Employee Time Theft: How To Completely Eliminate It

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  • 10 min read
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Here we'll answer all your questions about employee time theft. We'll also cover causes, what’s at stake, and how to investigate and eliminate time theft.

Employees are stealing time at work because they can. While the tricks of the trade vary by workplace, the result is always the same. Time stealing costs employers money. According to recent data from QuickBooks, time theft costs employers $11 billion a year. What’s more, 49% of employees in the United States who track time admit to time theft.

Employers can’t stop time stealing unless they know how to identify it. This is where things become tricky. Employees engage in several methods of stealing company time that can “outsmart” a rudimentary time and attendance system.

What Is Time Theft?

Time theft occurs any time an employee is paid for unworked time. It often goes unnoticed because it’s so subtle. Little by little, employees chip away at an employer’s bottom line by claiming extra hours worked that never happened. Time theft can happen by claiming hours that weren’t worked, failing to work while clocked in, or receiving compensation that one is not actually entitled to receive.

Time Theft Examples

Dozens of tactics exist for stealing time at work. In some cases, employees work alone when claiming fraudulent hours. In other cases, employees actually team up to commit time theft.

People Lying About Start/End Time on Paper Time Cards

“Fudging the numbers” is one of the most common time theft examples. Employers invite this problem when they use paper time cards that rely on self-reporting of hours. It’s very common for an employee to claim to arrive at 8:45 when they’ve actually arrived at 9:00. In addition, employees may “hang around” for 10, 15, or 30 minutes doing nothing before signing out at shift’s end in order to get paid for extra time.

Time Clock Fraud

Some employees will abuse time clocks. Time clock fraud is common with virtual time clock systems and apps that don’t contain tracking technology. For instance, an employee might clock in while they are still commuting into work to claim an extra 10 to 15 minutes. They will then clock out while driving home after a shift.

Buddy Punching

Buddy punching is a common technique where employees “cover the backs” of other employees by clocking in for them. There are two different motivations for buddy punching. The first is avoiding any record of tardiness. When an employee is running late, they may ask another employee to clock in for them to avoid being detected when a supervisor looks over time records.

The second motivation is pure theft. Some workplaces develop ongoing buddy punching schemes that allow employees to routinely claim extra minutes each week. This can become insidious because each employee “helps” with the promise that they will also be helped.

Long Lunches and Breaks

Employees often skim time by taking a long lunch break or other extended breaks that go beyond what’s permitted in their contracts. This is especially easy to do when employees work at outside sites. In theory, an employee could disappear for hours if there’s no accountability for location. However, most employees simply steal 10 minutes every day by lingering or taking a smoke break or personal calls for longer than they should.

Employers Still Lose Money When Employees Aren’t Intentionally Stealing Time

There’s also a gray area to employee time theft. While employees might not be blatantly stealing time, they might be recording time inaccurately for a variety of reasons.

The most common way that employees inadvertently steal time is by guessing hours. When an employee fails to keep accurate records of time spent working, they are inclined to provide rough estimates. It’s not surprising that these estimates almost always tilt in the employee’s favor.

It’s possible that an employee may genuinely be providing their best recollection of hours spent working. That doesn’t mean that the employer won’t be stuck paying for hours that were never actually worked. What’s more, some employees may feel entitled to inflate numbers in their favor if they believe that they are underpaid, underappreciated, or overworked. Claiming extra time can become a subconscious, passive-aggressive way to “claim what they deserve.”

Supervisors are sometimes to blame for employees stealing time inadvertently. An overwhelmed, disorganized supervisor is often always playing a game of catch-up when tallying hours. They may simply round up in an employee’s favor to avoid confrontations, problems, and complaints. After all, the supervisor isn’t the one who actually cuts the checks.

Why Do Employees Steal Time at Work?

