freedom Communications Inc.<br />
i. In November 2008, after five years <strong>of</strong> litigation and two<br />
months <strong>of</strong> trial, Freedom Communications, which<br />
publishes, among others, the Orange County Register,<br />
settled for $42 million with more than 5,000 current and<br />
32 Annual Report <strong>of</strong> the Joint Enforcement Task Force on Employee <strong>Misclassification</strong>, Feb. 1, 2009, available at<br />
http://www.labor.state.ny.us/agencyinfo/PDFs/<strong>Misclassification</strong>_TaskForce_AnnualRpt_2008.pdf (last visited on<br />
March 21, 2010).<br />
33 Id.<br />
34 Id.<br />
35 Id.<br />
36 Id.