Time theft happens when an employee gets paid for the hours they didn’t work. Whether employees do that intentionally or unintentionally, time theft costs US businesses billions of dollars every year.
One employee only needs to steal a few minutes each shift and those minutes can add up to hours over time. If management doesn’t do anything to resolve this problem, it may affect the morale and behaviors of other employees.
However, it’s not difficult to prevent time theft from happening. With the right time clock software and a clear attendance policy, you can eliminate a majority of fraudulent attempts.
In this post, we’ll discuss ways people may do to steal company time, as well as how you can prevent and handle these situations.
What is time theft?
Time theft is when an employee gets paid for the time they didn’t work.
Time theft is common among hourly workers, remote employees, and employees who commute a lot. These positions have flexible work hours and locations, so it’s harder to keep track of the actual time worked.
But time fraud isn’t limited to any industry or business. It can happen in any workplace that still uses an ineffective attendance system.
Why employees commit time theft
Most of the time, stealing company time stems from employees feeling underpaid. They try to steal hours here and there to get the pay they want.
Some employees use stealing company time as a way to rebel against the company. Maybe they’re dissatisfied with the workplace or they feel undervalued.
Even when there’s nothing wrong with the work environment and the pay, some people simply find sneaky ways to get extra pay without putting in all the work.
And some employees commit time theft because they can. If the clock-in system and management are loose, it’s easy to write down the hours that are beneficial instead of being honest. In fact, 43% of hourly workers in a survey admitted they exaggerated their hours worked at least once.
Knowing why employees commit time fraud can help you figure out the right way to tackle the situation. But it’s best to prevent time fraud from happening by using a strict time clock system that makes recording inaccurate hours impossible.
Types of time theft
Time clock theft
Time clock theft occurs when someone tries to fudge their timecards and round their hours up.
For example, Doe’s shift starts from 8 am to 12 pm. She arrives at 8:15 and leaves at 11:30, while still writing down 8 to 12 in her timesheet. 15 or 30 minutes might not be a big number, but it adds up over time.
This type of time fraud is common in businesses that still use paper time cards or manual spreadsheets. Employees enter their start and end times by themselves, so it’s easier to round hours up or even add more hours to get overtime pay.
Businesses are starting to move from manual time tracking to automated systems so it’s not easy for anyone to modify the numbers.
Buddy punching happens when an employee clocks in and clocks out for their coworker.
For example, Don works at 9 am, but he’s running late. Then he asks Deena—a coworker—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.
Buddy punching can easily be resolved by using biometric time clocks. Employees punch in and out by using their fingerprints or facial features, so they must be present at the work site to do so.
Swipe card excuses
Employees may use many excuses regarding their swipe cards so they can record worked hours manually (and incorrectly, probably). 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”.
Excessive personal time
Everyone needs some “me time”, especially when working long hours. But employees clocking in and not working in the long run will cause harm to your business.
This type of time theft can be blurry and hard to spot because you can’t follow your staff like they’re babies. But here are some common signs of employees not using their time for work:
- Make lots of personal phone calls
- Frequently fall asleep during work hours
- Take lots of smoke breaks
- Chit chat too much with coworkers
Sometimes, employees may take longer breaks than their standard break time.
For example, the standard lunch break at Carl’s company is 1 hour, but he always takes a 2-hour lunch break and still records a 1-hour break in his timesheet.
Taking lots of smoke breaks may also be an indicator of stealing company time. Although smokers need that amount of nicotine to keep them happy and productive, it can get complicated when smoking becomes a social activity. Groups of smokers may leave work for 15-20 minutes for smoking and chit-chatting.
Smoke breaks also cause non-smokers to feel unfair because they don’t have a “valid reason” to take breaks. Instead of restricting smoke breaks, you can give non-smokers extra time off so everyone has an equal amount of break time.
Internet time theft
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.
When your staff spends too much time on Internet distractions, re-evaluate if it’s the problem from the employees themselves or if workplace changes are necessary.
On-the-move time theft
Workers who travel to different job sites to work (home cleaning, baby-sitting, delivery, etc.) can easily commit time theft. It’s harder to track their location, when they arrive, and when they leave. They can arrive later, leave earlier, or not show up at the work location at all.
How to prevent time theft
Spotting employee time theft can be challenging if employees try to be sneaky. And you don’t want to be that boss who observes every single movement of your employees. That’s why taking measures to prevent stealing time at work from happening is the better approach.
Establish a time theft policy
Creating a policy regarding time theft is a transparent way to prevent possible offenses.
The policy should include:
- Behaviors that are considered time theft
- Types of time theft
- How you monitor employee time
- Consequences employees may face if they commit time theft
Once you’ve established a time theft policy for your business, communicate it to your employees. Explain why this policy is created, fraudulent behaviors, and the consequences of time fraud on both your business and on employees’ job security. Ask for written confirmation of whether your employees fully understand the policy.
