Time theft is a common headache for many employers because it costs businesses billions of dollars every year, according to Statistic Brain.
One employee only needs to steal a few minutes per shift, and the stolen minutes add up significantly over time. Not to mention if other employees spot these fraudulent shenanigans, they can lose their morale, or even imitate those behaviors.
However, it's not too hard to spot time theft, as well as preventing and tackling them in time.
What is time theft?
Time theft is when an employee gets paid for the time they didn't work, or wasn't actually at work, or was at work but didn't actually use the time for work.
Time theft is common among hourly workers, employees who commute a lot, and employees who work on computers. But time fraud isn't limited to any industry or business; it can happen anywhere.
Types of time theft
Time clock theft
It's quite common to see employees fudging and rounding their work time. They can arrive late, leave early, take extended breaks, while recording full hours.
For example, Jess's shift starts from 8 am to 12 pm. She arrives at 8:15 and leaves at 11:30, while still putting down 8 to 12 in her timesheet. 15 or 30 minutes might not be a big number, but it will cost you a lot in the long run.
Some staff can even be more daring by adding hours to get overtime pay.
It's easier for employees to commit this type of time fraud if your business is still using paper time cards and tracking things manually.
Buddy punching is when an employee clocks in and clocks out with the help of other employees (buddies).
For example, Don works at 9 am, but he's running late. Then he asks Deena to clock him in at 9 even though he arrives 30 minutes late. Don then leaves work at 4:30 and asks Deena to clock him out at 5. Okay, we don't understand Deena, either. But if Don does this every day, he's stealing over 20 hours every month and 262 hours every year.
It's better to use software with biometric clocking-in methods to prevent employees from clocking in and out for each other.
Swipe card excuses
Employees may use many excuses regarding their swipe cards to get away with time theft. Be careful if you're hearing too much of "I forgot/lost my swipe card", or "The time clock didn't take my swipe card".
More personal time
Employees use work time for personal matters. This type of time theft can be blurry and hard to control because you can't ban your staff from answering a dentist appointment call or take smoke breaks. But if your employees use too much work time for personal tasks, this can harm your business performance.
Some behaviors you can spot include:
- make personal phone calls all the time
- take lots of naps during work hours
- take lots of smoke breaks
- chit-chat excessively with other coworkers
Employees take longer breaks than the required time. Some employees may steal time through smoke breaks.
For example, the standard lunch break at Carl's company is 1 hour, but he always takes a 2-hour lunch break. He still records his timesheet as if he's only taken a 1-hour break.
Internet time thef
This happens when employees browse the Internet for irrelevant purposes such as online shopping, scrolling through social media, playing games, reading newspapers, working on their side hustles, etc.
According to BroadbandSearch, the average time people spend on social networking is 153 minutes per day in 2019. And the number still continues to rise. There's no doubt that work productivity will drop and time theft will increase if your staff spend too much of their time on distractions.
Besides the cost of labor, you're paying for company property including computers, paper, Internet access, etc.
On-the-move time theft
Some industries such as delivery, home cleaning, baby-sitting, etc. require workers to travel to different job sites. On-the-move workers can easily steal time because it's harder to track their locations and time. They can arrive later, leave earlier, drop by their homes, or not show up at the work location at all.
How to prevent time theft
Monitoring and spotting employee time theft can be challenging if your employees are sneaky. You also don't want to pry into your staff's private lives. But preventing timesheet fraud is possible. Try the actions below.
Figure out why employees commit time theft
Most of the time, employees commit time card fraud either because they feel underpaid or because they feel your company doesn't value them.
These fraudulent behaviors are a way to rebel against your company. Of course, some employees are simply sneaky and want extra pay for the efforts they didn't put in.
Figuring out the reasons for time theft is a good starting point to gradually solve the problem.
Establish a time theft policy
A clear and transparent way to prevent possible time stealing behaviors is to create a policy regarding time theft. It should include:
- behaviors that are considered time theft
- consequences employees may face if they commit time theft
Once you've established a time theft policy for your business, make sure to communicate it to your employees. Clearly explain the reasons why this policy is created, time theft behaviors, the consequences of time theft on both your business and employees' job security. Ask for confirmation of whether your staff fully understand the policy.