Opportunity is a big factor in why people steal time at work. Knowing that loopholes exist that make it easy to get more for doing less provides all the motivation most people need to take advantage. However, other motivators are also at play. Here’s why employees are stealing time:

  • Rationalization: If an employee feels that they are being underpaid, this removes the guilt associated with stealing time. Employees may simply feel that they are claiming what is rightfully theirs.
  • Lack of time: An employee who feels like they simply don’t have enough time in the day to balance work and life may decide to start cutting into work time to take care of personal tasks.
  • Morale is low: During times of low employee morale, employees may feel comfortable taking a risk about getting caught because they are unhappy in their workplace environment.
  • Supervisors are disengaged: Employees often feel bold enough to skim hours when they are certain their supervisors are not paying attention.

In a workplace where buddy punching is taking place, employees may feel peer pressure to go along with it. Newer employees may feel like participating in hour stealing is a way to become part of the group.

Time Theft Laws: Is It Illegal?

Uncovering employee time theft is notoriously difficult. It can be even harder to prosecute. There are no federal wage and hour laws outlining penalties when employees are caught stealing company time. However, there are statutes in place for federal employees and contractors caught stealing time because this technically falls under the category of stealing “public funds.”

Generally, disciplinary actions and procedures come down to an employer’s own policies. However, employers who do enforce time theft rules should be prepared for some blowback. Under the Fair Labor Standards Act (FLSA), all employers must pay their employees for time worked. That means that the employer could end up in trouble if they penalize an employee without concrete proof that hours were not worked.

Employees have every right to bring lawsuits forward if they are penalized for time theft by an employer. That puts the burden on the employer to come back with irrefutable proof that an employee has stolen time. Proving stolen time can be nearly impossible when employers use paper timesheets to track employee hours or time clock software that doesn’t track location, or a combination of the two.

How Much Is Time Theft Costing You?

More than $11 billion per year is being lost by employers in the United States due to time theft. However, even just a few dollars per employee each day can drastically cut away at your bottom line if time theft is happening right under your nose. Consider a very conservative estimate where an employee is adding 15 minutes of unworked time to each shift.

If this particular employee works five shifts per week at $20 per hour, that equals $25 lost per week. While that may not seem like a lot, it adds up to $1,300 per year for that one employee. If you have 10 to 15 employees “fudging the numbers” at a similar rate, this could total between 13,000 and $20,000 a year in time stolen just 15 minutes at a time.

The problem is fixable. In one scenario, a $2 million commercial electrical subcontracting company was able to eliminate $10,000 in payroll costs caused by mistakes in employee time reporting.

Dealing With Employees Caught Stealing Time at Work

How do you deal with employee time theft once you realize it has infiltrated your business? Acknowledgment is the first step. Next, it’s time to lay down the law.

Implement a Time Theft Policy

A time theft policy serves two purposes. The first is to deter time theft by setting clear guidelines for what your company defines as time theft. This creates accountability, a system for identifying time theft, and concrete repercussions for time theft.

The second purpose is to protect your company legally when an employee is accused of time theft. Having clear policies in place allows a company to create a paper trail of documentation.

A time theft policy should be communicated in a company meeting. In addition, this policy should be covered during all new employee orientations. Finally, the full policy should be laid out in the employee handbook.

It’s important to announce that clear systems have been put in place to actually monitor and investigate time theft. Unfortunately, simply having a policy won’t be enough to deter most time theft. You will also need clear disciplinary procedures. Employees will do a risk analysis to see if fudging hours is “worth it” based on the likelihood of being caught. If employees catch on to the fact that your policy is “all talk” after several employees continue to get away with time theft without detection, you will seem powerless.

