Double the trouble: When one investigation leads to another

Unlike the 7-Eleven sting in January, which had its genesis in a previous U.S. Immigration and Customs Enforcement (ICE) investigation, an April 5, 2018 raid on a Tennessee meat-processing plant, one of the largest ICE raids since the Bush era, began with a tax evasion inquiry. A massive undercover operation by the IRS not only revealed the employer’s failure to pay taxes on employees’ wages (which were paid in cash) but also its practice of hiring individuals who lacked work authorization.

While many employers pay employees in cash to evade taxes, others intentionally misclassify workers as independent contractors to avoid paying overtime. The erroneous belief among some employers is that labeling someone a contractor or paying him in cash is enough to avoid the applicable legal obligations, but that’s a misperception. Should the company’s practices be investigated and wrongdoing uncovered, it will not only owe taxes to the IRS but back wages to its employees as well. And we’re not talking about simply owing employees minimum wage for their labor—the most damaging part of a back-pay award may be the time and half due in overtime. Multiply the claim for unpaid wages by a hundred employees, and an employer is easily looking at a figure topping six digits or more.

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