Dec 15, 2025
Across the United States, more jurisdictions are moving beyond civil penalties, administrative fines or private lawsuits in response to wage underpayments.
A growing number are now imposing criminal penalties for willful or repeated wage violations. These changes mark a significant shift in how wage compliance is enforced.
Federal enforcement efforts may also increase
The trend is not limited to state and local governments. The United States Department of Labor has indicated its intent to expand criminal enforcement.
The department has announced that it will submit a report to the Office of Management and Budget outlining criminal regulatory offenses that the Department of Justice could enforce. The Department of Labor has also shared general criteria it may use to determine whether a wage violation should be referred to the Department of Justice for criminal prosecution.
These factors include the death or serious injury of an employee, a pattern of repeated violations, deliberate obstruction of investigations, coercion or extortion of workers and clear evidence that the employer knew the conduct was unlawful.
States are introducing tougher penalties
Several states have enacted laws that classify wage theft as a criminal offense. For example, Connecticut has reclassified wage theft as a felony when unpaid wages exceed $2,000. In such cases, fines may reach $10,000 and employers may face potential imprisonment.
Both Colorado and California treat the intentional underpayment or withholding of wages as criminal theft. Other states, including Hawaii, Illinois, New Jersey, New York, Rhode Island and Virginia, have laws that authorize imprisonment for failing to pay wages or falsifying payroll records.
Criminal charges are affecting a wide range of industries
Employers in a variety of industries have faced criminal charges related to wage violations. These have included dairy farms, restaurants, garment manufacturers and construction companies.
In one case, a construction company in California was charged with 31 criminal counts, including tax evasion. Criminal convictions can lead to incarceration and cause long-term damage to a company's reputation.
Education and training help reduce risk
To protect your business, it is important to invest in training for your payroll staff. Team members should be fully informed about wage laws and compliance requirements. Implementing a reliable recordkeeping system is essential.
Accurate documentation of hours worked, wages paid and employee classifications can prevent legal issues and demonstrate good-faith compliance.
Pay stub compliance is just as critical
Even small details such as pay stub inaccuracies can lead to fines and legal action. For example, states such as California and New York have specific requirements about what information must appear on employee pay stubs and how they must be delivered.
In Massachusetts, failing to comply with pay stub rules could result in fines up to $3,000 or imprisonment for up to one year. To stay compliant, you must understand the laws in every state where you employ workers.
Transparency with employees supports compliance
Monitoring employee satisfaction with payroll processes can help identify issues early. When employees feel confident that their pay is accurate and transparent, they are less likely to escalate concerns through legal action.
Inaccuracies can result in individual lawsuits or even class-action claims, which increase legal exposure and often attract media attention. In many cases, employers are required to pay legal fees and court costs in addition to back wages.
Regular audits support proactive compliance
To stay ahead of potential violations, conduct regular audits of your payroll systems. Make sure your business is accurately calculating overtime, following minimum wage requirements and correctly classifying employees. These efforts help reduce the risk of costly penalties and avoid criminal charges.
Compliance protects your business and your employees
Maintaining fair employment practices and adhering to state-specific wage laws can shield your company from legal consequences.
Ensuring employees are paid accurately and on time helps you avoid back wage payments, civil penalties and the risk of criminal prosecution. A proactive and informed approach to payroll compliance protects both your business and your workforce.
©2025
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