Don’t forget to tell your employees that it’s OK to take breaks and have some minutes for themselves, as long as they don’t plan to commit time theft.
If you’re not sure, consult an attorney to create a proper time theft policy.
Keep a close, yet unintrusive eye on employees
Monitoring employee attendance is necessary to help you spot time theft early. Showing up late, leaving early, or leaving tasks unfinished are signs of employees starting to disengage from the workplace.
If your business is still using paper time cards or tracking work hours manually, we recommend changing to an automated system, like Camelo. It’s hard to backtrack and spot discrepancies in manual timesheets, especially if you manage a larger team.
Be careful when monitoring your employees, though. Being too strict and obvious can appear like you’re micromanaging and intruding into their privacy.
Create a healthy and positive company culture
Many cases of time fraud result from dissatisfaction with the workplace. Some employees hate the working environment; some feel they’re underpaid; 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 increase employee trust and satisfaction.
Some actions you can take to build a better company culture and prevent time theft include:
- Prioritize transparent and constructive communication.
- Support and engage your employees. Look out for them genuinely and improve your employee engagement programs.
- Pay your employees properly. Trying to save by underpaying your workers will only cost you in terms of productivity and employee engagement.
- Be firm and consistent in enforcing the workplace policy. If someone can get away with fraudulent behaviors easily, other people will assume they can do the same.
Use good time and attendance software
A proper time tracking software like Camelo helps prevent time theft right from the beginning:
- Employees clock in and out by taking a selfie at the work location or recording their GPS location. It’s difficult for buddy punching to happen. It’s easy to check if your employees have arrived at work and clocked in/out on time.
- The software records worked hours exactly for every minute. Managers can then review, verify, edit, and export timesheets for accurate payroll and avoid losing money on time theft.
- Employees clock in and out using their phones or a device at work. There are clock-in reminders before their shifts. There’s no room for “I forgot to bring my swipe card/time card” or “I forgot to clock in/out”.
How to tackle time theft
What if time theft already happens in your company? The course of action you must take depends on your company’s policy. You can either give a verbal or written warning to that employee, or terminate them if that behavior continues.
A sample written warning for time theft
Sub: Time Theft – Violation of Code of Conduct
Dear Mr. / Ms.
It has come to our attention that you were writing down the wrong start and end time of your worked shift on [Date] at [Time]. We do not appreciate such action.
You are advised not to repeat such incidents in the future. Management will be forced to take necessary disciplinary action if you continue to show such unacceptable acts, which may ultimately result in the termination of your employment.
This letter will be placed in your personnel employment file. Please acknowledge receipt of this letter by signing one copy of the letter as enclosed herewith.
FAQs about time theft
Is time theft illegal?
Time theft is fraudulent. You can sue an employee for time theft, but most employers don’t go down this road because it’s a costly process and nothing guarantees they can recover the money lost.
Can employers sue employees who committed time theft?
Yes, you can file a civil claim against that employee. But it’s an expensive and emotionally draining process and the outcome isn’t always favorable.
You need to pay attorney fees at the beginning of the lawsuit, wait for weeks or months for the claim to be processed, and provide evidence that is clear and solid. It’s time-consuming to backtrack sneaky behaviors such as chit-chatting with coworkers or taking extended breaks.
If you can prove the employee stealing time and you overpaying them, they’ll have to pay for the restitution, fees, and damages. But that outcome is not guaranteed. The employee may not have money to pay you back. The employee could be acquitted, meaning you get nothing back and you also have to pay high attorney fees.
So, unless the employee has taken thousands of dollars from stealing company time, litigation is not worth it. It’s better to define disciplinary actions in your attendance policy and follow them accordingly. Reprimand or terminate that employee and then move on.
Can you fire an employee for time theft?
Yes, if termination is defined in your attendance policy as one of the disciplinary actions for time theft.
Are there any time theft laws you need to know?
Currently, there are no laws that define disciplinary actions for time theft. Most cases are resolved in-house based on the company’s policy.
Be careful if you deduct pay or refuse to pay an employee who committed time fraud. According to the Fair Labor Standards Act (FLSA), if you don’t pay an employee for the hours worked, they can file a lawsuit against you for 2 times their wages, including legal fees.
How can you conduct a time theft investigation?
Keep in mind these tips when conducting a time theft investigation:
- The person who discovered the theft is not the one to investigate.
- Involve neutral third parties or witnesses in the investigation.
- Keep all records and interactions well-documented.
- Keep the investigation confidential.
- Seek help from experts—an attorney and a certified public accountant.
Time theft is expensive and damaging for companies. It shows there are gaps in your business operations and time tracking system.
It’s best to take preventive action before fraudulent behaviors actually occur in your business. Pay attention to suspicious behaviors and take action in a timely manner.
And don’t forget to try out a good time tracking app like Camelo to stop any time fraud attempts from happening. Try it for free →.