Money Makes The World Burn Down

, , , , , , | Legal | April 23, 2019

Years ago, my brother was working as an accountant for a small chain of mini-marts. Since he was considered management, he was not eligible for overtime, but they wanted him weekly to be on call and to come in on his day off to some task that was not part of his job and not a management task. California law indicated he might be eligible to collect overtime for that after all.

So, he requested about $10,000 to cover the unpaid overtime. The company refused, so he took them to the Labor Board.

He lost his suit with the Labor Board, but as part of the investigation, the Labor Board discovered that the company was shorting the overtime for other employees. The company was forced to pay the overtime and close to $100,000 in fines.

In addition, the investigator discovered that the company had official inventory taken, but then fudged the numbers on the tax returns and kept both the correct and the fraudulent inventories. So, the investigator turned them into the IRS. They were audited and ended up paying close to $500,000 in back taxes and fines.

This put a major crimp in the savings and income of the partners. Whether it was because she didn’t have enough spending money or because she did not want to be associated with the cheats, one of the partner’s wives filed for divorce and in the community property state, she ended up with a quarter of the business, which she insisted on taking in cash.

This resulted in the company going bankrupt. And it all could have been avoided for $10,000.

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