Once we encountered a business that was engaged in baking. The owner of the enterprise, let's call him a baker, was a difficult person to communicate with; he was very quick-tempered and had problems with alcohol.  

His personality quirks caused constant conflicts with everyone around him, including employees.  

The moment we started due diligence, we saw that he was making payments to a lawyer. Then we asked him: “What is this for?”.  He replied: “I have a case in court. One of my former employees is demanding that I pay him for overtime. But I won't pay him anything.”  

Leaving aside how these things are handled during the closing of the deal (he paid anyway and it all fell on his shoulders), what consequences did all this have for him?  

  1. The fact that he still had to pay this money, plus pay legal costs, plus pay two lawyers: his own and the one who represented the interests of his former employee (since he lost the case).  
  1. Investors immediately jumped in and said that “There may be underestimated wage costs because he refuses to pay earned overtime wages. There may be other claims."  

Even though the deal closed, it took much longer and the owner lost money in the process.  

If you're underpaying employees, then it's a problem between you, the employee, and the State Department of Labor.  But taxes are still charged on the salary, and not paying the extra taxes due can cause difficult potential questions to arise when any tax discrepancies are revealed. 

The reasons are the same.  

Как американские бизнесмены экономят на сотрудниках 3

This man (the baker) never did anything but knead the dough and bake. He did not study, and he did not know how to keep records (this is not directly related to this matter, but his accounting was very confusing). Most importantly, he did not have a very good understanding of labor laws, and as a result, he didn't realize how much not paying them would cost him.  

If the owner knew from the very beginning what it is, if he had passed our CLASS about the basics of US labor law, then he would not have had such illusions, and he would have acted correctly and more efficiently from the very beginning. 

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