Of course your company wants to do all it can to prevent anyone from taking little liberties that add up to big cash hits.
But take it from one company who’s been there: Sometimes those efforts can have unexpected consequences. Check out this cautionary tale.
The warehouse – it’s often a hotbed for “shrinkage,” aka theft. Items seem to sprout legs and mysteriously walk off … at your business’s expense.
So it’s understandable that many companies focus some of their fraud prevention efforts there.
But the steps online mega-retailer Amazon took to prevent theft in their warehouses have landed it in some legal hot water. Employees in multiple states have recently filed lawsuits against their employer.
Here are the details of this specific case and how you can protect your company from a similar fate, no matter what steps you use to prevent fraud.
Required they do it but never paid them for that time
The claim in the Amazon suit: that the metal detectors warehouse workers stood in line to walk through at both ends of their workdays should be considered on-the-clock time for pay purposes.
Amazon never compensated employees for that time, even though the company made it a requirement that all employees pass through the scanners.
It’s not looking good for the employer here – more than likely the Fair Labor Standards Act (FLSA) would allow for employees to be compensated for that time, since it is technically a job requirement.
But that’s not all. If employees spend enough time in a given week doing this compensable activity, it could just push their hours into overtime territory, meaning Amazon would owe time and a half, as well.
All for an effort that was supposed to save the company money!
Learning for all companies
So maybe you don’t have metal detectors in your facility, like Amazon does. It doesn’t mean there aren’t controls you do have in place that could have a similar impact on your company’s pay practices.
Even something as simple as adding daily reconciliations (a known best practice in the inventory world), could add to staffers’ workloads so much so that they’re working extra hours that trigger overtime. Or they might be working through lunch or breaks to get the job done. That’s something you want to make sure supervisors are aware of.
Warehouse workers tend to be hourly employees so it’s extra critical their managers closely monitor their charges to ensure that they’re taking all the breaks they’re entitled to and recording all hours they work.
You want Payroll to keep an eye out as well to see if they notice anyone’s hours creeping up. Giving the supervisor involved a heads-up could give that person an opportunity to shift workloads around a bit to help your company avoid a potential uptick in your compensation costs.
No word yet on what will happen in the Amazon cases. But we’ll be following the situation closely and let you know as soon as there are any developments.