In the evolving landscape of labor enforcement and public accountability, one term has become increasingly weaponized鈥�fraud. Once reserved for intentional deception involving material gain and knowing misrepresentation, the word is now routinely misapplied by public employers, internal investigators, and agency counsel in a way that defies law and logic. Wage discrepancies caused by managerial error, system limitations, or longstanding informal practices are suddenly recast as 鈥渇raud鈥� when an employee becomes inconvenient, vocal, or protected.
This trend is especially pronounced in public-sector workplaces where the employer controls every element of the payroll ecosystem鈥攁pproval hierarchies, digital systems, manual overrides, and documentation storage. In these environments, investigators often fail to distinguish between clerical irregularity and criminal intent. Worse, they treat recreated or reconstructed payroll records鈥攍egally permitted under federal and state law鈥攁s inherently suspicious, ignoring that such records are often the only remedy available when employers have failed to meet their legal obligations.
Under Section 211(c) of the Fair Labor Standards Act (FLSA) and its implementing regulations, the legal duty to maintain accurate records of hours worked and wages paid falls squarely on the employer. Similarly, New York Labor Law 搂 195(4), supplemented by 12 NYCRR 搂 142-2.6, requires every employer to 鈥渆stablish, maintain and preserve鈥� weekly payroll records for six years, documenting hours, pay, deductions, and schedules. These are not suggestions鈥攖hey are binding, enforceable mandates grounded in the principle that employers, not employees, are best positioned to document labor inputs.
Federal and state courts have repeatedly affirmed this structure. In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), the U.S. Supreme Court made clear: where an employer fails to keep adequate records, the employee鈥檚 burden is relaxed. Workers may estimate hours worked based on memory, routine, or testimony, and the employer then bears the burden of disproving those claims with reliable records. The聽decision of Mid Hudson Pam Corp. v. Hartnett, 156 A.D.2d 818 (3d Dep鈥檛 1989), cemented this principle in New York jurisprudence. The rationale is sound鈥攁n employer cannot benefit from its recordkeeping failures, especially where it controls the means of documentation.
And yet, too many internal and external investigations disregard this precedent. Investigators trained in criminal law but unfamiliar with labor compliance conflate 鈥�reconstruction鈥� with falsification. They fail to ask the threshold question: Who was responsible for documenting the time, who controlled the system, and who approved the payment? Instead, they rely on ambiguous paperwork, missing slips, or incomplete digital entries to manufacture narratives of fraud, often retroactively and selectively, after an employee engages in protected conduct.
This misapplication of criminal standards to civil wage issues is more than a procedural error鈥�it鈥檚 a structural abuse of process. Employees who follow managerial instructions, receive supervisory approval, and operate within flawed but long-accepted systems are not committing fraud when their time records are later questioned. They are complying with the workplace as it is. To prosecute, discipline, or stigmatize them for that compliance, especially without audit trails, contemporaneous objections, or evidence of intent, is to reverse the burden of proof and undermine the rule of law.
Moreover, the 鈥渇raud frame-up鈥� disproportionately targets whistleblowers, women of color, and workers who challenge institutional misconduct. Black women, in particular, have long faced disbelief and heightened scrutiny in legal and bureaucratic systems鈥攁 dynamic that continues to play out in modern employment retaliation cases. When a complaint of discrimination, harassment, or misconduct is filed, many employers don鈥檛 respond with an investigation鈥攖hey react with a counteraccusation. Payroll becomes the battlefield. Old records are reexamined. 鈥淢issing鈥� slips appear. Internal memos are leaked. The accuser becomes the accused.
This article aims to expose and dismantle that pattern. It will begin by laying out the legal foundation: the employer鈥檚 statutory recordkeeping obligations under federal and state law. It will then examine how courts evaluate wage disputes without documentation, explain why reconstructed payroll records are lawful and expected under precedent, and explore the dangerous consequences of imposing a criminal lens on civil disagreements.
Finally, it will issue a call to action鈥攖o employees, investigators, agencies, and the public鈥攖o restore integrity to these processes, prevent retaliatory misuse of fraud accusations, and remember that in any lawful employment system, due process must be more than a slogan. It must be the standard.
