Can US employers claim damages from former ‘Time Theft’ employees?

varsha sarkar

July 26, 2023

2:13 pm

The topic of whether U.S. businesses might similarly utilise electronic monitoring to persuade courts to award them damages is raised by the instance of a Canadian business that successfully recovered damages in court from a former employee accused of “time theft.” Several legal authorities state that’s typically impossible, yet one lawyer claims American employers can do that.

AI-Based Software is Involved in a Canadian Case

According to CBS News, a former accountant at the Vancouver Island, British Columbia, accounting business Reach CPA was sentenced to pay back her former employer for time theft after tracking software revealed she had carried out personal duties during billed hours. After she filed a lawsuit alleging that she was unlawfully terminated and that the employer owed her overdue salary and severance pay, the company countersued her for time theft.

Reach CPA stated, “We value the privacy of our staff.” “We also want to ensure that they have the equipment necessary to complete the task correctly and under minimal stress. TimeCamp software was recommended to the former employee after she indicated difficulty keeping accurate time records.

TimeCamp is a management tool powered by artificial intelligence that tracks how a computer is utilised, according to Reach CPA. Only a small number of employees utilise this program, and it is not essential for our remote workers, according to the company.

According to Zachary Busey, an attorney with Baker Donelson in Memphis, Tennessee, this kind of counterclaim by an employer “would not get very far in the U.S.”

When it comes to disputes over working hours and salary, employment regulations in the U.S. typically give the employee the benefit of the doubt. Although it is rarely a justification for recouping salary or other payments from an employee, “wasting business time is sometimes a very defensible cause for an adverse employment action, including termination.”

Nicole Truso, an attorney with Faegre Drinker in Minneapolis, agreed that there is not a straightforward mechanism for recovering time theft under U.S. law, apart from a formal lawsuit.

Many states have strict limitations on employers deducting from an employee’s pay, she noted: “Even in a case where an employee was overpaid based on time theft or timesheet fraud, most state labour agencies disfavour self-help mechanisms that employers have at their disposal to deprive employees of their wages.”

According to Truso, estimating how much an employee overpaid using only electronic monitoring might be challenging.

“An employee may easily claim they were performing an activity connected to their job while using their work computer or phone,” “An employer runs the danger of an employee claim for unpaid wages under federal and state law, which can come with hefty fines, without a formal judgement that the employee was not entitled to pay for the period worked.”

Nonetheless, David Barron, a lawyer from Houston’s Cozen O’Connor, asserted that even in the United States, companies could demand restitution from a terminated employee for time theft. He said that a variety of legal theories, including as conversion, fraud, and in some places, civil theft acts, would be applicable.

Giving notice to employees

Employers that electronically monitor workers should provide reasonable notice to employees. A lawsuit to recover damages for time theft might be likely to succeed when the former employee owed a duty of loyalty to the employer, such as a C-suite employee, Busey said. An employer lawsuit alleging time theft could also prevail when the employee submitted reimbursements or charged an employer for personal time.

“Depending on the facts, an employer could also file a criminal complaint for theft,” Barron said. “Each case is different, and employers should consider whether simply terminating the employee is adequate, or if spending the time and money to pursue additional relief makes good business sense. Typically, the greater the amount of theft, the more likely an employer would consider taking legal action beyond termination.”

varsha sarkar

July 26, 2023

2:13 pm

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