Automating Wage Theft: A Crime Against Families and Community Made Easy

Posted by National Alliance for Fair Contracting on

CAROLE LEVINE | June 1, 2018

We probably should not be surprised that an industry has been built to support “rounding down” the wages of low paid workers, but there’s evidently a large market for it. Perhaps United Way’s new ALICE initiative should pay attention to this kind of corporate behavior.

It’s all pretty simple. You clock into your job, and the system is set to round the time up or down (sometimes in your favor, sometimes not) if you are a few minutes early or you stay late. The system is set to deduct time for your breaks and your lunch, even if you are not able to take that time because of a crisis or a demanding work project. You don’t get paid for that time worked. And now we know that companies are deducting these hours purposefully.

University of Oregon Associate Professor of Law Elizabeth C. Tippett documented this first and co-authored a 2017 study on timekeeping software and a follow-up article on wage theft. Now, she writes in The Conversation about how employers are using software for the purpose of “wage theft” and are cheating workers out of millions of dollars of wages they have worked and should have been paid for.

“Wage theft” is a shorthand term that refers to situations in which someone isn’t paid for the work. In its simplest form, it might consist of a manager instructing employees to work off the clock. Or a company refusing to pay for overtime hours.

A report from the Economic Policy Institute estimated that employees lose $15 billion to wage theft every year, more than all of the property crime in the United States put together.

That report, however, focused on workers being paid less than the federal or state minimum wage. Our 2017 study, which was based on promotional materials, employer policies and YouTube videos, suggested that companies can now use software to avoid paying all sorts of hourly workers.

Tippett focuses on two main areas of digital wage theft by employers: rounding and automatic break deduction. She did a search to see if there were legal cases brought to reclaim lost wages to these two causes, expecting to find only a few. To her surprise, she found hundreds and hundreds of legal opinions. To quote her from the article, “The study’s methodology does not support quantitative inferences about how often digital wage theft occurs or how much money US workers have lost to these practices over time. But what I can say is that this is not a theoretical problem. Real workers have lost real money to these practices.”

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Prosecutors Treating ‘Wage Theft’ as a Crime in These States

Posted by National Alliance for Fair Contracting on

June 26, 2018
By Chris Opfer

When a business doesn’t pay workers minimum wages or overtime, it usually risks a government investigation or private lawsuit. In some states, companies and their officers may also be looking at criminal charges that could land them behind bars.

“We prosecute companies that have institutionalized theft as a business model,” Manhattan Assistant District Attorney Diana Florence said.

Prosecutors in New York and California are starting to view wage violations as an actual crime more often, as opposed to a matter for civil courts. Their approach could be a model for other states looking to beef up enforcement in an era when the federal wage-and-hour watchdog is shifting its emphasis to voluntary compliance.

Also changing the landscape are a recent U.S. Supreme Court decision that’s likely to increase private arbitration and an immigration crackdown that may make some workers less likely to come forward with complaints.

“Companies take criminal cases more seriously,” Rena Steinzor, a University of Maryland professor who wrote a book about corporate criminal prosecutions, told Bloomberg Law. “If you’re an executive and the cops come to your door, you don’t soon forget it.”

Prosecutors are focusing on particular industries-such as construction, restaurants, janitorial services, garment makers, and home care providers-where they say low wages, temporary job assignments, and businesses that pop up and shut down with little notice leave workers especially vulnerable to abuse. Prosecutors are also packaging “wage theft” investigations as part of a wider look that encompasses health and safety violations, payroll tax fraud, and human trafficking.

Defense lawyers say the threat of criminal prosecution for what has largely been handled in civil courts may give prosecutors too much leverage.

“They can come in with these outrageous demands knowing that there’s no basis in reality,” Allan Bahn, a partner at FordHarrison in New York, told Bloomberg Law. “At times, they can hold” criminal charges “over a contractor and say, ‘If you don’t settle, we’re going to refer you for prosecution.'”

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