I. Employers鈥攏ot Employees鈥擝ear the Legal Burden in Wage Disputes
At the heart of every wage dispute lies a critical legal truth: recordkeeping is the employer鈥檚 duty, not the employee鈥檚. This is not a theoretical allocation of responsibility, but a black-letter requirement embedded in federal and state labor law, grounded in the practical realities of workplace power and access.
Under the Fair Labor Standards Act (FLSA), , employers are required to 鈥渕ake, keep, and preserve鈥� records concerning wages, hours, and other conditions of employment. The corresponding regulation, , specifies the nature of those records, including the hours worked each day, total hours worked each workweek, regular hourly pay rate, total daily or weekly straight-time earnings, and total overtime earnings.
New York鈥檚 Labor Law imposes nearly identical obligations. Employers must 鈥渆stablish, maintain, and preserve鈥� for at least six years weekly payroll records that document:
Hours worked,
Wages paid,
Deductions taken, and
Supporting documents such as timecards, schedules, and pay stubs.
The rationale is self-evident: employers are in a superior position to create, control, and preserve accurate wage data. They operate the timekeeping systems, supervise employee conduct, issue payments, and retain access to internal audit tools. Employees, by contrast, rarely have access to backend payroll systems. Their timekeeping responsibilities鈥攊f any鈥攁re subordinate to employer systems, managerial approval, and established workflows.
This legal structure is not merely about administrative convenience鈥攊t establishes the foundation of wage-and-hour litigation. The failure to keep proper records creates what courts have long recognized as a burden-shifting dynamic. In , 328 U.S. 680 (1946), the U.S. Supreme Court held that when an employer fails to keep records as required by the FLSA, 鈥渢he solution鈥s not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work.鈥� Instead, the employee鈥檚 burden is reduced to producing 鈥渟ufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.鈥�
Once that inference is made, the burden shifts back to the employer to produce either: (1) accurate records, or (2) evidence negating the reasonableness of the employee鈥檚 reconstructed account. The court may award damages based on the employee鈥檚 estimates if the employer cannot meet this rebuttal burden.
This doctrine has been firmly adopted in New York. In Matter of Mid Hudson Pam Corp. v. Hartnett, 156 A.D.2d 818 (3d Dep鈥檛 1989), the Appellate Division emphasized that an employer who fails to maintain adequate payroll records 鈥渃annot complain that the damages lack the exactness and precision of measurement.鈥� The principle is clear: courts will resolve uncertainty in the employee’s favor when the employer does not have reliable documentation.
This is the legal backdrop that investigators, employers, and disciplinary bodies often ignore.
Employees who reconstruct their time records鈥攂ased on memory, copies, patterns, or managerial instruction鈥攁re not falsifying documents. They are exercising a legal remedy explicitly permitted by controlling law. The absence of original slips or exact timestamps does not imply fraud鈥攊t means that the employer failed to comply with its statutory duties. And when the employer tries to reverse-engineer that failure into a basis for disciplinary action, it violates the foundational rule of wage-and-hour jurisprudence: you cannot punish a worker for noncompliance.
Yet in many public-sector investigations, the opposite logic is applied. Employees who attempt to reconstruct time after discovering a discrepancy are often accused of 鈥渇raud,鈥� 鈥渕aterial misrepresentation,鈥� or 鈥渋ntent to deceive,鈥� despite the lack of any showing of willfulness or benefit. What is lost in this prosecutorial zeal is the basic recognition that reconstructed records鈥攕o long as they are reasonable and grounded in fact鈥攁re not only permissible, but necessary under both FLSA and NYLL precedent.
Rather than approaching these cases as disputes rooted in flawed systems and employer obligations, agencies and investigators misframe them as criminal episodes, injecting suspicion, threatening discipline, and sometimes involving law enforcement without the evidentiary threshold required for such escalations.
This is not law enforcement. It is a legal distortion.
And when the accused employee is a whistleblower, a woman of color, or someone already challenging institutional power, this distortion becomes not only a procedural failure鈥攊t becomes a tool of retaliation.
II. Reconstructed Records Are Legal鈥擭ot Fraudulent
In wage-and-hour law, reconstructed records are not merely tolerated鈥攖hey are a legally sanctioned remedy for the employer鈥檚 failure to meet its statutory obligations. Yet too often, internal and external investigators treat the act of creating substitute or recreated payroll documents as a prima facie indicator of dishonesty or fraud. This is not only factually incorrect; it is legally indefensible.
