We want to think that the world is a trustworthy place – especially in the workplace, but that is often not the case. There are people who commit theft on a continual basis. And no, we’re not talking about a person who steals staples from your business. Instead, we’re referring to employees who steal paid time that wasn’t earned.
Before explaining how you can reduce time theft with time clock software, we’ll cover the “how’s” and “why’s” time theft occurs in the first place.
How Does Employee Time Theft Occur?
Let’s say that a business owner employs a worker who earns $10 per hour, five days per week. But they end up stealing 20 minutes per day by having their coworkers punch the clock for them while they’re not present. With that, the employee ends up stealing over $15 per week that they didn’t earn. Your business has to pay that employee additional money.
While this may not seem like a large sum, it can add up to thousands and thousands of dollars if multiple employees in your business are indulging in the same practice.
Why Does Time Theft Happen?
It’s essential to understand the motivation behind employee time theft and why it occurs. What causes employees to want to inflate their hours worked? Most times, employees waste time on social media rather than utilizing their time correctly. Others don’t punch in or out on a timesheet because they assume they can get away with it. Some employees think that their actions are justifiable.
How much does time theft cost your business?
A recent study
found that U.S. employers
lose approximately $400 billion per
year due to decreased employee productivity.
These stats show that employees need to be
present and proactive to complete their
work. According to the American
Society of Employers, approximately 20% of
every dollar earned by a U.S. company
is lost to time theft.
Time theft is a prevalent part of businesses around the world. A study done by the American Payroll Association found that over 70% of employee theft occurs due to employees punching time for others. This is commonly referred to as buddy punching.
Additional studies show that time theft is a direct result of nearly 30% of corporate bankruptcy. The harsh reality is that time theft robs employers of their revenue and can jeopardize the overall success of a business.
Employee Time Theft
Time theft most frequently occurs when an employee enters false hours into a payroll system or time attendance clock. According to the American of Certified Examiners, organizations lose nearly 5% of their revenue due to employee fraud. Employees who punch a timesheet when they enter or exit their workplace and change the number of hours worked when adding that data is committing time fraud.
Employer Time Theft
Can employers deduct money if an employee is committing time theft? The answer is yes. According to the Fair Labor Standards Act, employers can deduct an employee’s paycheck in cases of fraud or overpaying wages.
However, employers should check their state laws for an accurate assessment of how to handle such situations. in 2004 the U.S. Department of Labor stated, “Certain overpayments or loans may be deducted from the employees’ earnings even if such deduction cuts into the minimum wage or overtime pay due to the employee under the FLSA.”
How can I prevent time theft?
You may be asking yourself, how can I prevent employee time theft from occurring? Or how do I
transition from a manual timesheet to automated time clock software?
If you’re currently still using a manual method for timesheet management, then the first and most crucial step is to invest in automated time clock software.
A time keeper app offers the ease and
convenience of monitoring employees’ time and attendance in
real-time. Most solutions have features and
functions available that allow you to restrict precisely where, when, and how
employees can punch in or out. To help prevent buddy punching, you
can take advantage of more
advanced features such as facial recognition to ensure that users
are only punching time for themselves.
Switching to an automated online timecard system may initially be challenging, and you may experience some pushback from your employees. After all, if they were previously committing time theft, they will be losing out on that stolen money. If that ends up being the case, it may be time to replace those workers with more honest and trustworthy individuals.
Once you have found a cloud based time clock to meet your business needs, gather up your employees, and explain to them how a time tracking solution can improve their workplace experience. Employees will have peace of mind that they are being paid accurately for all of their time worked, and they will feel a sense of accountability since they have more control over their time tracking practices.
Technology and workplace allies can make it easy to manipulate time card information for extra pay. Luckily, we are in an era that has plenty of employee time clock solutions available to help keep your employees honest and keep your labor costs as low as possible.