The Rise of Digital Wage Theft

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The days of punching a manual time-clock when you arrive at work are all but over. Digital time tracking systems now use things like facial recognition to monitor when a worker arrives and has finished for the day. However, the software that’s replaced the 19th century time-clock technology is helping some employers steal workers’ hourly pay.

This so-called wage theft is a problem for many healthcare workers, drivers, and food-service and factory employees, according to a study by Elizabeth Tippett, associate professor at the University of Oregon School of Law, published in the American Business Law Journal. An earlier report from the Economic Policy Institute found that wage theft in the US may account for more than $15 billion each year.

How digital wage theft works

Tippett’s study of 330 cases litigated in state and federal courts found three main types of digital wage theft:

  • Rounding, which happens when the software is set to alter an employee’s starting and finishing times to pre-defined increments
  • Automatic break deductions, which deduct preset time increments (for lunch or other breaks) from pay, regardless of whether the break was taken
  • Time shaving, which takes place when managers alter time records to pare down the number of hours worked

Read more about this study in this article by John Detrixhe.