Is it really a bank robbery if the theft occurs slowly over time? A roll of quarters here. A dollar bill there. What about a museum heist? But, instead of priceless art, millions of dollars are lost in the gift shop, in a steady stream of pilfered tote bags and postcards.
There are no superheroes swooping in to apprehend the transgressors of time theft. What would that look like anyway — a caped hero battling a leaky bucket? That’s because when employees accept pay for time they have not actually worked, it’s usually not a grand, singular event. Time theft is a series of micro infractions which, as stand-alone incidents, may not seem like much. Add them up, and they cost employers billions of dollars per year.
Time theft is so pervasive and takes so many different forms in the workplace that it is difficult to put a precise value on the losses incurred. It’s a nebulous crime, hard to pinpoint and even harder to quantify.
Like so much in the world of HR and payroll, the best ways to stop time theft come from the protocols and systems you have in place. Let’s take a look at the ways time theft happens in the workplace and then look at some best practices to save your operation money. Like they say, not all heroes wear capes.
How does time theft happen?
Time theft is not tied to any one industry, workplace, employee or position — it does not discriminate. And, while some types of time theft are malicious or intentional, others are purely accidental. That said, all forms of stolen time impact your bottom line. Here are a few of the most common ways that businesses experience time theft:
Accidental overreporting
It’s true, the majority of your workforce is made up of good people that have your best interest at heart. However, it’s not uncommon for employees to make mistakes and overreport their hours, especially with manual time tracking methods like paper timesheets and digital spreadsheets.
Intentional overreporting
Although it may not seem like much, when employees punch in early or punch out late (even by just a few minutes), it adds up. Let’s say an employee consistently starts work at 8:05 a.m. every single workday, but reports an 8:00 a.m. start. Removing three weeks for holidays and vacations, those five minutes a day over the course of a full work year add up to 1,225 minutes, or 20 hours and 41 minutes. Multiply that by the employee’s hourly earnings, extrapolate the results of this overreporting to other employees — and the numbers become mind-boggling.
Buddy punching
This is related to intentional overreporting, but involves an accomplice. Buddy punching is when an employee has a colleague clock in or out for them. Buddy punching is an easy way for employees to hide a late arrival or early departure. However, in some cases, employees use it to cover up missing a shift completely. Both manual and electronic timekeeping procedures are susceptible to buddy punching. It’s as easy as stamping somebody else’s timecard or entering a co-worker’s PIN.
Ghost employees
There are several ways a “ghost employee” can misrepresent hours worked. For starters, an employee could come to work and clock in and then disappear for the day, returning only to clock out. Employees that are in the field, on the road or even working from their home or a remote location could say they are working when they are not. Or, even more elaborate, an employee (likely a manager) could create a fictitious person in the payroll system and collect their wages. “Ghost employees” can be hiding in plain sight.
Personal time
If employees are using company time for non-business activities like surfing the web, checking their social media accounts, running errands or taking personal calls, it’s a form of time theft. With that said, you need to determine what an acceptable balance is for your organization. This kind of behavior should not happen in excessive, regular amounts. However, most employers understand that an occasional phone call, doctor’s visit or personal task online is necessary.
Extra break time
Taking regular breaks throughout the day improves productivity. However, if employees take excessive or extended breaks outside of what’s reasonable or permitted by an employer, they are stealing time. This can take many forms, such as extra long lunch or rest breaks, or even distracting and ongoing chit-chat between colleagues.
Unapproved time
If an employee works through a lunch hour that’s supposed to be unpaid, comes in early without permission, or decides on their own to take work home to “work off the clock,” you are more often than not still required to pay them. Although this form of time theft is usually a consequence of ambition (not malice), it can result in unanticipated payroll costs that you didn’t budget for.
How to combat time theft using technology
Enforcement of time theft begins with a clear and comprehensive company policy. If the rules are clearly defined and consequences unilaterally imposed — no exceptions — employees won’t be confused about what is outside the range of allowable workplace behavior. The goal is to avoid gray areas that employees could interpret one way or the other.
With a time theft policy in place, technology can help you manage employee time more efficiently, accurately and securely. Begin by taking a critical look at analog tracking performed with spreadsheets, punch cards and paper sign-in/out sheets. These outmoded timekeeping practices are prone to inaccuracies and time theft. An action of the first order would be to leverage a solution consisting of a data-collection device (such as an onsite time clock and/or a mobile app) that interfaces with a cloud-based technology like our Time & Labor solution.
