Entrepreneurs Beware of Personal Liability for Wage & Hour Violations


Is Groupon’s June 3 announcement of its intent to launch an IPO a sign of another looming “tech bubble” or an “entrepreneurial renaissance”? Either way, entrepreneurs seeking to ride the next wave of technological innovation must be aware of the significant personal risks arising from failing to comply with wage and hour laws.

Can’t pay your suppliers or rent on the swanky new office space you rented to impress potential venture capital investors? If the business fails, at least the budding entrepreneur might be able to avoid or limit personal liability for these unpaid debts. Not so for unpaid wages owed to employees.

Under the FLSA and most state wage and hour laws the entrepreneur will be personally liable not only for the amounts owed to employees, but also for attorney’s fees, liquidated damages, statutory penalties and in extreme cases could be subject to criminal prosecution.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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