It would be a civil matter. Were the workers supervised? If yes, did the supervisor point out the problems with the work early on? It is probably easier to pay them for their time and move on. This is more of a business suggestion rather than a legal answer.
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Pay them a fair wage for the work. Be careful hiring people off the street.
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You must pay them for all time worked even if they did a lousy job, unless they are considered independent contractors. In NY state you must pay employees at least minimum wage ($7.25) per hour worked and time and one half for all hours worked over forty (40) in a workweek ($10.86). Failure to pay can result in serious fines and unnecessary legal costs.
As an initial matter, most day laborers are paid of the books, which means that you probably did not withhold the necessary payroll taxes. If they call the department of labor, which costs them nothing, then you are subject to being audited and any misclassified employees will be reported to the IRS, which can impose that you pay all unpaid pay roll taxes and a penalty in the range of 15%-30% of the total. Additionally, under the NY state wage theft act non payment of wages is considered theft and you may be exposed to criminal liability, although it is unlikely a prosecutor would spend resources filing complaint, you never know. If unpaid overtime is at issue, you will be liable for double damages (double the amount) and if you have no record of the time they worked then the presumption is against you. This is only a portion of the liability you face.
If you feel like dealing with any of the above is worth a few hundred dollars, then that is up to you. However, paying them and moving on is a much cleaner way of handling the situation.
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