As established by Anderson, where the employer has failed to keep adequate records, 鈥渁n employee has carried out his burden if he proves that he has performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.鈥� The court emphasized that approximations and memory-based testimony are admissible and binding on the employer if not rebutted.
This principle is reinforced by regulatory guidance from the U.S. Department of Labor. While the Field Operations Handbook (FOH) does not contain a standalone section on reconstructed time records in all wage contexts, it explicitly permits using reconstructed time data during wage and hour investigations, especially where the employer has failed to keep adequate records. In FOH Chapter 64, which governs investigations under Section 14(c) of the FLSA for workers with disabilities, the DOL instructs investigators to:
鈥淯sing standard interview techniques, reconstruct these employees鈥� starting and stopping times, average number of hours worked per day and per week, average units produced per hour for piece rate workers, and average earnings per day and per week.鈥�
Although tailored to a specific subset of wage earners, this directive acknowledges a broader and legally significant practice: in the absence of complete employer records, reconstructed evidence鈥攂ased on employee interviews, estimates, and sworn declarations鈥攊s an acceptable and necessary tool to establish hours worked and wages owed.
This aligns directly with the Supreme Court鈥檚 ruling in Anderson, which held that employees may rely on 鈥渏ust and reasonable inference鈥� when employer records are inadequate or nonexistent. In such cases, the burden shifts to the employer to rebut the employee鈥檚 reconstruction with reliable records.
In short, reconstructed records are not fraudulent simply because they are not contemporaneous. They are an established remedy recognized by both administrative enforcement and judicial precedent. To suggest otherwise鈥攑articularly in retaliation cases鈥攔eflects either a fundamental misunderstanding of wage-and-hour law or a willful attempt to distort its purpose.
New York courts agree. In Mid Hudson Pam, the Appellate Division held that employees may use reconstructed evidence, such as handwritten logs, estimates, and testimony, to prove hours worked when the employer鈥檚 records are deficient. The court reaffirmed the state鈥檚 burden-shifting doctrine: once the employee presents a good-faith estimate, it is up to the employer to rebut that estimate with reliable evidence. The burden does not shift back to the employee to prove accuracy beyond a reasonable doubt.
Many investigators鈥攅specially those trained in criminal law or administrative enforcement鈥攎isapply the standards here. They often treat reconstructed records as evidence of falsification, ignoring that the law explicitly permits and protects such reconstructions when employer records are deficient. In doing so, they import a criminal intent standard into what is fundamentally a civil, remedial framework.
Worse, when investigators or employers label reconstructed records as 鈥渇raudulent鈥� simply because they were completed after the fact, they implicitly reverse the legal burden, placing the onus on the employee to prove exactitude, rather than on the employer to rebut a good-faith estimate. This violates the controlling standards under Anderson, Mid Hudson Pam, and DOL guidance.
It also reflects a troubling institutional bias: the presumption that employees are dishonest, particularly when they are women, people of color, or whistleblowers. In practice, reconstructed records are frequently submitted in response to employer confusion, payroll error, or at managerial direction. When investigators later 鈥渄iscover鈥� that these records are not contemporaneous, they often leap to conclusions of fraud, without asking the more appropriate question: why were these records needed in the first place?
The answer is almost always the same: the employer鈥檚 system failed.
It failed to track time accurately, standardize approvals, create audit trails, and preserve documentation. These are not employee failures鈥攖hey are institutional design flaws. Yet instead of correcting them, agencies often scapegoat employees for navigating the dysfunction the employer created.
Reconstructed records are a last resort for workers denied the benefit of a functioning timekeeping system. They reflect that justice cannot depend on the employer鈥檚 ability to avoid liability through poor recordkeeping. They are a lifeline, not a liability.
But in the hands of misguided investigators, they become a noose.
III. Reconstruction Is a Legal Remedy When Employers Fail to Keep Records
One of the most pervasive misconceptions among internal investigators, agency counsel, and even some prosecutors is that reconstructed or recreated payroll records inherently signal employee deceit. This is not only wrong as a matter of law鈥攊t is dangerous as a matter of due process.
