Time Theft: Why (and How) Your Employees Do It and How to Stop It For Good

Time theft happens in nearly 75% of US businesses, according to the American Payroll Association (APA). It is committed by workers and employees everywhere from the public sector to private industries.

Did You Know?

27% of employees in construction, healthcare, and service industries either committed or witnessed time theft, according to an Ernst & Young study.

Tolerating time theft can spell trouble for businesses in many ways. 

In this article, you’ll learn about different kinds of time theft and how they manifest in the workplace. 

Then we’ll take a hard look at the impact of time theft on business operations and employee morale.

We will then discuss effective strategies to prevent and mitigate time theft at work.

But first, let’s discuss what time theft is. 

What is Time Theft?

Time theft happens when an employee gets paid for time they did not spend working. It’s also called time fraud, buddy punching, and time card fraud. Time theft can be committed by salaried employees, hourly workers, and contractors. 

Stealing time at work is a type of payroll fraud. Unworked time gets credited to an employee and compensated at the expense of their employer. At the end of a year, idle minutes and hours can accumulate into days of unworked time among workers and staff. 

Often, time theft is no secret in the workplace. A lot of managers and employers are aware that workers are stealing time.  Even so, time theft is notoriously hard to control using traditional methods such as paper timesheets and time cards. Workers can usually find a way to exploit such systems to commit time fraud. 

Time Theft Tactics 

“The question isn’t who is going to let me; it’s who is going to stop me.” Ayn Rand might not have been thinking of idle workers when she penned this famous quote, but they were surely thinking along the same lines as her. Temptation abounds in the workplace when there is little oversight and accountability for employees to earn their pay while on the clock. 

Here are some ways employees commit time fraud:

Extended Breaks 

Workers prolong their meal or smoke breaks beyond the period allowed by management. Some also take unscheduled breaks altogether or enjoy multiple breaks throughout the day.

Buddy Punching 

Employees ask their buddies at work to punch in their cards for them when they are running late. This practice often operates on a reciprocal basis among co-workers. 

Rounding Up or Down 

Some workers round their start and end times thinking it will help management calculate their salary faster. Some, however, do it deliberately to earn extra pay. Whether done maliciously or not, rounding time to include unworked minutes boils down to time theft.

Timesheet Alteration  

Workers deliberately alter timesheets to reflect a false record of hours worked. Tampering with timesheets is a more conscious act of fraud compared to rounding as the culprit is willfully deceiving his or her employers.

Chatting 

Employees can also steal time by chatting with colleagues about matters unrelated to work. These include narrating one’s vacation, sharing stories about family events, or discussing sports. While teamwork hinges on good communication among co-workers, using a lot of time to talk about life outside work is a form of counterproductivity. 

Socializing

Workers can steal time by socializing with teammates instead of working on tasks. They may gossip about co-workers or complain about bosses. Employees may also use time to flirt with newcomers or visitors.

Idling 

Employees try to earn extra pay by standing around the clock. They may try to look busy doing nothing. Or they may try to hide their activities such as browsing social media while waiting to clock out. 

Why Employees Steal Time

There is no single, ultimate reason to explain time theft. The psychology behind it cannot be expressed in a neat cause-and-effect equation. Usually, there are several reasons why an otherwise honest hire can turn to stealing time from his or her employers. 

One reason is that an existing culture of counterproductivity can pressure a new hire into conforming. In order to be socially accepted, a fresh recruit chooses to go with the flow instead of upsetting his seniors. 

Another reason is that time theft instigators are trying to show off to their work buddies. By pushing boundaries as far as they can, they are saying that they are not afraid of their boss.

Often, a corrupted way of thinking is behind habitual time theft. Employees may feel they are ‘getting back’ at their employers by altering timesheets. They may justify taking an unscheduled break after a hard day’s work because they ‘deserve’ it. Laziness, procrastination, dishonesty, and greed all play a part in malicious time fraud. 

Whatever the reason, time theft takes its toll at the end of the day. Let’s look at how stealing time affects both employers and employees. 

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The Impact of Time Theft

Consider the following findings: 

• $373 million – the cost of ‘buddy punching’ per year (Conselium)
  
• 65 minutes – average daily time spent browsing news websites while on the clock (Vouchercloud)
  
• 44 minutes – average daily time spent on checking social media while on the clock (Vouchercloud)
  
• 38% – the percentage of employees who discuss activities outside work with colleagues  (Vouchercloud)
  
• 43% – percentage of employees who inflated their number of work hours or underestimated their breaks (APA)
  
• 7% – percentage of companies’ gross payroll paid for unworked time (APA)

The impacts of time theft are tangible enough for businesses. Then there are effects that cannot be quite quantified and put on paper. Here are some ways employees suffer from time theft: 

Damaged Employee Morale   

Most, if not all of us, show up on the first day of work wanting to do our best. But when good employees see that their best is essentially on par with a tardy colleague’s doctored timesheet, it’s hard to stay motivated. Honest work needs to be encouraged and affirmed by management through a policy of fairness and accountability in the workplace. 

Counterproductive Atmosphere

Few things are more contagious than laziness. (Measles, perhaps.) It doesn’t take a cough or a sneeze to transmit laziness to the next person. All it takes is for a lazy co-worker to get away with slacking or enjoying a 40-minute coffee break instead of 15. Then the diligent employee starts to ask himself, Why should I work my fingers to the bone while this bloke is watching UFC? People are more susceptible to influence than they care to admit. If time theft goes unchecked, an atmosphere of counterproductivity sets in like fog on a winter day. 

Loss of Trust

Something more than dollars is lost when time theft occurs. Trust between employers and employees is also lost when time fraud is discovered. As trust is the foundation of all healthy relationships, it must be protected at all costs in the workplace as it is in the home.

Time fraud and theft should never be tolerated. While time theft is committed by employees, employers are the ones ultimately responsible for creating a culture of accountability. Business owners and project managers should take steps to enforce transparency by tracking time usage among employees.

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Stop Time Theft 

Prevention is better than cure. Stopping time theft before it starts means being proactive in identifying and stopping up loopholes.  Here are steps to stop time theft in your workplace:

①  Set Expectations  

Employers need to set clear guidelines and expectations around employee time usage.  Make sure employees understand the exact start and end times, lunch and smoke breaks, and overtime. For hourly employees, clarify guidelines around billable hours and idle time. 

By setting clear expectations, employers get everyone on the same page. They also protect themselves and the business from potential accusations of discrimination and harassment from concerned parties. 

②  Track Employee Time Usage 

It is the management’s job to track workers’ hours. While workers can report their own time usage, project managers need to ensure records are accurate and updated on a timely basis. 

There are many solutions available for tracking employees’ time usage. Be sure to pick one that accurately tracks workers’ productivity and allows no loopholes for time theft. For workers on the field such as construction, choose a solution that captures accurate data on personnel movement, location, and activity.

③ Review Time Records

Once an adequate time tracking system is in place, employers should actively review time records on a regular basis. These should be periodically compared to employees’ expected work hours. 

Take note of suspicious entries and identify any pattern of insidious time theft. Investigate any incident that stands out from the rest such as prolonged idle time for hourly contractors or excessive overtime for salaried employees. 

④ Follow Through

Company guidelines and policies are only good if they are followed through. Once time theft is discovered, management needs to enforce appropriate disciplinary measures. These need not be as drastic as termination on the first offense. Rather, they can be increased in severity according to the seriousness of the offense. 

For example, first-time offenders can be given a warning while habitual time thieves can be suspended for a considerable period. Disciplinary measures depend on the management but need to be communicated and followed through to be effective. 

Taking delinquent time thieves to task also sends a message that the management values hard workers who help the company succeed. 

⑤ Be Aware

Lastly, business owners and managers need to be aware of time theft tactics and loopholes. Human ingenuity will always find a way as long as the opportunity presents itself. 

The reality is, workers can spot loopholes better than managers or business owners when it comes to stealing time. Updating time tracking systems can help employers stay on top of business operations and stop time theft in its tracks. 

Time Tracking Methods

Sometimes, a culture of time theft can be so ingrained in a workplace or industry that it is no longer possible to uproot it completely. In that case, employers need to mitigate time theft and stop it from spreading. 

Time tracking systems can help business owners identify time theft occurrences and loopholes. While there are different ways to track time usage among employees, not all of them are effective or accurate. Here are the most common methods for tracking time:

• Pen and paper:  Employees record their start and end times on physical sign-in sheets. This basic method requires manual observation and monitoring to be accurate. It also takes a lot of time to tally and process.
  
• Time clock:  Employees use either an analog or digital clock to punch in their start and end times. While this method is more precise and convenient than pen and paper, it cannot track employee activity during work hours.
  
• Biometric system:  Biometric time tracking systems require employees’ sign-in in the form of biometric ID at the beginning or end of their shifts. It prevents ‘buddy punching’ by using a person’s unique biometric data such as fingerprint or iris scan as identification. However, it still fails to track employees’ activities during work hours.
  
• Honor system:  Workers estimate the time it will take to complete a specific task and submit that estimate to their client or boss. Employers using an honor system to track time may fail to comply with labor laws since they can’t document work hours properly.
  
• Time tracking software: Digital time tracking solutions automatically track and record employees’ time usage. Advanced time tracking software can also track employee activity, idle time, and location. Sophisticated time tracking solutions include real-time updates, time usage analysis and reports, built-in rules for labor compliance, and other advanced features.
  

It’s clear that basic methods such as pen and paper may suffice for simple businesses such as mom-and-pop stores. But it simply won’t do for companies with large-scale projects and manpower. Employers need to choose a time tracking system that will help them identify time theft and promote fairness and transparency. Managers and personnel also need to be trained in using time tracking systems to effectively mitigate time theft in the workplace.

Maximizing Efficiency and Addressing Time Theft in Your Business

Addressing time theft requires a multi-pronged approach. Aside from selecting the right tools, understanding best practices, and avoiding common mistakes can make a big difference.

1. Understand the Cost of GPS Tracking for Employee Time Management
   If you’re considering GPS tracking for employee time monitoring, it’s important to know how much does GPS tracking cost. Assessing these costs helps ensure the benefits of tracking justify the expenses.
2. Avoid Time Tracking Errors and Improve Efficiency
   To minimize the risk of inaccurate records, learn about common time tracking errors and how to avoid them. Understanding these pitfalls can help keep your time management system error-free and efficient.
3. Measuring Employee Productivity Accurately
   Beyond just tracking hours, it’s crucial to gauge how employees are spending their time. Check out the best practices for measuring employee productivity to gain insights into your team’s performance and optimize workflows.
4. Mitigate Time Theft through Accurate Job Management
   For industries like construction, tracking job progress and worker locations is crucial. Explore effective job management solutions that help prevent time theft and improve oversight of field operations.
5. Leverage Tools for Tracking Time and Compliance
   For a comprehensive solution, consider using integrated time reporting and compliance tools. Learn how you can automate payroll to streamline your payment processes and maintain accurate time records.
6. Choosing the Right Time Tracking Devices
   Choosing the correct hardware or software for time tracking is essential to avoid misuse and inaccuracies. Explore the different time tracking devices that suit your business needs and can help enforce fair and transparent tracking.
7. Should Salaried Employees Clock In and Out?
   For businesses with salaried workers, determining whether to track hours is a critical decision. Learn more about whether salaried employees should clock in and out and how this can impact time theft and productivity tracking.

By integrating these strategies and tools, you can enhance your time-tracking system, reduce time theft, and boost efficiency across your business operations.

End Time Theft with Workyard

Workyard is the most accurate time clock app built for the construction industry. Equipped with high-accuracy GPS, Workyard provides visibility into real-time locations of employees on the field using a convenient map view. 

Workyard takes the guesswork out of job costing and time card calculations. Automatic clock in and out based on location and time saves money by preventing rounded hours. 

Workyard also saves time and effort by automating timesheets to payroll and job costing with one click. 

All of Workyard’s features are designed with the business owner and project manager in mind:

• GPS Time Clock: Monitor the exact time of arrival and departure of every employee from every job site with high accuracy GPS
  
• Job Tracking: See real-time field progress with up-to-minute updates
  
• Reporting: Get a bird’s eye view of your team’s hours, job activity, and project costs at a glance
  
• Integrations: Connect any app using 15+ native integrations to major cloud and on-premise apps or using our developer API
  
• Scheduling: Assign tasks to employees with job notes and checklists using our digital team calendar
  
• Job Costing: Hit your budget with live construction cost tracking
  
• Labor Compliance: Simplify compliance with wage and hour laws through automatic recordkeeping, GPS audit trail, and built-in rules for overtime calculations

Ready to save time and money? Sign up for a free trial of Workyard today!