Across the United States, regulators are treating wage theft with unprecedented seriousness. What used to result in civil penalties or administrative fines is increasingly leading to criminal charges for employers.
This shift is reshaping compliance requirements for businesses of all sizes. Employers who fail to pay staff correctly or issue incomplete pay stubs may now face felony convictions, steep fines, and even jail time.
The message is clear: payroll compliance is no longer just a legal formality. It is a business-critical responsibility that protects both your company and your workforce.
The U.S. Department of Labor (DOL) has stated its intent to expand criminal enforcement. The agency has outlined criteria for referring cases to the Department of Justice, including:
Patterns of repeated violations
Evidence that the employer knowingly broke the law
Obstruction of wage investigations
Coercion or exploitation of employees
Severe worker harm, such as death or serious injury
Meanwhile, states are introducing their own criminal penalties.
Connecticut now classifies wage theft as a felony if unpaid wages exceed $2,000. Convictions can carry fines up to $10,000.
California and Colorado treat intentional wage underpayment as criminal theft.
New York, New Jersey, Hawaii, Rhode Island, Illinois, and Virginia, among others, allow for imprisonment if payroll violations are proven.
In one widely reported case, a California construction company was charged with 31 criminal counts related to wage theft and tax evasion. Cases like this demonstrate the very real risks for employers who fall short on compliance.
Wage theft enforcement is not limited to large corporations. Small and mid-sized businesses are increasingly being targeted, especially in industries such as:
Hospitality and restaurants
Construction and contracting
Healthcare and homecare services
Manufacturing and garment production
Even small payroll mistakes can have serious consequences. For example, in Massachusetts, failing to include the required details on pay stubs can result in fines or imprisonment.
Mistakes that once carried civil liability may now trigger criminal exposure. That is why accurate payroll processes are essential in 2025 and beyond.
The good news is that compliance does not have to be overwhelming. By putting the right systems and safeguards in place, you can protect your organization from costly fines and lawsuits.
Invest in education for anyone who manages payroll. Even unintentional mistakes can lead to legal issues if they become recurring.
Review pay calculations, overtime rules, employee classifications, and pay stub accuracy. Proactive audits show good faith and help identify issues early.
Read more: The Hidden Costs of Manual Payroll Processing (And How Automation Saves You Money)
If you employ staff across multiple states, remember that rules vary widely. A modern system like Excelforce Payroll helps you manage compliance across different jurisdictions with confidence.
Keep accurate documentation of hours worked, wages paid, and employee classifications. A cloud-based Time & Labor solution makes it easier to track this data in real time.
States like California and New York require specific details on pay stubs. Regularly review your formatting to make sure you meet state-specific laws.
Encourage employees to raise questions about pay. A transparent, open payroll process builds trust and reduces the likelihood of external complaints.
Outdated manual systems are prone to mistakes. Upgrading your payroll, time tracking, and HR platforms helps ensure compliance and reduces errors. It’s also wise to use an HR compliance tool that keeps you updated on changing state and federal laws and gives you direct access to HR experts when questions arise.
The consequences of wage theft enforcement go far beyond financial penalties. Criminal convictions can damage your reputation, impact employee morale, and even threaten your ability to operate.
On the other hand, employers who invest in compliance gain a competitive advantage. They build stronger employee relationships, avoid costly disputes, and create a workplace culture based on fairness and trust.
Ready to protect your business? Explore our full suite of solutions, including Payroll, Benefits, and HR Compliance Services.
Wage theft enforcement is intensifying in 2025, with states and the federal government pushing for tougher penalties. While the risks are serious, the solution is straightforward: invest in strong payroll processes, employee transparency, and modern compliance tools.
By being proactive today, you can avoid costly fines tomorrow, protect your business reputation, and build lasting trust with your workforce.
©2025 - Content on this blog is intended to provide helpful, general information. Because laws and regulations evolve, please consult an HR professional or legal expert for guidance specific to your situation.