When an employer fails to maintain accurate records鈥攁s required under both federal and state wage-and-hour laws鈥攅mployees are permitted to estimate and reconstruct their hours worked using 鈥渏ust and reasonable inference.鈥� This is not a loophole. It is an evidentiary mechanism sanctioned by decades of binding precedent and agency policy.
In Anderson, the Supreme Court articulated the foundational principle: 鈥淸W]here the employer鈥檚 records are inaccurate or inadequate and the employee cannot offer convincing substitutes,鈥� the employee need only 鈥減roduce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.鈥� Once that threshold is met, the employer must disprove the claim with competent records. The Court emphasized that it is the employer鈥檚 statutory obligation to maintain accurate payroll data, and where it fails, any resulting uncertainty must be resolved in the employee鈥檚 favor.
This framework was adopted by the New York courts in Mid Hudson Pam, where the Appellate Division held that reconstructed evidence鈥攅mployee logs, oral testimony, or written estimates鈥攃ould be used to support wage claims when the employer鈥檚 records were deficient. In that case, the court clarified that any inexactitude in the reconstruction process is attributable not to the employee but to the employer鈥檚 failure to fulfill its statutory duty.
Moreover, as clarified by the U.S. Department of Labor鈥檚 Field Operations Handbook (FOH), investigators are expected to reconstruct time and wage data where employer records are inadequate. In Section 64g of the FOH, which governs procedures under Section 14(c) of the FLSA, investigators are instructed to reconstruct work hours through 鈥渟tandard interview techniques鈥� and 鈥渞easonable inference,鈥� including employees鈥� recollections of starting and stopping times, breaks, and hours per day or week. Although this section pertains to workers with disabilities, the principle applies broadly: reconstructed time entries are legitimate investigative tools, not red flags of fraud.
The reflexive use of terms like 鈥渇alsification,鈥� 鈥渙verpayment,鈥� or 鈥渇raud鈥� to characterize reconstructed time entries鈥攅specially when the employer鈥檚 systems are paper-based, inconsistently enforced, or directed by managerial instruction鈥攂etrays either a profound misunderstanding of the law or a deliberate attempt to suppress legitimate wage claims. Either way, it is impermissible.
Legally defined, fraud requires intent鈥�scienter鈥攖he deliberate submission of false information with the intent to deceive. Employees who approximate hours after the fact, under direction, or in good-faith reliance on their memory or managerial approval do not meet that standard. Courts have been clear: absent fraudulent intent, reconstructed records are not a basis for discipline, clawbacks, or prosecution.
Yet public-sector employers鈥攅specially law enforcement agencies鈥攐ften invert this burden. They ignore their recordkeeping failures and focus investigatory resources on the employee who submitted a corrected or recreated slip, acting under management鈥檚 direction. This is not compliance. It is retaliation disguised as an audit.
In such cases, the employer鈥檚 negligence in timekeeping becomes the basis for punishing the worker. The statutory burden flips, the evidentiary standard is erased, and what should be a civil reconciliation process is reframed as criminal misconduct. This inversion not only violates wage-and-hour law, but it also undermines core constitutional protections.
In sum, reconstructed records are not 鈥渇raudulent鈥� because they were created after the fact. They are legally necessary when the employer has failed in its duty. The greater danger lies not in allowing employees to reconstruct what their employer was unable to track but in allowing public institutions to criminalize the very people they disenfranchised.
IV. Why Manager-Approved Timekeeping Shields Employees from Fraud Claims
In the context of wage disputes鈥攑articularly within public-sector environments where payroll systems are decentralized, paper-based, or inconsistently enforced鈥攐ne truth must be repeated until institutional investigators internalize it: employees do not control the system.
All managerial decisions are timekeeping entries, pay codes, approval hierarchies, and even whether to use electronic or manual systems. Supervisors approve overtime. Payroll units process it. Internal auditors validate it. When front-line employees rely on that chain of command, they are not engaging in misconduct鈥攖hey comply with organizational procedure.
Yet investigators and compliance officials often ignore this authorization chain when seeking to assign blame. A backdated form, a missing slip, or a 鈥渞econstructed鈥� entry鈥攎ade at the direction of a superior or following long-tolerated practices鈥攕uddenly becomes grounds for fraud accusations or termination. This is not only legally unsound, it is structurally unjust.
