Inflation Issues in Jewish Law
Rabbi Dr. Aaron Levine

Proceeding from the legal principle that wages are due at the end of the wage period is the interdict against labor agreements calling for the worker to receive a premium in wages in the event the employer is delinquent in paying him on time. Since wages are due on the last day of the wage period, the premium offered in the event of delinquency amounts to an avak ribit payment to the worker for tolerating the delay in receiving his wages. ⁴²

A mutually-arrived-at agreement between a worker and an employer calling for a premium wage in the event of delinquency in payment violates avak ribit law even if the agreement was not made at the outset of the labor contract. Accordingly, should the worker, upon demanding his wage at the end of the wage period, acquiesce to the employer's offer to pay him a premium wage at some later time, the agreement violates avak ribit law. Since an employer's holding wages in arrears violates the wages delay interdict (halanat sakhar), ⁴³ the worker's acquiesce to the delay in payment amounts to an agreement on his part to treat the balance due him as a loan. The higher wage called for at the later date therefore amounts to a premium for tolerating delay in payment and consequently violates avak ribit law. ⁴⁴

A variant of the above case occurs when the employer is in default of the wages due to the worker, and the worker, in consequence, exerts a claim for the income he could have realized from the wages had he been paid on time. The legitimacy of the worker's claim here is disputed among Talmudic decisors. While R. Eliezer of Toul et alia validated the compensation claim, ⁴⁵ R. Isaac b. Moses of Vienna et alia regarded the payment as constituting avak ribit.⁴⁶

Supporting R. Eliezer's view, R. Joel Sirkes () offers the following rationale of why m~eting the worker's compensation demand does not violate avak ribit law: Since the wages are held in arrears against the worker's wishes, the worker cannot be said to have allowed the balance due him to take on the character of a loan for the duration of the delinquency period. With the loan character absent here, the extra payment the worker seeks can in no way be characterized as a premium for tolerating delay in the payment of his wages.⁴⁷

Noting the indirect link between the worker's foregone earning and the action of the employer, R. Judah Rosanes (Turkey, 1657-1727) posits that while meeting the worker's compensation demand does not violate avak ribit law, the employer is under no legal obligation to honor the demand. Responsibility for meeting the worker's extra compensation demand proceeds as a definite matter only when the employer invested at a profit the wages due the worker and the worker expressed an investment intent at the time he demanded his wages. ⁴⁸

In the context of the current inflationary spiral, holding wages in arrears generates a definite loss for the worker in the form of reduced purchasing power. Noting this phenomenon, R. Nahum Rakover posits that legislating a penalty on the employer for delinquency in payment of wages is entirely appropriate. ⁴⁹ In a similar vein, R. Jacob Blau concludes from his survey of rabbinic literature that the majority view would find no objection to the employer accommodating the worker for holding his wages in arrears.⁵⁰

Theft Liability and Price Changes

Another instance where price change is a matter of halachic concern occurs in connection with the liability obligation of a thief. As long as the article of theft remains intact and was not materially changed, the thief must return it, rather than make monetary compensahon.⁵¹ Should the article of theft no longer be in the culprit's possession, i.e., it was stolen or lost, a monetary obligation is imposed on him. This payment is set equal to the value of the article at the time of the theft.

An exception to the above rule obtains when the thief damages or consumes his pilferage. Here, in the event the article appreciated above its value at the time of the theft, liability for the thief is set in accordance with the article's value at the time when the damage was comitted.⁵² Nevertheless, in the event the article depreciated in value in the interim, liability is set in accordance with the higher value prevailing at the time of the theft. ⁵³ Imposing the higher penalty on the thief is justified on the ground that it would be morally reprehensible to allow him to gain when he compounds the theft with the commission of a tort. ⁵⁴

The above criteria for theft liability apparently apply whether or not the change in the price of the subject article was accompanied by a general change in the price level in the same direction.