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Preventing Time-Keeping Fraud Among Staff

The housekeeper who worked at the Long Island home of singers Marc Anthony and Jennifer Lopez alleges that she worked 80 hours per week without overtime pay. The woman worked for Anthony from 2005 until he sold his house in 2017.

The former housekeeper alleges that Anthony owes her for unpaid wages, overtime, and vacation pay. She sued Anthony for $500,000.

Anthony responded by alleging that the housekeeper committed fraud by inflating her timesheets. He said she did not work the number of hours that she claims. He filed court documents in January 2019, denying all allegations made against him in the lawsuit and demanding that the court dismiss the lawsuit. Ryan Naumann "Marc Anthony Accuses Former Maid of Timesheet Fraud, Wants $500K Lawsuit Scrubbed" (Jan. 14, 2019).

Commentary and Checklist

Keeping accurate records of all hours that staff members work is essential to a family employer's efforts to avoid wage and hour violations.

There are many digital time-keeping programs to explore. Many organizations, however, continue to use time cards or sheets to record all hours that a staff member is at work. However, there are opportunities to commit fraud beyond recording hours not actually worked.

"Buddy punching" is a type of wage fraud that occurs when a staff member has a coworker sign in for him or her before the staff person actually arrives or after the staff person has left or stopped working.

A staff person may simply lie about the total number of hours he or she worked, which is easier if staff members self-report their hours. Another type of wage fraud is when staff members are clocked in but not working, or when they take longer-than-allowed breaks without clocking out.

Make sure you know your state's laws concerning break periods. If you are required to provide a certain amount of paid break time per day, always do so. However, require staff to clock out for unpaid break periods and relieve staff of all work duties during breaks.

Because even digital clock time cards can be falsified, family employers should routinely audit time records to make sure the entries match the hours that the staff member was actually working. It is a good practice to review time records every week with each staff member. Ask them if the weekly record is correct and if so, have the staff member initial it. This prevents a staff person, months or years later, from arguing that he or she worked overtime on a particular day. You will be able to show that you have a business practice of reviewing contemporaneous time records for accuracy every week; that you note and correct any errors during this review; and that the staff member initials the record at the end of the review, signifying its correctness.

Of course, time card fraud protections will not prevent a lawsuit if you violate wage and hour law. In addition to following time card best practices, family employers must also follow all federal and state wage and hour laws.

Family employers who fail to do the following could face a costly wage and hour lawsuit:

  • Pay staff the federal minimum wage, or the state or local minimum wage, whichever is higher;
  • Pay staff promptly after each pay period, making sure that delays in pay do not occur;
  • Fairly compensate staff for all time that they work, which may include meetings or other times they are required to be at work that are outside of their normal duties;
  • Pay staff overtime rates of one-and-a-half times their hourly pay for hours worked over 40 hours per week or whatever you state requires; and
  • Keep accurate and complete payroll records.
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