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Digital Wage Theft

An employee is entitled to receive compensation for all the work that they've completed. One way that an employer violates this right is through wage theft, a form of larceny in the workplace. It becomes digital when it's achieved through means such as employee time-tracking software. This article discusses digital wage theft including information on the following:

  • How digital wage theft differs from ordinary wage theft,
  • The various tactics that employers use against employees, and
  • How victims of digital wage theft can get relief.

Employers are prohibited from taking their employees' earnings and are required to disclose the basis for their pay at the time of hiring. When an employer commits wage theft against an employee, they've committed a violation of the Fair Labor Standards Act (FLSA). The following are examples of wage theft:

  • Minimum wage violations;
  • Failure to pay overtime wages;
  • Requiring "off the clock" work;
  • Illegal deductions; or
  • No payment to the employee.

On the other side of the equation, employees can also cheat their employers by taking longer breaks or falsifying time for a co-worker; it's easier with manual time cards and clocks. However, the increase of time keeping devices such as facial recognition and digital time tracking software have ushered in a new era in employee time tracking.

Digital Time Tracking

With digital time tracking, an employee's working hours become electronic data and a software program is used to manage the data even before it goes to the payroll department, making it easier to alter or corrupt, undetected, with just a few keystrokes. Thus, the technology that employers use to prevent employees from making time violations can also be used to facilitate digital wage theft.

Digital Wage Theft Tactics

The same wage theft violations that have traditionally plagued employees can also be carried out in digital form with digital time tracking technology. Employers could digitally steal employees' wages through the following methods:

  • Rounding
  • Automatic break deductions
  • Time shaving


Rounding is the practice of setting software to alter the employee's start and end times to pre-defined increments. For instance, a company that rounds times to a fifteen-minute increment records a worker who arrives onsite at 8:52 with a 9:00 arrival time. This can be problematic because the rounding doesn't reflect the actual time worked and can be beneficial to the employer. If the employee tries to level the playing field by arriving late, then they could be subject to discipline or termination for tardiness.

Automatic Break Deductions

This occurs when an employee's time is automatically deducted for a scheduled break regardless of whether the employee takes the full time allocated for the break or doesn't take the break at all. For example, the time system could automatically deduct time for a scheduled 30-minute meal break, even if the employee doesn't take their lunch that day or only takes 15 minutes.

Time Shaving

In efforts to reduce costs and maximize profits, some employers may doctor employee time keeping records to show employees working less hours. In the past, managers conspired with accountants or manually altered time sheets, but computerized time keeping systems has made time shaving much less detectable that it often takes a forensic expert to uncover the conduct.

Filing a Complaint

Because states differ regarding how employers should report pay to their employees, sometimes employees might be unaware that there's an issue with their wages. The laws and resources also vary from state to state. In 2010, a Florida county became the first in the country to enact a wage theft ordinance. Many other states and municipalities followed suit with similar laws.

Obtaining relief for this issue can begin with filing a complaint against your employer. You can initiate the process with a report to the HR department. If that doesn't resolve the problem, you can report the violation to the local office of the U.S. Department of Labor, the agency that conducts investigations into labor law violations. The law forbids your employer from taking any retaliatory actions against you after complaining about wage violations.

Class Action Lawsuits

If your employer has stolen your wages, it's likely that it has also happened to your co-workers. Depending on the circumstances, it may be possible to initiate a class action lawsuit against your employer. You can sue for unpaid wages and damages.

Experienced Digital Wage Theft? Seek an Attorney's Help

Although it's mainly associated with workers in the medical, retail, or service industries, anyone can become a victim of digital wage theft. If you've suffered this violation, assert your rights and protect your pay with the help of a knowledgeable wage and hour attorney.

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