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April 09, 2004
Newspaper: Managers Illegally Alter Time Cards
"Time shaving," or the illegal doctoring of hourly employees' time records, is far more prevalent than most Americans believe, according to compensation experts interviewed by The New York Times.

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The computer age makes time shaving easy. In the punch-card era, a manager would have had to conspire with payroll clerks or accountants to manipulate records. Now, he or she can act alone, with just a few keystokes.

Nevertheless, time shaving has spurred a growing number of lawsuits and settlements against a wide range of businesses. For example:

  • Workers have sued Family Dollar, a discount-retail chain, and Pep Boys, the auto parts and repair chain, accusing managers of deleting hours.

  • A jury found that Taco Bell managers in Oregon 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 U.S. 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.

"There are a lot of incentives for store managers to cut costs in illegal ways," said David Lewin, a professor of management who teaches a course on compensation at the University of California, Los Angeles. "You hope that would be contrary to company practices, but sometimes these practices become so ingrained that they become the dominant practice."

Compensation experts told the Times that many managers fear losing their jobs if they fail to keep costs down.

"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."

Moreover, an increasing part of managers' 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."

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