Is Your Employer Committing Digital Wage Theft?

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Through the combined efforts of the U.S. Department of Labor, State Departments of Labor, and various class action and collective action lawsuits, roughly $3 billion of stolen wages were recovered on behalf of employees between 2017 and 2020. Unfortunately, these recoveries represent a small fraction of the total of stolen wages in the US.

Every year, millions of Americans are victims of wage theft. The perpetrators can be big corporations or small businesses, and the methods these perpetrators use to steal wages vary considerably.This article will explore digital wage theft–a type of wage theft that happens through unscrupulous manipulation of software and technology.If you think you’ve been the victim of digital wage theft, we can help. Contact We Stop Wage Theft to discuss your options.

What Is Digital Wage Theft?

With much of the hourly record-keeping, time tracking, and payroll management administered electronically, a significant amount of wage theft occurs digitally. 

The same technology that makes it easy to track employee time and calculate payroll also makes it easy to alter records. Electronic timekeeping software can automatically round down an employee’s hours, and insert breaks into an employee’s schedule (even when that employee did not take a break).

Examples of Digital Wage Theft

There are three main types of digital wage theft: time shaving, automatic break deductions, and rounding. Let’s look at each in greater detail. 

  1. Time Shaving

Time shaving is the practice of trimming down an employee’s hours as reported on their timesheet. The obvious purpose of this practice is to pay an employee less. However, employers are typically focused on avoiding overtime pay.

If an employer wishes to avoid paying overtime, they may trim excess time over 40 hours per week—even just a few minutes. These small increments of stolen wages add up significantly over time.

  1. Automatic Break Deductions

An employee’s records must accurately reflect the time they spent working. Unfortunately, time tracking software can be used to automatically deduct lunch and other breaks from an employee’s total hours—even when that employee worked through lunch or only used half of their allotted break time.

  1. Rounding Worked Hours Up or Down 

In another misuse of time tracking and employee management software, employers round clock-in and clock-out times to fixed intervals in their favor. 

For example, if you arrived at work and clocked in at 8:50 AM, the system would round your start time to 9:00 AM. Likewise, if you clocked out at 5:10 PM, the system would round your time back to 5:00 PM. In this example, the practice of rounding robs the employee of 20 minutes of pay for that day. 

As with other digital time-shaving practices, these small amounts add up over time and take a significant amount of wages out of workers’ pockets.

Wage Theft Is a Violation of the FLSA

All of these illicit practices violate federal law because the employer (1) did not pay the employee for all time worked, and (2) manipulated their time records. To understand digital wage theft more clearly, let’s look at the federal law protecting workers from wage theft—the Fair Labor Standards Act (FLSA).

What Is the FLSA?

The Fair Labor Standards Act is legislation that protects employees in the US. The FLSA defines federal rules for minimum wages, overtime pay, requirements for keeping accurate wage and hour records, and putting limits on the number of hours children can work. 

The examples of digital wage theft described above violate employers’ legal obligations to keep accurate records regarding their employees. In addition, digital wage theft can lead to overtime pay violations in cases where non-exempt employees (i.e., workers who are paid by the hour), would be entitled to overtime pay if their timekeeping records were accurate.

Do You Think You Have Been the Victim of Digital Wage Theft?

We Stop Wage Theft recommends taking the following steps if you believe you have been the victim of digital wage theft.

Keep All Records, Paystubs, and Communications with Your Employer

It’s imperative that you keep copies of all your employment records. This includes obvious records like paystubs, but it also includes emails, texts, and other records of communications with your employer. Additionally, you should maintain your own separate time records so you have an accurate and trustworthy account of when you actually worked, which you can compare with any potentially falsified records.  

Speak with HR About the Discrepancies in Your Pay

Sometimes employers do make honest mistakes. For example, someone handling payroll may have accidentally set up the time-tracking software incorrectly. 

Reach out to HR about your issues and find out whether they are willing to acknowledge the problem. If it’s merely a clerical error, HR should be willing to remedy the situation. However, if you receive pushback or are ignored by HR, it could mean that your employer is covering up digital wage theft. 

Speak with an Employment Lawyer and Find a Class Action Lawsuit

If speaking with HR proved fruitless, you need to consider taking legal action to get your due compensation. An employment lawyer can help you get informed and prepared legally. If you have experienced wage theft at your employer’s hands, you are likely not alone. Talk to your co-workers and find out whether they have experienced similar problems with payroll. 

We Stop Wage Theft Can Help You Recover Stolen Pay

We Stop Wage Theft is a team of legal professionals dedicated to stopping illegal payroll practices and helping workers bring class-action lawsuits to recover their hard earned compensation. 

Contact us today if you think you have been a victim of digital wage theft.   

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