What is Employee Time Theft & How to Prevent it

Employee Time Theft

June 2, 2022

Essentially, employee time theft is when employees get paid for time they didn’t work. Even a few minutes of stealing time at work a day can lead to thousands, if not millions, of dollars lost. Read on to learn more about how employees commit time theft and how you can prevent it to create a more productive and profitable workplace.

4 Types of Time Loss 

Employee time loss can often be sorted into four distinct categories: 

1. Time Reporting Inaccuracy 

Whenever employees manually round up their hours worked, it eats into your budget. An average of 2 minutes per day, per employee, are lost and can cost companies hundreds if not thousands of dollars a year. 

2. Calculation Errors 

Manual data entry mistakes are a common occurrence. Even hitting the wrong key on a calculator can cause errors of up to 0.1% of total payroll. While this seems like a small percentage, it all depends on your business’s payroll. 

3. Misreported Breaks 

Employees often record their break times as scheduled as opposed to when they really take them. This costs companies an average of 3 minutes per day, per person. 

4. Time Card Preparation and Calculation 

Preparing and calculating time cards or sheets is a time-consuming and lengthy process. It can take nearly 3 minutes per card, per person, per weekly pay period. This is time you could be spending on other business operations that affect your bottom line. 

Common Examples of Time Theft 

There are many ways employees can steal company time. Some of them might just surprise you. Here are a handful of the most common types of time theft in the workplace: 

Time clock fraud is perhaps the most obvious form of theft at work. This occurs when an employee clocks in and clocks out when they’re not supposed to, most often to make it look like they’re working more hours than they actually are. Or, in other cases, leaving their shift a few minutes early every day. 

Buddy punching is another form of time card fraud where a coworker clocks in for another employee. This makes it appear that a coworker arrived earlier or left later than they did. This type of fraud costs U.S. employers $373 million a year by some estimates. 

Taking extended breaks can add up to major dollars lost in the long run. Whether an employee takes a longer lunch or disappears for personal activities, like taking a phone call, this all affects the amount of time they’re actually working. 

Distractions like social media are detrimental to the productivity of hourly and salaried employees alike. Mobile phone usage is another modern issue that is becoming more apparent as the tech-native generation enters the workforce. In fact, internet use is quickly becoming one of the most common forms of time theft. 

Mistakes on timesheets can happen in the favor of the business owner or the employee. Fudging the number of hours an employee works is yet another case of time and attendance fraud. 

Current Employee Time Theft Laws

Time theft costs businesses billions of dollars a year. However, there are no federal time theft laws in place. Rather, businesses may have their own time theft policy in place to help prevent it from occurring. 

If you suspect an employee is stealing time, it can often be difficult to pursue legal action since there are no time laws. 

First, you will need to prove that an employee has been committing time theft (which we will discuss later). If the time theft is serious, you may consider temporarily suspending an employee while you conduct an investigation. 

The investigation will uncover if time theft occurred while still ensuring you’re paying your employee for hours worked. This fine line is essential for avoiding a wage-and-hour lawsuit for back pay. You can never fire an employee based on suspicion of card fraud. But if it’s proven to be true, you have the right to terminate them immediately and/or pursue legal action. Other examples of employee time theft punishment include the disciplinary route, like a demotion or suspension. 

How to Prevent Time Theft At Work 

Preventing time theft at work is possible when you have the right policies and tools in place. Here are some ways to help prevent time theft: 

Have A Company Policy

This is one of the best ways to cover your bases. Be as detailed as possible in your employee handbook, outlining what constitutes time theft. This may include highlighting break times, proper time card procedures, and the difference between personal and company internet use. This way, an employee is less likely to say they didn’t know they were stealing time. You can also remind employees who you suspect of time theft with this written policy. 

Make sure to emphasize these policies during routine training. Also, remember your business policies are only effective if enforced. 

Invest in An Employee Timekeeping System 

Timekeeping, especially when it’s automated, is a great way to hold employees accountable for their hours worked. Automated timekeeping systems give business owners the control and management necessary to stop time-breakers in their tracks. These systems are savvier than your traditional time clock systems and also greatly reduce the chance for manual errors. 

Consider Alternative Employee Time Tracking Tools 

Today, there are a number of additional tools business owners can use to gain an accurate understanding of how long their employees are working. This includes new solutions like mobile-clock in apps that are ideal for a spread-out workforce, or GPS tracking to help verify their whereabouts. There are even solutions like biometric clock-ins to solve problems like buddy punching by scanning unique biological features. 

Follow Through With Policies and Discipline

It’s essential to follow up with time theft policies and disciplinary action. For example, if you notice an employee is clocking in late, you can send them a friendly reminder on the importance of timeliness. This reminder shows the employee that their tardiness was noticed and likely won’t be tolerated again. At the same time, you can also reward employees who consistently show up on time. This positive reinforcement can help boost employee morale and even be used when it comes time for promotions. 

Proving Time Theft at Work

Proving time theft at work is easier said than done. Since time isn’t tangible, it’s increasingly difficult to prove an employee is stealing it. And as we previously mentioned, you never want to accuse an employee of time fraud without evidence. An automated timekeeping system is one way that can help you prove time theft at work, but it’s also important to stay vigilant. Time-breakers can exhibit similar behaviors that can be the first sign they are stealing company time, such as: 

● Habitually taking a 12-minute break instead of their scheduled 10.

● Disappearing during non-break time.

● Always leaving a few minutes early but never staying late.

● Don’t alert you to a timesheet calculation sheet if it’s in their favor.

If you notice these behaviors, you can address the problem with your employee. Your suspicions may be further proven by security camera footage, or in the case of clock fraud, timestamps from your automated system.

Benefits of Using an Automated Timekeeping System

An automated timekeeping system can help business owners overcome the major areas of time loss. 

1. Proven Time Reporting Accuracy 

Automated time clocks record exactly when an employee punches in and out, saving you two minutes per day, per employee. This eliminates guesswork and confusion about when an employee started or ended their shift. 

2. Ensure Accurate Calculations 

An automated time clock means you no longer need to spend time manually entering time punch data. The block performs all functions while delivering error-free results. This can increase your efficiency by 0.1% of total payroll and give you more time in your day to work on other things. 

3. Enforce Break Conformity 

There’s no way for time-breakers to fool an automated time close, especially when biometrics are involved. This means every employee has to stick to their proper break times and can save three minutes a day, per person. 

4. Eliminate Preparing and Calculating Time Cards 

An automated time clock requires employees to use a badge that is pre-encoded. This provides the system with all the data it needs to calculate how many hours it worked. With these calculations done manually, you save on administrative time and costs. 

If you’re ready to invest in an automated time tracking system to stop time theft at your business, look no further than PayClock Online. This web-based solution gives you the ability to manage employee time and attendance from any location at any time. 


The Benefits of Combining Time Clocks & Online Software

Learn how time & attendance management software with employee time clocks can eliminate workforce time theft. (Free Download)

Grab the Free Guide Here