Study: Wage theft increases when employers fall short on forecasts

On Behalf of | Oct 6, 2021 | Wage And Hour Violations

Tough times call for tough measures. However, that never means cheating employees out of their hard-earned wages.

Unfortunately, that seems to be the “default” option for a lot of companies when they’re desperate to make their financial forecasts a reality.

A new study

According to research published by the Review of Accounting Studies, wage theft becomes prevalent among bigger public companies when they are barely able to meet their earnings forecasts. It’s less likely to happen when a company can easily meet their projections — and when they’re clearly going to miss those projections by a mile.

In other words, the closer a company is to crossing that projected earnings “finish line,” the more likely management is to engage in wage theft to try to help the company along. When management knows they can’t meet the projection, they don’t even try. When they know they can meet the projection, they don’t need to cheat.

What sort of behavior do companies in this position resort to? Consider these examples:

  • Stealing tips, withholding bonuses and keeping final paychecks
  • Averaging weekly hours over a pay period to avoid overtime
  • Pushing employees to work through paid breaks and lunches
  • Forcing employees to perform some prep or clean-up work off the clock
  • Classifying actual employees as independent contractors

Even a few dollars shaved off each employee’s paycheck every two weeks can make a big difference to a company’s bottom line. If you have the sense that your bosses are worried about meeting their projected goals, be watchful. Wage theft can happen to anybody.

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