These failures are often endemic in public agencies. Many departments, including police and fire services, operate outside centralized timekeeping platforms like CityTime or Kronos. Manual submission remains the norm. Overtime is logged on paper, keyed in by clerical staff, and routed through multiple layers of review鈥攐ften with no audit trail. Suppose a supervisor tells an employee to enter retroactive hours, sign a slip from memory, or recreate their time from callout logs. In that case, the employee is legally and operationally entitled to rely on that directive.
In wage-and-hour disputes, especially when employer time records are incomplete, inaccurate, or absent, federal and New York State laws apply a burden-shifting framework that protects workers from being penalized for their employer鈥檚 statutory violations. This framework is not simply a procedural tool鈥攊t directly contradicts the criminalization of payroll reconstruction and renders 鈥渇raud鈥� allegations untenable when raised in such contexts.
The FLSA: A 鈥淛ust and Reasonable Inference鈥� Standard
Under the FLSA, 29 U.S.C. 搂 211(c), employers must maintain accurate records of hours worked and wages paid. When an employer fails to meet this obligation, courts apply the standard set forth by the U.S. Supreme Court in Anderson: an employee need only show 鈥渢hat he has performed work for which he was improperly compensated鈥� and can do so through 鈥渏ust and reasonable inference.鈥� That showing may be based on the employee鈥檚 estimates, recollections, or sworn testimony.
Once this threshold is met, the burden shifts to the employer to either:
Provide precise records of the work performed; or
Undermine the reasonableness of the employee鈥檚 claims.
If the employer fails to do so, the court may award damages based on the employee鈥檚 reconstruction, even if the result is an approximation. See , 121 F.3d 58, 66 (2d Cir. 1997); , 643 F.3d 352, 362 (2d Cir. 2011); Gonzalez v. Masters Health Food Serv. Inc., 2017 WL 3835960 (S.D.N.Y. July 27, 2017).
The NYLL: A Stronger Burden on Employers
The New York Labor Law imposes an even stricter regime. Under NYLL 搂 195(4) and its implementing regulation, 12 NYCRR 搂 142-2.6, employers must preserve weekly payroll records for at least six years. Critically, NYLL 搂 196-a creates a substantive burden: when an employer fails to maintain these records, the employer鈥攏ot the employee鈥攎ust affirmatively prove that all wages, benefits, and supplements were paid.
This burden is more demanding than under the FLSA. As the court held in Canelas v. World Pizza, Inc., 2017 WL 1233998 (S.D.N.Y. Mar. 31, 2017), 鈥淸i]f an employer cannot satisfy its burden under the FLSA, it cannot satisfy th[is] 鈥榤ore demanding burden鈥� of the NYLL.鈥� And unlike the FLSA, the NYLL does not allow an employer聽to challenge the聽reasonableness of the employee鈥檚 evidence鈥攊t must prove payment in full.
Moreover, the New York State Department of Labor has recognized in both enforcement policy and case decisions that the burden of timekeeping accuracy falls on the employer, not the worker. When a manager instructs an employee to document hours in a particular way, especially when retroactive liability for any discrepancy rests with the system, not the subordinate. Treating the employee as culpable for following instructions is to impose a standard of strict liability with no basis in wage-and-hour law.
Internal investigators often cherry-pick compliance points, ignoring the laxity that permeates payroll administration and fixating on individual 鈥渆rrors鈥� when targeting whistleblowers or disfavored employees. This selective enforcement not only opens public agencies to retaliation claims鈥攊t erodes credibility and fosters a culture of fear and silence.
The legal system has no patience for post hoc punishment dressed up as process. Courts have consistently rejected efforts by employers to reinterpret longstanding, manager-approved practices as 鈥渇raud鈥� after a conflict emerges. If the system allowed, condoned, or directed the behavior, it cannot then criminalize the participant.
In sum, employees cannot be expected to exceed, contradict, or override the very systems they are embedded within. Reconstructed records, made in good faith and under managerial supervision, do not constitute misconduct. They are the byproduct of institutional failure, and liability flows upstream.