Have a Procedure for Investigating Time Theft

It’s important to implement a clear procedure for how to investigate time theft. This can help a business to avoid accusations of targeting certain employees. Here are some tips for creating a standard procedure for investigating time theft:

  • 1. Consider consulting with an employment lawyer to learn your legal boundaries when investigating employee activities.
  • 2. Keep the situation confidential. The personal information of all parties involved must remain confidential during the evaluation process.
  • 3. If someone is making an accusation against an employee regarding time theft, take actions to protect the identity of the accuser to prevent harassment or retaliation. Exposing the identity of an accuser could prevent others from coming forward in the future.
  • 4. Talk with your employment practices liability insurance (EPLI) provider before beginning an investigation. This is necessary due to risks of lawsuits.
  • 5. Consider assigning an investigator to the case. A neutral third-party can be considered more credible than an employer. What’s more, investigators have resources for uncovering telltale signs of theft.
  • 6. Create an outline detailing all of the evidence you have against an alleged time thief. You may need to bring in employees for witness interviews to help prove that an employee was not working during specific times.
  • 7. Make a verdict.
  • 8. Design a plan of action for disciplining an employee found guilty of time theft.

Ideally, a company is relying on pure data as the backbone for evidence. While everything from video footage to employee testimonies can help to bolster a case, location-specific tracking software is the indisputable proof employers need to verify that employees were not working when they said they were. It is difficult to remain insulated against lawsuits unless this type of proof is available.

Is Employee Time Theft Punishment A Good Idea?

Employees should face repercussions for time theft. Repercussions deter employees from continuing to steal time.

It’s up to each employer to decide an appropriate course of action. In some cases, simply being written up for a first-time offense might be considered fair. However, egregious cases of employee theft might require more severe punishments. Employee suspension is the most common form of punishment for employee time theft.

Time Theft Terminations

Check your state’s employment laws to discover your rights for terminating an employee due to time theft. This must be handled impeccably due to the fact that being fired for stealing may disqualify an employee from receiving unemployment benefits. As a result, the likelihood for a lawsuit is higher.

When terminating employees for time theft, a company’s conduct guidelines can become important. You may have grounds for terminating an employee for their improper use of company time even if their actions weren’t technically illegal as long as the actions are in violation of company policy.

An employee should already be fully aware that an investigation is taking place prior to termination. When the time comes to terminate, hold a private termination meeting with other staff members present to serve as witnesses. Consult a lawyer to discover how much information you need to divulge to the employee during this meeting in order to avoid accusations of discrimination, targeting, or conflict of interest.

Eliminating Time Theft With Workyard

The best way to handle time theft is to prevent it with a modern time tracking solution. When companies implement ironclad automated time tracking solutions, time theft is fully deterred. This helps companies to avoid the lost productivity and the liabilities that go along with investigating employees stealing company time. It could even prevent costly, time-consuming lawsuits.

Companies that use Workyard deter time theft every minute of the day. Workyard’s technology uses a three-pronged approach to tracking everything employees do while clocked in to create the most accurate timesheets possible. Companies enjoy time tracking software, time management software, and GPS mileage and location tracking software. Companies using Workyard get:

  • App-based time cards designed to be easy for people who aren’t tech savvy. Employees clock in with just a few taps!
  • Automatically prompt employees when to clock in and out.
  • Alerts that let you know when your GPS audit trail doesn’t match a timesheet.
  • An industry-leading GPS time clock app that uses high-accuracy GPS to help you see exactly when each team member arrives and departs every job site.
  • Automatic recording for driving routes, travel time, and mileage.
  • Accurate time tracking means that eliminates overreported hours to save business owners thousands on payroll.
  • The ability to track employees in real-time when they’re on the clock.
  • Easy recording of job site arrival and departure times.
  • The ability to compare GPS location data to employee timesheets.
  • Much more!

All of these features for tracking employee times come in addition to the incredible features for job scheduling and job costing that companies of all sizes are using to make each job more profitable. One restoration company with 45 employees was able to eliminate persistent payroll issues while saving thousands of dollars after implementing Workyard to track employees during a time of growth. A solar company based in Texas that remotely manages 40 employees in the field was able to save $5,000 a week by reducing payroll and job costs using Workyard.

Labor is already your priciest resource. It accounts for roughly 70% of the cost of doing business for most American businesses. There’s nothing more painful than paying for work that didn’t happen. Losing control of labor costs and employee productivity is one way that many businesses eventually go under. Stop time theft in its tracks by tracking employees with the best technology possible.

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