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For example imagine a company in Washington that needs a temporary building for its workers to live in during the summer. Instead of bothering with permits, they rapidly construct a dormitory for their employees which is a violation punishable for up to $500/day. They keep the building up for 3 months and then pay a $45k penalty to the state government. For their purposes this is cheaper than getting those employees hotel rooms or waiting for the permits to arrive.

Is there any issue with the company’s management officially deciding to ignore the permit system and just pay the fine? Or in other words, can they be charged with anything besides the known $45k penalty for openly deciding to break the law?

In more general terms, I’m trying to understand if the concept of “treat fines as a convenience fee” applies to businesses as well. I.e. it is commonly said that smoking in hotels is allowed, you just have to pay a $250 fee to do it.

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  • Smoking in hotels is a tort, not a crime.
    – Trish
    Commented Feb 24, 2021 at 8:35
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    In contract law there is a concept called "efficient breach", in tort law the same doctrine by and large does not apply. It isn't clear that either of these areas of law are within the scope of the question which addresses statutory, quasi-criminal penalties in its example.
    – ohwilleke
    Commented Feb 24, 2021 at 9:05
  • Yes, just as with an efficient breach of contract, the law is the law and the punishment is the punishment. The law imposes penalties, but it generally can't do anything about the person who is willing to pay the maximum penalty to obtain some benefit. Willfulness might factor into what that maximum is, but the government will eventually hit a ceiling, and a potential defendant can decide whether it is or is not a fair price to pay. Obviously this calculation is separate from what one should do.
    – bdb484
    Commented Feb 24, 2021 at 19:32
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    Note, though, that while the penalty for a business is generally limited to a monetary fine, there is also the possibility of jail time for individual actors within the company. That may radically alter the calculus.
    – bdb484
    Commented Feb 24, 2021 at 19:33
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    @JonathanReez Under section 103.8 that you linked above, jail time up to 365 days per violation is possible.
    – David Siegel
    Commented Feb 24, 2021 at 21:06

5 Answers 5

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There are often additional legal measures that the authorities can take to make it more expensive and troublesome for a company that acts in the way described in the question, treating a fine as merely a cost of doing business, or as a "convenience fee".

For example, consider the Seattle Building code linked in the question. While section 103.5 authorizes a penalty of up to $500 per day, it is on a per-violation basis. It is likely that a structure constructed with no permits at all would involved many code violations, at $500/day for each.

Under section 103.3 and subsections the building official may issue a stop work order, halting work and the building, and requiring all persons to refrain from continuing such work until the violations are corrected. Under section 103.4 and subsections the building official may issue a notice of occupancy violation if a structure is occupied contrary to the provisions of the code. Under 103.4.2 this imposes a requirement on "Any person occupying the building or structure" to "discontinue occupancy" of the building until the violation is cured. This would impose an obligation with potential fines, on the individual employees housed in the building.

Under section 103.8 Any person who "violates or fails to comply with any notice of violation" can be charged with a criminal offense. On conviction, such a person can be fined up to $5,000 or imprisoned for up to 365 days, or both, for each violation. Each day that a violation continues constitutes a separate offense, and separate fines and imprisonment could be imposed for each such day. This could place individual corporate officials and responsible employees in line for significant criminal penalties.

Further under section 103.9 the court may issue an injunction to deal with any violations as needed.

In short, the law often has a variety of tools to use, when there is blatant defiance of a requirement, which may make such defiance more expensive and onerous than it would first seem. The details will vary, and the above is merely an example.

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Yes, but there is a risk

If a company persistently violates the law, the regulator can go to court to get an injunction for them and their agents to stop. If they don’t they are now in contempt of court and the fines for that are much steeper. Also, the people in contempt can be jailed until the contempt stops.

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    and then there's the fact that in most cases, there actually are prison times available for criminal laws.
    – Trish
    Commented Feb 24, 2021 at 20:36
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Can they be charged with anything besides the known $100k penalty for openly deciding to break the law?

The answer may depend on US state-specific legislation but In - which is also a Common Law jurisdiction - the demolition of a listed building without proper authorisation is an offence under s.9 of the Planning (Listed Buildings and Conservation Areas) Act 1990

(1) If a person contravenes section 7 [ie demolish, alter etc without authorisation] he shall be guilty of an offence.

...

(4) A person who is guilty of an offence under this section shall be liable—

(a) on summary conviction, to imprisonment for a term not exceeding six months or a fine, or both; or

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.