Capabilities to look for in a timekeeping technology
Regardless of the timekeeping technology, you’ll want to ensure it has the capabilities you need to effectively and effortlessly combat time theft. Below is a list of key functionalities that will support your efforts to combat time theft and protect your bottom line.
Biometrics
Biometric technology confirms people are who they say they are. Time clocks with biometric scanning automatically identify individuals by means of unique physical characteristics using fingerprint readers, iris scans or facial recognition. Biometrics eliminate the possibility of buddy punching, while also making it more convenient for employees to clock in and out.
Geofencing
With a cellphone in nearly every pocket or purse, many employers are supporting their workforce with convenient solutions to clock in or out using a mobile app on their phone or tablet. If your workforce would benefit from this, consider timekeeping solutions that allow you to geofence, or restrict employee punches based on location. This will help you safeguard against buddy punching and prevent employees from clocking in or out when they aren’t actually at work. Even if you aren’t leveraging a mobile app solution with geofencing, there are IP restriction capabilities available with some web-based timekeeping tools to ensure that folks are punching in and out from an approved computer location.
For more on geofencing, check out our blog: "Geofencing: What It Is and Why Employers Need It."
Geosensing
The satellite-based radio navigation system we all know as GPS not only enables geofencing — it also facilitates geosensing. While geofencing can restrict time punches based on location, geosensing provides an essential location recording. In other words, geosensing captures the location of a punch. This may not be as sophisticated as geofencing, but it’s invaluable for audits and oversight, as it allows managers to verify that employees clocked in or out from expected locations.
Notifications and alerts
Robust timekeeping solutions allow you to set rules in the system. For example, you can specify how much overtime is permitted in a given time period or how long employees have for lunch or other breaks. Then, if there is a violation, managers can receive notifications alerting them of the situation. It’s always good to have someone onsite to keep an eye on things, but that’s not always a perfect solution either. Pairing human supervision, with the convenience of system-based rules and notifications makes communication and oversight that much easier.
Note: Having a full-suite human capital management (HCM) solution is particularly beneficial for rule-based functionality, as payroll, timekeeping, HR, talent management and more are all interconnected. Accurate timekeeping impacts the accuracy of your payroll, enables HR compliance, detailed and automated record-keeping and so much more.
Smart Punches
Smart punches are an advanced timekeeping capability designed to prevent employees from clocking in or out when they are not scheduled to work. Let’s say an employee accidentally showed up to work a day early and tried to clock in. They’d attempt to punch, but instead of it being permitted, they'd receive a message letting them know they aren’t authorized to work at that time. The punch would be rejected, and you’d be safe from unexpected payroll costs — and potential time theft.
Attestation
Attestation plays a vital role in helping employers enforce their own HR policies, ensure compliance with workplace laws, engage employees and mitigate time theft. With attestation, employers can create customized questions and response options, presenting them to employees during data collection at a time clock, mobile app or web clock. For instance, at the end of a shift or pay period, you could ask employees to attest to the accuracy of their recorded time. A question like this gives employees a chance to catch potential errors, but it’s also psychological. Asking employees to verify their time puts the onus of accuracy on employees and sends a message that this is something being monitored and taken seriously.
Track and analyze data
To fully understand how time theft is affecting your company’s bottom line, you need unprecedented visibility into employee timekeeping records. By using timekeeping software that allows you to track and analyze employee time, you can quickly spot trends, identify potential fraud and put a stop to it. With access to employee activity data, you can keep an eye on concerning trends like a high rate of late arrivals, long breaks, compliance missteps, missed punches and more.
How B2E Solutions can help
As our B2E Solutions name implies, solutions are at the heart of what we do. Our human capital management (HCM) solution, UKG Ready, offers a Time & Labor product that helps businesses manage employee timekeeping, time-off requests, approvals, overtime, pay rules, scheduling, reporting — and of course time theft.
To learn more about how UKG Ready Time & Labor can improve your timekeeping practices and help you mitigate time theft. request a demo today
Editor's Note: This blog was originally posted on July 1, 2019 and has been updated with new content relevant for 2024.
