Sunday, April 04, 2004

Deleting time records to reduce overtime pay

Altering of Worker Time Cards Spurs Growing Number of Suits
... Experts on compensation say that the illegal doctoring of hourly employees' time records is far more prevalent than most Americans believe. The practice, commonly called shaving time, is easily done and hard to detect — a simple matter of computer keystrokes — and has spurred a growing number of lawsuits and settlements against a wide range of businesses.

Workers have sued Family Dollar and Pep Boys, the auto parts and repair chain, accusing managers of deleting hours. A jury found that Taco Bell managers in Oregon had routinely erased workers' time. More than a dozen former Wal-Mart employees said in interviews and depositions that managers had altered time records to shortchange employees. The Department of Labor recently reached two back-pay settlements with Kinko's photocopy centers, totaling $56,600, after finding that managers in Ithaca, N.Y., and Hyannis, Mass., had erased time for 13 employees.

,,,'A lot of this is that district managers might fire you as soon as look at you,' said William Rutzick, a lawyer who reached a $1.5 million settlement with Taco Bell last year after a jury found the chain's managers guilty of erasing time and requiring off-the-clock work. 'The store managers have a toehold in the lower middle class. They're being paid $20,000, $30,000. They're in management. They get medical. They have no job security at all, and they want to keep their toehold in the lower middle class, and they'll often do whatever is necessary to do it.'

Another reason managers shave time, experts say, is that an increasing part of their compensation comes in bonuses based on minimizing costs or maximizing profits.

'The pressures are just unbelievable to control costs and improve productivity,' said George Milkovich, a longtime Cornell University professor of industrial relations and co-author of the leading textbook on compensation. 'All this manipulation of payroll may be the unintended consequence of increasing the emphasis on bonuses.'

If you incent people strongly by strong rewards and strong punishments (termination), they will deliver -- by whatever means necessary.

We have shown this for elected officials (since 1776), for senior executives (stock options), Texas school principals (The Texan solution to graduation rates -- make the low end disappear), and now local management of various service businesses.

Franklin, Jefferson et al understood this problem quite well. Knowing the inevitability of corruption, they set up the competing bodies of the executive, legislative and judicial branches. (Only recently have the judicial and legislative been coopted by the executive ... but the authors knew no solution was perfect.) Similarly, in the past workers had unions, which fought with management. Now workers have the protection of ... Hmm. What protection do they have again?

The technology angle is interesting. A lot of fraud is easier when you leave paper behind. That's why so many people want paper trails in the voting booth.

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