When talking about employee theft, the first ideas that come into our minds are related to material belongings. It could be cash, equipment, data, and intellectual property as well.
The idea of stealing time isn't the first to occur, being a bit elusive for employers and employees.
However, as time theft can be quite costly for the company, in this complete guide, we will dive into the most common ways employees steal time at work, time theft laws, and how to prevent this fraud from occurring.
Most Common Forms of Employee Time Theft
But what is time theft? Simply put, time theft is when employees are paid for the time they did not spend working. It is practically stealing company time and is considered fraudulent.
Employee time theft can have many forms. Below, we have gathered a list of the six most common types of stealing a company's time.
The most common way of employee time theft is so-called buddy punching. Buddy punching most often occurs in companies that use PIN-based systems, time cards, or time clocks to monitor attendance. It happens every time an employee clocks in or out for one or more colleagues, using their credentials.
Instead of clocking in after arriving late, an employee may ask their co-worker to start their time clock even though they are not at the workplace.
In some instances, such a practice can evolve into a well-developed time theft scheme where the first employee to arrive clocks in for the entire team. Then, logically, the whole team is clocked out with the last employee leaving the workplace.
A shocking 2017 study revealed that 17% out of 1000 employees admitted to being involved in buddy punching. The cost of US employers annually was projected at $373 million, paid for workers not physically at their job site.
Punching a co-worker in or out is an intentional offense. Such misconduct should result in termination or disciplinary measures if previous corrective actions have been ignored.
Taking Longer Breaks
But buddy punching is not the only way of employee time theft. Many working hours can go to waste unrecognized if employees take longer breaks than they are allowed to.
Extended breaks most commonly occur when an employer doesn't require their staff to check out when taking a lunch break.
However, it happens even when breaks are being logged in. To make the case even more serious, it sometimes happens in combination with buddy punching to avoid disciplinary actions.
The scenario is simple. Employees usually get 30 minutes of a lunch break. It's not that difficult to understand that sometimes, an employee just needs a bit more time and can be a few minutes late. However, taking a longer break becomes an issue when stealing time at work becomes a habit.
If that time is not made up, it can have a domino effect on employee productivity. The workers are not where they should be during their working hours, so that they may miss project deadlines or important meetings.
If you notice that employees in your company are taking breaks longer than allowed, there are two possibilities: either you're providing them with insufficient time for a break, or the culture at your workplace is far from accountable.
Ensure that you provide your employees adequate time to rest and that your company complies with the relevant meal and rest breaks in your area.
Time Theft On The Internet
One of the most common ways of employee time theft is using the internet for non-work-related purposes. Employees can engage in various other activities instead, such as:
- Spending time on social media
- Online shopping
- Playing online games on mobile apps or work computer/laptop
- Browsing the internet for personal research
- Interaction with online users
All employees have smartphones and will use them to indulge in social media. Unfortunately, using the internet for activities other than business is stealing company time, often having a form of addiction.
And with continuous notifications impacting a person's focus, Instagram, Facebook, and TikTok are all colossal productivity killers.
Taking Unreasonable Personal Time
Employees can use company time to engage in various private activities. Personal time can be considered stealing company time when they do it in excess.
For example, an employee will take excessive personal time by texting during their shift or making phone calls to finish personal chores. If they work on the computer, they can steal time on work by paying bills online or running errands if they are field workers.
Employees with side gigs can commit their fairly paid hours to finish what is expected of them in their other job. Some workers can use this time to study, others to take a nap. In all the cases, such use of working hours may be considered an employee time theft and should be adequately addressed.
Rounding Time Card Fraud
Rounding time theft occurs when an employee arrives a few minutes late or leaves work earlier. It may happen that in these situations, the employee rounds their hours so that it seems they were present for the entire shift. They can engage in time theft unknowingly and with the most innocent intentions, as they believe that having round numbers is easier for the payroll.
Usually, rounding only amounts to a couple of minutes every day. Still, throughout a month or a year, it adds up.
When done intentionally, with the purpose of providing misleading data to the company, such employee time theft practice can be considered as falsifying a time card. This is possible only with companies that still use manual time tracking methods.
The Invisible Employee
And there are those invisible employees who are impossible to find when a manager needs them. No matter their profession, field workers can find sneaky ways to steal company time.
Unsupervised, they can spend time finishing their personal or other business errands during their working hours. Or they can decide to go home earlier.
Using the GPS time tracking feature of tracking software, such as Timeero, during your employees' shifts, you will always have real-time info on their whereabouts.
How Can You Prevent Employee Time Theft?
Now that you know the methods employees most commonly use to steal time at work, here are the most efficient solutions that you can use to prevent such malpractice from happening.
Use Automated Time Tracking
If you're still using paper timesheets or Excel templates, reconsider switching to an automated time tracking solution. While manual time tracking is generally the most straightforward way for employees to steal time, it opens doors for multiple excuses.
Switching to time attendance software can end fraudulent employee time theft and early punch-ins. At the same time, you will make it easier for your staff to clock in and out of their breaks via mobile apps.
Time tracking software like Timeero will put an end to buddy punching time theft. Using the facial recognition feature, the system will notify administrators if the person punching in isn't the person they claim to be or if there are any other discrepancies or errors.
