What Is Employee Time Theft and How to Stop It

Employee time theft occurs when workers get paid for hours they have not worked. A worker steals time via buddy punching, taking extended breaks, or personal time. You need to create and communicate time theft policies, use time tracking software and increase employee morale to prevent time stealing.

Easy access to smartphones and the internet is increasing time theft in organizations. Business owners are now looking beyond commodity theft because paying for hours not worked decreases productivity and increases labor costs. Employees that steal time can end up costing you a lot of business money annually.

In this article, you’ll learn what time theft is, and the different ways employees steal time. You’ll also know how to prevent employee time theft and deal with time fraud when it occurs.

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What is employee time theft?

Employee time theft is when an employee receives payment for the time they did not work. Time theft can also be regarded as stealing company time. It applies more to hourly employees than salaried workers.

All employees can commit time theft because stealing time is not particular to any organization or position. However, hourly employees commit more time theft than salary employees to receive pay for hours they didn’t work.

Employees that lie about time cause hard-working individuals to feel demotivated. Low performance becomes the norm because stealing time hurts productivity.

Why?

A diligent employee will receive the same payment as one who steals time.

Additionally, your company suffers because you pay for work without results. Time theft creates an expensive domino effect within your organization. But knowing the exact amount of money your company loses due to time theft is challenging.

When it comes to employee time management, the accuracy of records is paramount, not just for financial reasons, but also for legal and ethical obligations. Incorrectly documented hours can lead to significant misunderstandings, akin to the serious consequences faced by individuals who are falsely reported as deceased (read why). Such inaccuracies not only disrupt the individual’s life but also pose legal challenges, which can be expertly navigated with the assistance of specialized legal services. Employers must ensure the integrity of their record-keeping systems to avoid these complex situations.

employee time

Is time theft illegal?

Time theft is fraudulent. But it can be difficult to make a case on employee theft about time. You use the employee’s time card or timesheet to determine the number of hours they have worked. But if you think the time card is falsely reported and refuse to pay, your employee can sue you for hours worked.

FLSA (Fair Labor Standards Act) requires you to pay hourly employees their wages. The Act doesn’t allow employers to fight back employees who have sued them for unpaid wages. If you respond to the lawsuit by suing your employee for time theft, it can be seen as retaliation. Time theft laws require you to have clear proof that your employee is committing time fraud.

You can sue your time theft employees if you suspect they have violated any time theft laws. Ensure that you have clear evidence that your worker included hours in the time card they did not work. Nevertheless, there is little chance of you receiving any money from playing games, extended breaks, unauthorized overtime, or wasting time at work.

Employers rarely make wage theft cases against workers. If your employees commit time theft, it is crucial to talk to your corporate attorney before taking action. Your lawyer will take you through state and country laws and advice you on the best course of action. However, the best action that most employers make is to prevent employee time theft.

What is the most common time theft?

Buddy punching is the most common way of time stealing, and it happens when an employee clocks in or out for other employees. It mainly occurs if your company has time cards or a PIN-based system.

Even workers with time clocks can clock in and out for their colleagues. Rather than an employee clocking in after arrival and punching out, they tell their co-worker to stop or start their time clock.

A study conducted in 2017 shows that clocking in or out for colleagues costs American employers $373 million in a year. The study surveyed 1000 employees, and 17% admitted to clocking in for another employee (check the full report). The most common mistake is where an employee adds an extra 15 minutes. Clocking in or out for a colleague is time theft, no matter how little time is added to the time card.

Sometimes, an entire team of employees conducts a buddy punching scheme—the first worker to get to work punches in the rest of the colleagues. Also, the last person to leave work punches out other workers. The whole team has very long shifts even if they work fewer hours. You end up paying wages for workers who are not at your job site physically.

Here are our other types of employee time theft:

Extended breaks

Employees can steal time by taking longer breaks than you allow. They may come back to work late after taking a break. For instance, you give your workers a 30-minute lunch break. One employee takes an hour because they got stuck in traffic. Upon arrival, they record that they took 30 minutes.

Extending breaks mostly happens when you don’t require your employees to clock out when going for a lunch break. Smoke breaks can also cost you a lot because smokers take long breaks and lose productivity. Sometimes, employees take breaks and don’t record them, leading to future compliance issues.

Taking excessive personal time

Workers can use company time to engage in personal activities. Personal time is considered as time stealing when taken in excess. A worker will take excessive personal time by making phone calls to deal with personal stuff.

Your employers may frequently take phone calls to handle children, family members, health care, or bills. Another way workers use their working time is by texting on the job. Employees that work on the computer will also use company time to pay bills—other employees who are not physically present on the job site run errands.

Workers with side hustles will also spend a lot of time on text and personal emails to run their business. They will meet with clients, reply to a personal email, or receive calls during your business time. Other daring workers will even take a nap during work time.

Internet time theft

There are different ways employees commit theft of time through the internet, such as:

Online shopping on mobile apps
Personal research
Social media
Interaction with online users
Playing online games on mobile apps or work computer/laptop

Using the internet for activities other than business is time stealing. Most works have smartphones, and they will use them to commit time theft, primarily through social media. Productivity levels go down when workers access Instagram, Tik Tok, Facebook, etc.

Slack coworker

Disappearing workers

Workers, including home health aides, delivery people, and home cleaners, will find sneaky ways to steal time. Traveling employees are harder to track during work hours. A delivery guy can pull off at any location and rest in their vehicle. They might enter a restaurant or coffee shop or end their shift earlier.

How to stop employee time theft

You can prevent employee time theft by creating clear policies, using time tracking software, and monitoring your employees. Every minute counts because time theft can lead to losses financially and in productivity.

1. Create clear attendance policies

The first thing is to form clear attendance policies for your employees. Define and communicate your company’s workplace rules about time theft.

You should include the following:

What you consider as time theft
What actions are not considered as time stealing but could lead to abuse of the time theft policy
Outcomes when someone breaks the time theft policy

After creating your policy, ensure you communicate it to your employers.

The IT team can send every average employee an email to sign. