Time Clock Fraud: How To Stamp it Out For Good

When it comes to labor, time is literally money. If your employees are reporting a few extra minutes here or there, it’s cutting into your profit. 

But if you don’t have a reliable method of tracking employee time, how can you prove that your employees are cheating their time clock?

What Is Time Clock Fraud?

Time clock fraud or time card fraud is when an employee records hours they did not work on their time card and is then paid for those hours. In essence, the employee is stealing by claiming hours they did not work from the employer.

Sometimes time clock fraud is not malicious, in effect employees are just not recording time accurately but they are trying to purposely steal hours. Other times, employees have figured out how to game the system and are intentionally stealing as many hours as they can.

Why Does Employee Time Theft Happen?

Most employees will “cheat” a time clock eventually. It’s not always intentional. It’s human nature to approximate—and it’s human nature to think “it’s just a few minutes.” The looser you are about employee time reporting, the less accurate your employees will be.

In construction, employees may visit multiple sites a day. They may need to travel quite a distance to get to the first site. And they may not actually log their time until the end of the day or even the end of the week.

Do you remember everything you did this week?

Most employee time theft occurs not because employees aren’t being honest or ethical, but because there’s no easy method of accurately tracking time. Paper timesheets will always introduce a level of uncertainty, while manual time clocks are expensive and limited.

The Most Common Forms Of Time Clock Fraud

There are many forms of employee time theft that can occur depending on the type of time clock you’re using. Most time clocks have specific vulnerabilities that you need to protect against.

Old-Fashioned Punch Clocks

With these devices, employees can often buddy punch each other. Buddy punching is when an employee has another employee clock in or out for them. This is usually done when the first employee is running late or needs to leave early, but it can also be for legitimate reasons, such as an employee working on a project off-site.

Sure, buddy punching may build some camaraderie, but this type of employee time theft steals valuable time from your business. And employees may feel pressured to buddy punch so as not to develop animosity between themselves and the rest of the crew.

Time Clock App (Without GPS Tracking)

You have implemented a mobile employee time clock app, but employees can simply forget to clock out or clock in early. They may also even be able to adjust their time after they have clocked in late.

How do you know when they actually arrived at the work site? You may have made it easier for employees to record their time, but they are still going to forget and generously round their hours.

More sophisticated GPS time clock apps with a complete audit trail help you eliminate this problem, more on this later.

Spreadsheet or Paper Timesheet

This is probably the solution that drives the If you’re using a spreadsheet or paper timesheet, it’s even easier for employees to cheat. Employees just track the time that they want to have worked, rather than the time that they actually worked.

As you can see, it’s the method of time tracking that makes you vulnerable to an employee cheating your time clock.

The 4 Most Effective Ways To Prevent Time Clock Fraud

So, when employees can cheat the time clock, they will. While you can address individual instances that you’ve caught, there will be many more that you didn’t catch. 

Here’s how you can prevent time clock cheating.

1. Invest in a GPS-Driven App

A GPS time clock app tracks an employee’s location from when they clock in to when they clock out so you always know when employees are actually on site. Each employee would have the app installed on their phone, so buddy punching becomes a thing of the past—an employee can only log themselves in, not others.

2. Periodically Review Your Reports

Look at your labor reports to identify any discrepancies. In Workyard, you can pull real-time reports for any employee. Does it seem like some jobs are taking too long? Reference photographs and text to determine whether tasks are getting done on time, or whether it seems like your employees are losing time.

3. Improve Your Employee Communication

Sometimes, time clock cheating doesn’t occur because employees are trying to “steal time,” but rather because employees don’t have enough time in the day. A job goes over, for instance, and they just attribute that time to the next job. You are paying them for the same number of hours, but now your estimates and client billings are off. 

If you’re using a GPS app, this is easy to catch and fix. But even if you’re not, have a conversation with your employees about their daily workloads. Make sure they understand that it’s important to be accurate in their time tracking so that estimates are correct and jobs are scheduled accurately.

4. Establish the Consequences of Time Theft

In your employee manual make it clear that time theft will not be tolerated. Set up a system of warnings and progressive discipline, so that employees know the consequences of their actions and be aware that you’re paying attention. Follow through on those consequences when they do occur.

Time clock cheating is a serious issue, but it’s one that you can address with policy and technology. Because time clock cheating is so insidious (employees often do it without even thinking about it), it’s better to make it so that it’s impossible to do—with the right technology.

Precisely track time with Workyard.

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Defeat Employee Time Clock Fraud With Workyard

Workyard’s construction time tracking software puts your employee time tracking on autopilot. With our GPS-powered time clock app, you’ll never have to worry about time clock cheating again—buddy punching, late clock-ins, late clock-outs, or employees forgetting to clock in at all are a thing of the past. 

Get real-time reports regarding your employee hours. View where your employees are right now, on a live dashboard. And make time clock fraud a thing of the past.