RICO and Wage and Hour Claims

RICO claims could be filed in cases involving deliberate and widespread underpayment of wages. A Columbia Law Review Article wrote,

“One such nascent strategy is to couple an FLSA suit with an allega- tion that the defendant violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by fraudulently depriving employees of wages to which they were entitled under the FLSA. The RICO statute lists a number of extant state and federal criminal offenses and provides additional criminal and civil punishments for violations of these laws.17 Successful civil RICO lawsuits grant plaintiffs access to two powerful de- terrent and remunerative devices: the right to treble damages18 and access to Rule 23 of the Federal Rules of Civil Procedure—that is, an opt- out class action.

But the path to RICO recovery is not straightforward for the under- paid employee. The statute lists over fifty crimes as “predicate acts” that may expose a defendant to RICO liability. The list is exhaustive, and
violation of the FLSA is not included. Thus, FLSA-based RICO claims usually run as follows: When an employer mails its employee a paycheck that it knows contains less pay per hour than required by the FLSA, it not
only violates that statute but it also profits by lying (by keeping for itself money to which the employee is entitled) and thus commits fraud. According to plaintiffs, this activity constitutes mail fraud because mailing the paycheck was necessary to carry out the fraudulent scheme. Mail fraud is listed in RICO as a predicate act and thus, these plaintiffs argue, these employers are subject to civil RICO liability.”
Crooks, Fair Labor Fraud: the Peculiar Interplay of Civil Rico and the Federal Minimum Wage Act, 112 Colum. L. Rev. 2153 (2012).

We can add that in a deliberate scheme, the employer would likely have filed fraudulent state and federal wage returns which could constitute mail or wire fraud, included predicate acts.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s