As cryptocurrencies like Bitcoin, Litecoin and Etherium grow in the public consciousness and become more relevant in everyday life, New York employers may have incentives to pay their employees in crypto. Such an action might bring cryptocurrencies further into everyday use and help employers attract tech-savvy personnel. Entrepreneurs and business owners interested in paying employees in this way might run afoul of wage and hour regulations, however. Employers should be aware of the potential pitfalls of paying wages in other than U.S. currency.
The Fair Labor Standards Act governs wage-related issues like overtime pay and minimum wage. It’s a federal law that requires payment in cash or in an instrument that can be converted to cash. In the past, the U.S. Department of Labor has allowed payments to be made in foreign currency as long as such payments meet the requirements of the FLSA when their value is converted to U.S. dollars. In addressing the issue of payments made in foreign currency, the DOL has opined that the foreign currency compensation should be valued at the rate of exchange current when payment is made.
The Department of Labor has not weighed in on the issue of cryptocurrency payments, but problems may arise for employers based merely on the variability of crypto values from day to day. Bitcoin, for example, lost nearly 30 percent of its value over the course of two days in May 2017 and rose in value by more than $1,000 on November 27, 2017. This volatility may cause problems for employers who are required to meet minimum wage and overtime payment requirements as the value of crypto payments evaluated as of the date payment is made.
Another pitfall is the potential treatment of cryptocurrencies as securities. Employers who are considering using crypto to pay employees may want to consult an attorney. A professional attorney with experience in employment law may be able to help by reviewing the relevant wage & hour laws, agency opinions and regulations.
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