Lipsky Lowe LLP gives an overview of digital wage theft in the workplace.

In Focus: Digital Wage Theft

By Douglas Lipsky

In the digital age, the use of digital time-tracking is becoming increasingly common. This technology is designed to replace clocks and time cards and improve the ability of employers to track employee time. Conversely, when an employee’s working hours are converted to data that is managed by computer software, that data can be manipulated with a few simple keystrokes, resulting in digital wage theft.

Common Wage and Hour Violations

Wage theft has been a problem long before the digital age and continues to be pervasive in certain industries, such as hospitality. In fact, tipped workers are at a high risk of wage theft, which is a violation of the Fair Labor Standards Act (FLSA) and New York’s Wage Theft Prevention Act (WTPA). Examples of wage theft include:

  • Minimum wage violations
  • Failure to pay overtime
  • “Off the clock” work
  • Illegal deductions

Nonetheless, employees are entitled to compensation for all work performed. Moreover, employers are prohibited from stealing wages from their workers and must disclose their basis for pay at the time of hiring. In any event, while digital technology has facilitated employee time tracking, workers remain susceptible to wage theft.

How does digital wage theft occur?

Digital time tracking is designed to prevent employee time theft, however, the technology can also be used to engage in the wage and hour violations mentioned above. Common digital wage theft tactics include:

  • Rounding — Under the FLSA, employers that track employee hours in 15-minute increments are permitted to round to the nearest quarter-hour. Time from 1 to 7 minutes may be rounded down and not counted as time worked, while employee time from 8 to 14 minutes must be rounded up and counted as a quarter-hour. Digital wage theft can occur when an employer uses the software to alter an employee’s start and end times (e.g. altering a worker’s start time from 9:00 am to 9:08 am).

  • Automatic Break Deductions — This form of digital wage theft occurs when an employee’s break time is automatically deducted, regardless of whether the employee used all of the allocated time or didn’t take a break at all. As an example, the digital time-tracking system could automatically deduct a 30-minute lunch break, even if the employee worked through lunch or only took 15 minutes. 
  • Time Shaving — In the past, timekeeping records have been doctored when employers manually altered timesheets. While electronic timekeeping systems are designed to improve accuracy, they can also be manipulated to show employees working fewer hours. 


What can I do If my employer steals my wages?

If you believe your employer is engaging in wage theft, you can file a wage and hour claim with the Department of Labor. Given that you may not be the only victim of this type of workplace larceny, however, it is wise to consult an experienced employment law attorney. One effective strategy is to file a class-action lawsuit, in which the claims of a number of affected workers can be combined into a single legal action. If you have a valid wage and hour claim, you may be able to recover back pay, liquidated damages and attorney fees. 

About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.