(5) In determining the amount of any fine to be imposed on a person convicted of an offence under this section, the court shall in particular have regard to any financial benefit which has accrued or appears likely to accrue to him in consequence of the offence.

It will depend on the circumstances and the evidence, but one potential scenario is for both the company officials and the company itself (as a separate legal entity) to be prosecuted - obviously a company cannot be sentenced to imprisonment.

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  • My question is only about the US and about penalties that only carry a monetary penalty on their own.
    – JonathanReez
    Commented Feb 24, 2021 at 7:31
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    @JonathanReez there are only very very few crimes that don't have the chance of any jailtime. Most statutes in criminal law prescribe "Fine of X or imprisonment for Y"
    – Trish
    Commented Feb 24, 2021 at 7:54
  • @JonathanReez To assist others to offer a more focused answer, do you have any particular state in mind?
    – user35069
    Commented Feb 24, 2021 at 8:05
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    @RockApe done, added a better example
    – JonathanReez
    Commented Feb 24, 2021 at 8:15
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    @JonathanReez Thanks. Although my answer now bears no resemblance to your current question, I'll leave it up and use this comment to explain the disparity and point users to its original version in the edit history.
    – user35069
    Commented Feb 24, 2021 at 19:21
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You want to construct the building without the necessary entitlements... planning approval, zoning compliance or variance, concessions such as roadbuilding or traffic lights, building plan, work permits etc.

You're overlooking some costs there.

Right off the bat is the cost of constructing the structure.

Mind you, when the dust settles, the municipality will force it to tear the building down after obtaining a permit to tear it down, so there'll be that cost too.

Forcing a scofflaw to tear down an unauthorized structure/improvement is a standard weapon in municipalities' arsenal.

So the construction cost of the structure will be a total loss, as well as the demolition costs.

And some occupancy issues

Regardless, the government is not going to issue the building an occupancy permit. No occupancy permit means they can prohibit, well, occupancy. And they can use the government jackboot (police) to physically evict any refuseniks (not that too many employees will want to be arrested for the company's cost-cutting measure.)

And some construction issues

The next problem is, who's going to build it? A company can't just smite the ground and a building pops up.* Somebody has to build it. Unless the company has an internal core competency at that, they'll be going to a contractor. Licensed contractors won't want to touch the job because it hasn't been permitted.

Most likely, the contractor will simply quote the job inclusive of the entitlement costs... and the contractor will hand over keys to a building for which they (the contractor) pulled the permits.

* Okay, yeah, companies do have the ability to 'smite the ground and make a building pop up' in the sense that the Board can allocate a budget and assign a project manager in literally a minute who just hands it off to a General Contractor... but a ton of stuff happens behind the curtain, including design, entitlements (establishing right-to-build, which your premise excludes), contracting, and the contractors look to those entitlements.

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  • I probably should've used a smaller example. I.e. something like "instead of bothering with a parking permit lets just pay the fine if the parking inspector catches our cars parking". Small, but deliberate plan to constantly violate the law.
    – JonathanReez
    Commented Feb 24, 2021 at 23:58
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    @JonathanReez Oh yes, that would've been much better. Not least, it's a real thing. (delivery trucks, Google buses, US consular staff vs London tolls, etc.)
    – Harper - Reinstate Monica
    Commented Feb 25, 2021 at 0:05
  • In addition to the various penalties mentioned in this and other answers, egregious violations of the law may put a contractor's license at risk.
    – Brian
    Commented Feb 25, 2021 at 1:17
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Don't treat fines as "Fees"

Treating fines as fees is a complete misunderstanding of the correctional and legal system. The difference between fines and fees is that a fee is a payment to a (usually nongovernment entity) entity based on service. Fines get bigger and may (Sometimes) accumulate into a jail-time sentence. So no, you can't treat a fine as a fee.

It may seem logical that you can treat a fine as a fee but I strongly recommend against that practice.

Punishments

if you're the owner or CEO of a Fortune 500 company and the government realizes what you are doing, The situation could end with the CEO and other aiders and abbeters getting arrested

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    While I would agree that it is wrong to treat a fine as merely a cost of doing business, this answer does not clearly indicate the consequences, if any, of doing so.
    – David Siegel
    Commented Feb 24, 2021 at 18:14
  • @DavidSiegel thanks for pointing out a mistake for me
    – Tardy
    Commented Feb 24, 2021 at 18:20
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    "The situation could end with the CEO and other aiders and abbeters getting arrested": On what charge?
    – Nate Eldredge
    Commented Feb 24, 2021 at 21:16

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