Don't forget to tell your employees that it's OK to take breaks and have some minutes for personal stuff, as long as they don't plan to commit time theft.
You may need to consult an attorney to create a proper time theft policy.
Reward teams with accurate timesheets
You can set a nice reward for teams with accurate/less inaccurate timesheets. This is to encourage your employees to be more careful when recording their work hours. And individuals don't have much chance to steal time because other team members are involved. Pay for some team lunches, or give them some small gifts.
Keep a close, yet unintrusive eye on employees
Although this may feel like you're prying into other people's lives sometimes, it's necessary to monitor your employees closely. Watching their shifts, tasks, and attendance can help you spot time theft more easily. Even with the help of an automated time tracking software, some employees can still commit time fraud.
If your staff start to show up late or leave early, you should be the first one to notice the behaviors. Tasks that are unfinished are also signs of employees using time for other matters.
If your business is still using paper time cards and tracking work hours manually, you need to make sure that the time clocked in and out, as well as timesheets, are accurate. Talk to your employees if you spot discrepancies in the time records.
You might need to keep track of your employees' hours to avoid extra pay for unplanned overtime.
Be careful when monitoring your employees, though, because micromanagement may cause your staff to feel like you're intruding into their personal lives. Some employees may react negatively if they feel like you don't trust them and monitor them too obviously.
Create a healthy and positive company culture
Many cases of time fraud result from dissatisfaction at work. Some employees feel they are treated unfairly; some feel they aren't paid properly; others simply hate their boss. That's why you need to establish a healthy and positive company culture to create bonds and honesty in the workplace, as well as increasing employee trust and satisfaction.
Some actions you can take to build a better company culture and prevent time theft include:
- Be transparent so that your employees feel you can be trusted. Communication is key. If your staff hide things from you, it's a sign they don't trust you enough.
- Treat your employees better and fairly. Don't make them feel exploited. Look out for them genuinely, they can feel it.
- Pay your employees properly. Talk to them and make adjustments if they show dissatisfaction with their salary.
Use a good time and attendance software
A good time and attendance software such as Camelo allows employees to clock in and clock out using reliable biometrics validation methods. Employees need to take a selfie at the clock-in location, access the location's Wi-Fi network, or clock in using GPS. This is helpful if you're managing employees who commute a lot.
With this type of software, each employee has their own account, so buddy punching is also limited. Employee work hours are recorded automatically and precisely. Managers can review, verify, edit, and export timesheets for more accurate payroll and avoid losing money on time theft.
It's also easier to check the progress of shifts and tasks on employee management software. You can easily spot whether an employee is using their time for something else instead of work without visiting their desk all the time.
How to tackle time theft?
There are many ways to prevent time theft, but what if it already happens in your company? The course of actions you need to take depends on your company's policy. However, below are some main steps you can take to tackle time clock fraud.
If it's the first time someone commits time fraud, you can send an email or talk in person to give that employee a warning.
You need to clearly state the consequences he/she has to face if he/she continues that wrong behavior. This can also be a chance to find out why they adopted such behaviors and spot problems in your business operation.
If an employee keeps stealing time, or has stolen a considerable amount of time from your business, it's imperative to terminate that employee's contract.
Can employers sue employees who committed time theft?
You probably wonder if you can sue employees committing time theft and recover the money lost. You can sue them, but you need solid proof. That's why it's hard to find evidence for sneaky types of time theft such as chit-chatting with coworkers or taking extended breaks.
Employers don't often sue employees for time fraud because recovering the money lost is difficult, plus it wastes more money and time. You should pay your employees properly and keep records of employees' work hours, including overtime, because many employees file lawsuits against employers for not paying them.
Time theft is expensive and damaging for companies, and it shows there are gaps in your business operation.
It's best to take preventive action before it actually happens in your business. Pay more attention to suspicious behaviors and take action in a timely manner. And don't forget to try out a good time and attendance app like Camelo to manage employee hours, attendance, and performance more easily.