Academic journal article Yale Journal of Law & Technology

When Timekeeping Software Undermines Compliance

Academic journal article Yale Journal of Law & Technology

When Timekeeping Software Undermines Compliance

Article excerpt

Table of Contents  I. Introduction II. An Overview of Wage and Hour Law III. Methodology IV. Software Features that Undermine Wage and Hoi Laws   A. Timecard Editing Features   B. Computational Shortcuts to Cheating: Reconcile   Functionality   C. Automated Defaults Dominate Manual Overrides:   Automatic Break Deductions   D. Statistical Cheating: Rounding Rules   E. Software Architecture that Inhibits Enforcement: Data   Encoding V. The Influence of Recordkeeping Rules on Software Design   A. Gaps in The FLSA's Recordkeeping Requirements   B. An Alternative Regulatory Environment: DOD Audit   Standards VI. Recommendations for the Department of Labor   A. Improve Data Transparency   B. Scrutinize the Employer's Processes for Maintaining the   Integrity of Time Records   C. Prohibit Rounding VI. Conclusion Appendix: Screenshots of Software Functionality 

I. Introduction

Electronic timekeeping is a ubiquitous feature of the modern workplace. (1) In place of the old punch-card time clock, employees now log onto a computer or mobile device, swipe a radio frequency identification (RFID) badge, scan a fingerprint, or gaze into an iris recognition device. (2) These and similar systems enable employers easily to record employees' hours worked, breaks taken, and other information used to determine compensation. Yet they can also enable employers to deprive employees of earned pay by editing down their hours worked, setting up automatic default rules that shave time, and disguising edits to employees' time records. These actions potentially violate the federal Fair Labor Standards Act (FLSA) and its state and local counterparts. (3) Some software thus creates the means and opportunity for wage theft; without the proper oversight, supervisors driven to minimize labor expenditures in tight budgetary environments supply the cost-cutting motive. (4)

In doing so, supervisors work at cross purposes with the long-term interests of their employer, (5) which is then exposed to the risk of expensive wage and hour litigation. This risk grows the longer the wage theft goes undetected and the more widespread those practices become. Like the recent Wells Fargo scandal, where the company faced enormous fines and bad publicity after a tiny fraction of its employees opened unauthorized accounts for customers, (6) wage theft by a small number of supervisors has the potential to balloon into substantial liability and extensive litigation. An employer caught with questionable records is poorly positioned to defend wage and hour litigation because a court may declare those records "inaccurate" under a 1946 Supreme Court case, Anderson v. Mt. Clemens Pottery Co. (7) Under Mt. Clemens, the court may permit employees to introduce testimonial evidence of their hours worked or rely on representative evidence from a subset of plaintiffs. (8) An "inaccurate" determination also makes courts more likely to impose liquidated damages. (9) We posit that the litigation risk arising from software use (or misuse) may be underestimated or overlooked by employers, who pay little heed to the type of software they are using or the behavioral cues it presents to the user.

In the rush to identify algorithmic methods for finding violations of the FLSA and related wage and hour laws, the government's focus has been on employer data, not on time keeping software that generates the data. (10) We posit that there needs to be greater attention paid to the software that produces the data and the behaviors and incentives of the individuals making and using the software. This article thus considers electronic timekeeping systems through the lens of behavioral compliance, a field that has emerged from the study of behavioral economics, (11) ethics, (12) and organizational and managerial behavior. (13) Behavioral compliance is concerned with people's decision-making and motivations around "cheating"--a term of art referring to unethical behavior, where illegal conduct represents "an especially troubling form of cheating. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.