A mobile tracker app also enables tracking of your employees in real-time after they've clocked in.
Timeero, for instance, also shows the exact location of your remote or mobile workers via their GPS devices. If you have field staff working at multiple locations, you can benefit from its geofencing feature.
By setting a geofence - an invisible border around the workplace, you can permit your employees to clock in and out only when they are within the fence. Besides, you'll put definitely put an end to a disappearing employee problem.
Check out this article to learn more about the benefits of using a geofence time clock.
As the app monitors employees' during their shifts only, you and your employees don't need to worry about privacy concerns.
Have a Detailed Policy
Two-thirds of all US-based small businesses fall victim to employee theft and fraud, losing around 5% of their revenue.
Besides having the proper tools that could support your efforts to put an end to intentional and unintentional fraud and theft, your decisiveness should also be confirmed and explained in your policies and procedures.
Your staff should be aware and understand why you are implementing the procedures and what exactly your expectations are.
Before starting with the time attendance policy, your legal advisors should check all the relevant local, state, and federal wage-and-hour and time-theft laws. You must create clear, thorough, and consistent procedures concerning clocking in and out, lunch and other breaks, and phone, and social media during working hours.
Furthermore, your employees need to fully understand their work responsibilities and how to use the time to achieve work-related goals if there is a lull in the workday.
After you have created the policy and the procedures:
- Include them in your employee handbook immediately.
- Ensure all your employees have read and signed a document declaring they have read and understand the policy and procedures in the handbook.
- Post easy-to-spot reminders and alert your employees through mobile apps.
- Be Persistent With Your Procedures
By following the steps above, the odds are high that the occasions you will need to follow through with the set procedures will dramatically decrease. Taking disciplinary action is emotionally draining for all involved and, for a while, can really disrupt the atmosphere at the workplace.
However, if you suspect or discover any evidence of employee time theft, you need to take preventive measures to stop such behavior from harming your business.
Develop disciplinary procedures to manage employee time theft in your handbook.
Disciplinary actions may begin with issuing a verbal notice, followed by a written warning of time theft or establishing an improvement plan. If all these measures fail, the process may be followed by suspension and termination.
To make it easier for you to enforce your policies and procedures, we've created a free sample write-up for stealing company time that you can download and tailor to fit your company's needs.
Improve Your Workplace Culture
A widespread employee time theft occurring among your staff is a clear warning sign of low morale and disrupting workplace culture. Such a culture can negatively impact employee engagement and productivity, seriously harming your company's bottom line.
Even a single unmanaged case of time theft can lower morale among your employees when they see a colleague getting away with it. If they notice the company isn't following through with its own procedures, they are more likely to steal time at work.
To improve employee morale and engagement, and prevent further time theft occurrences, you should show your commitment to building a culture of accountability, transparency, and trust in your company.
Creating clear and thorough policies and procedures and ensuring you follow them are essential steps toward such a culture.
A system of employee rewards and recognition for accountable employees who excel in their roles will only bust staff engagement even more.
To learn more about the importance of accountability, you can check out our article on holding your employees accountable at the workplace.
Is Stealing Company Time a Crime?
Employee time theft itself is not actually considered a crime.
While you may be able to sue your employee and attempt to retrieve your company's losses, you will need to prove the employee misrepresented their working hours and that you overpaid them. In most cases, a lawsuit will not be worth your time and money.
If, however, the theft is severe, you may consider a lawsuit to try to recover substantial funds. Employee time theft can fall under criminal law. But in that case, you need clear evidence that your worker included hours they did not work in the timesheet.
If you are considering taking legal action against an employee, consult your lawyer before taking any action. They will take you through state and federal laws and advise you on the best course of action.
How to Deal With an Employee Stealing Time?
You must perform a fair, accurate investigation if an employee is suspected of stealing time at work. A third party should investigate your suspicions, not the person who uncovered the time theft. During the process, you must maintain strict confidentiality with the help of relevant professionals.
Under the Fair Labor Standards Act (FLSA), businesses must pay an employee for all the hours recorded on their timesheets. Even if you reckon that some of that time may be stolen it's not advisable to try to withhold their wages over a time theft claim. If you choose to do it, an employee can sue the company for two times the missing wages, plus any legal costs and fees.
Furthermore, if you try to bring a time theft claim against a worker who accuses you of withholding their salaries, your action could be seen as vindictive.
While it is possible to sue an employee for time theft, moving on will be easier and probably less expensive. With a clear policy, transparent procedures, and tools that will support you in preventing time theft, focus on putting an end to employee time theft in your company.
If and when time theft occurs again, you will have a transparent and straightforward chain of actions ahead of you.
How Can Timeero Help Me Prevent Employee Time Theft?
Creating a detailed employee attendance policy and procedures and sticking to them will improve your workplace culture, promoting accountability, transparency, and fairness.
Current technology can be your best ally in preventing employee time theft. With Timeero, an automated GPS attendance and time tracking software, you can eliminate early clock-ins and late clock-outs, stop prolonged breaks and put an end to buddy punching.
Besides streamlining GPS time tracking, employee scheduling, and payroll, Timeero will provide you with accurate and relevant records, satisfying both the IRS and, in a case of a lawsuit, a potential court's request for data.