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December 16, 2010 | HR Compliance | Posted by Howard Lennie

Wage Theft: A Two-Way Street? Or is it Three?

There has been a lot of recent Internet coverage on the subject of wage theft. Just some of the headlines include: “Paterson signs Wage Theft Protection Act”, “Wage Theft: Thou Shalt Not Steal From Your Workers”, “Workers Rebuilding New Orleans Face Rampant Wage Theft”. Even a quick search of YouTube shows over 200 results for videos related to wage theft. It’s an important topic to workers and employers alike.

Most of the stories tell of employers who “steal wages and overtime” from their employees by misappropriating tips, asking people to work off the clock or not paying minimum or living wages.

The reader is left with the impression that wage theft is strictly an employer misdeed and that employers are conniving miscreants who do not want to fairly pay workers.

“Our nation’s workers deserve full and fair compensation, and this Administration is committed to ensuring that they receive it,” said Hilda L. Solis, U.S. Secretary of Labor, in a recent press release. A lot of employers agree and pay workers their due wage. The Department of Labor’s (DOL) Spring 2010 Regulatory Agenda Narrative confirms this belief.  “Fortunately, many employers and other regulated entities have a culture of compliance. Their ordinary, day-to-day business practices include protecting workers against safety and health hazards, assuring workers benefits and family leave, and paying workers the wages and overtime to which they are entitled, among other aspects of "good jobs." Like the millions of ordinary citizens who pay their income taxes every year without ever coming into contact with the Internal Revenue Service, these compliant employers and other regulated entities should be congratulated for their responsible behavior. No government intervention in their workplaces is required to achieve compliance.”

Yet there is another form of wage theft gets little attention in today’s employee-friendly regulatory environment. Employee wage theft has become rampant within the US. A quick search of headlines across Google yeilds almost two million results.  A very common form of employee wage theft, called buddy punching, is just as illegal and unfortunate as the well-publicized employer wage theft.

What’s interesting is the chasm between the recourse available to the respective victims. When an employer discovers wage theft, their recourse is to dismiss the employee without any real opportunity to recoup the lost wages. Rare is the case that the law becomes involved. However, when an employee claims wage theft, they can file for class action status and cost the employer double damages, fines and lawyer fees, the total cost of which can potentially run into the millions of dollars in high profile cases.

And there may be a third form of wage theft that does more harm to the economy by removing money for reinvestment. As irresponsible as a wage-stealing employer or employee is, the settlements of large lawsuits have far greater consequences when money is siphoned out of local economies when legal fees are paid to out of state law firms and fines are collected into federal coffers. The result is an extension of unemployment because of lost opportunities to create jobs.

Employers who victimize workers should be punished for their misdeeds. But the painting of the entire business community with broad strokes colored by a small percentage of toxic employers perpetuates a bad economic environment.

Implementing a time and attendance software with biometric data collection can help economic recovery by eliminating wage theft in all its forms. It stores an accurate record of time punches from which employees can be fully and fairly paid and and shows clear documentation of compliance. Both of which employers can have on hand to greet plaintiff lawyers or investigators from the DOL when they come knocking on the door.