V. Fraud Requires Intent鈥擬anagerial Approval Undermines That Presumption
Fraud is a term with profound legal implications. In both civil and criminal contexts, proving fraud requires a showing of scienter鈥攊ntent to deceive. It is not enough to point to discrepancies or incomplete records. The employer or investigator must demonstrate that the employee knowingly submitted false information to obtain payment to which they were not entitled. Yet in many wage disputes鈥攑articularly in the public sector鈥斺�渇raud鈥� is invoked casually and irresponsibly, often by internal or external investigators lacking legal training in labor law.
This misuse is especially dangerous when managerial approval is central to timekeeping. In most public employment systems, including law enforcement agencies, employees do not have unilateral control over payroll entries. Time is submitted using department-mandated forms (like UF-28s), approved by supervisors, and processed by payroll officers. In such a setting, the idea that an employee can 鈥渄efraud鈥� the department by submitting time pre-approved and signed off by their superiors is logically incoherent鈥攁nd legally unsupportable.
Managerial approval destroys the inference of fraudulent intent. Courts have consistently rejected fraud claims where supervisors signed employer records, even if later deemed erroneous. This is especially true where the payroll system is outdated, manually administered, and lacks consistent enforcement.
As Judge Engelmayer observed in , 2016 WL 3248493, at 27 (S.D.N.Y. June 9, 2016), the employee鈥檚 burden to prove underpayment is 鈥渘ot high,鈥� and may be met through 鈥渆stimates based on [the employee鈥檚] own recollection.鈥� The employer, by contrast, bears the heavier burden of rebutting those claims with 鈥減recise records.鈥� When those records are incomplete鈥攐r when the payroll process relies on discretionary, after-the-fact approvals鈥攂laming the employee for inconsistencies borders on bad faith.
Moreover, any notion of 鈥渇alse鈥� payroll claims collapses when the employer maintains systemic control over timekeeping tools. Suppose a department disables electronic timekeeping systems (like CityTime), exempts specific units from digital entries, or directs employees to rely on verbal or manual instructions. In that case, it assumes legal risk due to the lack of uniformity. In such cases, courts have shown little sympathy for agencies that later cry fraud when the records they chose not to maintain fail to support their claims.
To call these reconstructed records 鈥渇raud鈥� is not only legally flawed鈥攊t鈥檚 dangerous. It exposes employees to reputational harm, disciplinary consequences, and even criminal referrals for conduct that is, at worst, a byproduct of employer mismanagement. Worse still, it creates a chilling effect, particularly for whistleblowers and vulnerable workers, who may fear that any attempt to correct a timekeeping error鈥攐r comply with a supervisor鈥檚 instructions鈥攃ould be turned against them.
Fraud requires intent. In systems defined by managerial discretion, institutional exemptions, and broken payroll infrastructure, the employer, not the employee, must be held accountable for confusion, loss, or ambiguity.
VI. Investigative Overreach: How Wage Errors Become Wrongful Fraud Allegations
One of the most troubling trends in wage-and-hour disputes鈥攅specially in public employment鈥攊s the tendency of internal affairs units, legal departments, or external investigators to treat payroll discrepancies as presumptive criminal misconduct. This practice often results not from legal analysis, but from institutional reflex: a desire to demonstrate 鈥渮ero tolerance,鈥� shield leadership from scrutiny, or make an example of an employee in politically sensitive cases.
This reflex is both procedurally unsound and legally dangerous. At its core, it represents a failure to distinguish between civil wage disputes, which are governed by the Fair Labor Standards Act (FLSA), New York Labor Law (NYLL), and corresponding case law, and criminal fraud, which requires clear and convincing evidence of willful deceit. Misusing 鈥渇raud鈥� as an investigative trigger in these contexts distorts due process and punishes employees for the employer鈥檚 failures.
Under federal and New York law, wage underpayment is a civil matter unless there is demonstrable intent to deceive. Errors, omissions, or inconsistencies鈥攅specially within longstanding, institutionally accepted timekeeping systems鈥攁re insufficient grounds for disciplinary or criminal action. Courts recognize that reconstructed records, approximations, and retroactive adjustments are a necessary legal response to broken payroll infrastructure, not an act of concealment.
