James Keegan, 65, and Alan Barraclough, 51, were bosses at Keebar Construction and were in charge of converting the disused Joplings department store site into a student accommodation and retail space in Sunderland.
However, construction was halted in 2017 after it was found that a number of workers had been exposed to the asbestos risk following an inspection from theHealth and Safety Executive.
Newcastle Crown Court also heard that an expert described it as being one of the worst cases he had dealt relating to uncontrolled asbestos.
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Both men denied the charges but were convicted after a trial failing to ensure the health and safety of employees and failing to ensure the health and safety of non-employees.
Asbestos is known to cause respiratory illnesses over time including cancer as fibres can get trapped in the lungs when they are breathed in.
The court heard that the pair didn't take the appropriate steps or actions to protect employees, who included their own sons.
Judge Stephen Earl said: "Following a ten day trial both defendants were convicted.
"These charges arose out of construction work carried out on the former Joplings store in Sunderland with the intent to convert it into student living and retail space."
The judge said that he was satisfied that employees working on the site would have been exposed to a "significant health and safety risk."
In mitigation, Ian West told court that Keegan, of Larkspur Road, Marton, Middlesbrough, had spent very little time at the site during the initial stages as his mother was ill.
Mr West also said that the workers placed at risk were Keegan's own sons, who worked for the family business.
He argued that he would never have placed his own family members at risk had he known there was such a level of asbestos in the building.
However, the judge argued that even by being present when they were, they should have been aware of what was happening.
The judge said: "These defendants had to run the site at all relevant times as they assumed the management of these risks on a daily basis as the site carried out significant work.
"I'm of the view that only a custodial sentence is appropriate and it would be wholly wrong for me to consider imposing a community order for the purpose of this case.
"Each defendant saw evidence of asbestos in the building and knew of the risks."
Jonathan Harley, for Barraclough, of Hutton Lane in Guisborough, North Yorkshire, told the court his client had also sent his son to the site.
The court also heard Barraclough was a working man with a good track record.
The judge sentenced both to 14 months imprisonment, suspended for two years.
They were also banned from being the director of any company for ten years.
The judge also ordered them to undertake 120 hours of community service and to pay costs of just over £44,000 each.