Shortly after his election in November 2021, New York City Mayor Eric Adams announced that he would accept his first three paychecks in Bitcoin. On January 20, 2022, the day before his first paycheck from the City was scheduled to arrive, Mayor Adams confirmed that his salary will be automatically converted into Bitcoin and Ethereum via Coinbase—a cryptocurrency exchange—prior to the funds being available to him.
As cryptocurrencies continue to make their way into mainstream consciousness, individuals—even beyond those in the tech sector—have been interested in receiving their pay (or a part of it) in cryptocurrency. This has prompted an increasing number of employers to consider, compensating their employees with Bitcoin, Ethereum, or other cryptocurrencies. While a cryptocurrency compensation scheme may help spark everyday usage of these currencies and attract tech-savvy talent to a company or organization, it may also place the employer at risk of wage and hour violations, and implicate additional regulatory regimes such as federal securities laws. Although lawsuits on such “crypto-compensation” issues have yet to materialize, employers should stay ahead of the curve by protecting themselves against these potential pitfalls.
Failing to Pay Employees in U.S. Currency or its Equivalent
Employers may violate both federal and state law by paying their employees with a non-fiat currency. The federal Fair Labor Standards Act (“FLSA”)—which governs minimum wage, overtime pay,...
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