Time theft: Will electronic monitoring lead to rise in counter-claims for wages paid?

In an interesting case dealing with the legal right of an employer to recover “lost time” from an employee who misrepresented hours worked, an employee was ordered to repay her former employer after it was proven that she misrepresented her hours worked.

Briefly the facts are as follows: following a termination for cause by her employer, an accountant alleged wrongful dismissal and claimed damages arising from the termination, seeking compensation for common law damages and unpaid wages.

Her former employer counter-claimed, alleging that their employee-tracking software uncovered “time theft”, and uncovered discrepancies in her “timesheets and the software usage logs."

The British Columbia Civil Resolution Tribunal ruled in the employer's favour and ordered the employee to repay $2,459 in returned wages to the employer.   

Notably, the basis for the termination (and counterclaim) was based on the use of electronic software to demonstrate that a remote employee was claiming payment for time she never worked. This in turn lead to an interesting review concerning electronic monitoring and remote employee supervisory practices.  

Time theft, productivity worries plague HR

Lorenzo Lisi, head of the Workplace Law Group at the Canadian law firm Aird & Berlis, believes the remote working aspect will continue to raise issues about productivity and time theft, and how they might be dealt with in the Canadian workplace. 

“There's nothing really new about the concept that time theft has often been deemed as ‘just cause’ for termination, in both union and non-unionized workplaces” he tells HRD. “The fact that the organization used monitoring software to prove both cause and the basis for a return of wages supports this kind of termination from an evidentiary perspective.” 

Bottom line, Lisi says, is if you're stealing time, there is a good chance that there could be cause for termination of employment.

Making a case for electronic monitoring

In Ontario, employers that employ 25 or more employees are required to have a written policy on the electronic monitoring of employees in place which states whether or not the employer electronically monitors employees. If they do, the policy must include: a description of how and in what circumstances the employer may electronically monitor employees; the purposes for which the information obtained through electronic monitoring may be used by the employer; the date the policy was prepared; and the date any changes were made to the policy

In this case, “the employee didn’t really disagree with the allegation – and she actually apologized for her misconduct,” adds Lisi. “But given her claim for wrongful dismissal, the employer counter-claimed, for monies it ‘paid’ to the employee for work not performed (as proven by the monitoring software).

“Two important takeaways: first, if this case was decided in Ontario and the employer had not complied with its obligations in terms of an electronic monitoring policy, there’s a chance the evidence might be viewed very differently by a court.” 

Secondly, Lisi adds, employers may more readily choose to counter-claim for payments made to employees when they can demonstrate that the time theft resulted in payment of wages which were not earned.

Beware the risks of falsification

“This case demonstrates how employment law is evolving,” says Lisi. “In remote work, employees need to be cognizant of the consequences of not working – that they could be asked to justify the time spent on their work, which, if proven, could lead to an effective remedy both in terms of proving just cause, and going after wages paid.”

However, it could also raise a host of issues which employees could take issue with, including compliance with any statutory obligations in terms of disclosing electronic monitoring, and possible privacy issues if the employee was not aware of this kind of employment practice.

“It may be the thin edge of the wedge,” says Lisi. “We may very well see more employers seeing this kind of strategy as an effective legal hook in 2023.”