Dunedin taxi drivers have been left nearly $100,000 out of pocket after their company treated them as contractors, not employees.
The Employment Relations Authority determined two former Southern Taxis directors are personally liable for their employee's loss, saying it was wilful blindness.
Ronald and Maureen Grant failed to provide the correct employment entitlements for four drivers.
The Grants claim they didn't know the law had been breached by failing to provide correct employment entitlements.
But Labour Inspectorate regional manager Jeanie Borsboom said there were no excuses for getting this wrong, calling it a clear case of mislabelling.
"They provided the four drivers with vehicles, payslips, deducted PAYE and treated them differently from other contractor drivers employed by the business. At the same time, they failed to keep accurate records, pay at least the minimum wage and holiday pay entitlements and made unlawful deductions," Ms Borsboom said.
"This decision shows that employers cannot claim lack of knowledge in circumstances where they should have turned their minds to potential breaches and that company directors cannot hide behind the corporate veil to reduce their liability."
An earlier determination ordered Southern Taxis to pay more than $97,000 but the company no longer has the ability to pay as its assets have been sold.
The next step will be for the Authority to determine whether the company or the Grants are liable for penalties.
"There are just no excuses for employers to get this wrong or, worse, intentionally rort employees of their rights," she said.
Ms Borsboom recommended employers contact the Employment New Zealand Service Centre on 0800209020, or check the employment.govt.nz website if they had any confusion about the differences between contractors and employees.