This principle is fundamental in public-sector workplaces where payroll systems are fragmented, outdated, or reliant on paper forms such as UF-28s, sign-in logs, or verbal approvals. In such environments, employees often have no access to audit trails, no control over time entry platforms, and no ability to independently verify what is ultimately submitted by supervisors or payroll units. Attempting to punish them for institutional dysfunction retroactively amounts to a procedural bait-and-switch: 鈥淲e failed to track your hours properly, so now we accuse you of fraud.鈥�
This dynamic becomes even more insidious when it is used selectively, often against whistleblowers, survivors of workplace harassment, or those deemed politically inconvenient. It weaponizes process, transforming civil discrepancies into criminal suspicion, and creates a climate of fear where compliance becomes a tool of coercion rather than a standard of fairness.
The U.S. Supreme Court, in Anderson, made clear that where employer records are lacking, courts are to rely on reasonable inferences and employee recollection. Yet internal investigators often disregard this controlling precedent, applying an evidence standard more suited to criminal prosecutions than wage recovery. The result is predictable: trauma survivors and marginalized employees are accused of fraud for doing precisely what the law permits鈥攔econstructing their time based on what they remember.
This misapplication of standards also has structural consequences. It can lead to false referrals to District Attorneys, unjust terminations, coercive settlement demands, and retaliatory disciplinary action. In some cases, it can even expose the employer to liability for abuse of process, selective enforcement, and retaliation under civil rights laws, including the New York State and City Human Rights Laws and federal whistleblower protections.
Institutions that treat reconstructed records as evidence of fraud, ignoring their legal obligation to maintain accurate systems, invert justice. They transform victims into suspects, turn administrative errors into criminal accusations, and sacrifice legal fidelity for political damage control.
The law is clear: wage-and-hour enforcement must be rooted in fairness, not fear. Any investigation that begins with a presumption of guilt鈥攅specially where the employer has failed to uphold its recordkeeping duties鈥攈as already lost its claim to credibility.
VII. Conclusion: Why Mislabeling Payroll Errors as Fraud Threatens Justice
In the increasingly adversarial landscape of wage-and-hour enforcement, particularly within public institutions, the reckless misuse of 鈥渇raud鈥� to describe payroll discrepancies threatens more than individual livelihoods. It undermines the rule of law, distorts statutory interpretation, and enables retaliatory campaigns that silence whistleblowers under the guise of administrative scrutiny.
As this article has shown, both federal and New York law impose unambiguous obligations on employers鈥攏ot employees鈥攖o maintain accurate, contemporaneous, and complete payroll records. When those records are flawed, incomplete, or nonexistent, the law does not presume employee dishonesty. It permits reconstruction. It allows approximation. It shifts the burden back to the party who failed to comply with their legal duty in the first place: the employer.
What reconstructed records are not鈥攁nd must never be mischaracterized as鈥攊s 鈥渇raud.鈥�
Courts from Anderson to Mid Hudson Pam Corp. have consistently held that when employer records fail, the employee鈥檚 good-faith estimate is admissible and often dispositive. Investigators who ignore these principles and criminalize discrepancies born of managerial neglect are not promoting accountability鈥攖hey are eroding it.
The real threat to institutional integrity is not the employee attempting to get paid for hours worked under a broken system. It is the employer who allows systemic dysfunction to persist and weaponizes those deficiencies against disfavored workers. The public agency seeks to clawback wages approved through flawed but long-tolerated processes after the employee engages in protected conduct. And it is the investigator who turns a civil wage dispute into a criminal inquisition, not because of evidence but because of power.
Employees, especially those in the public sector, must understand their rights. Internal and external investigators must be trained on the legal standards governing wage recovery. Legal departments must abandon the reflexive use of 鈥渇raud鈥� as a catchall for managerial failure.
When we allow due process to be replaced by bureaucratic retribution and permit the misuse of criminal labels to chill legal claims, we do not protect the public interest鈥攚e endanger it.
To protect the integrity of our wage-and-hour laws, we must insist on precision in language, fidelity to law, and an unwavering commitment to the principle that negligence by the powerful must never be used to destroy the credibility of the vulnerable.
It鈥檚 time to stop framing payroll corrections as fraud鈥攁nd start holding institutions accountable for the systems they control, and the people they fail.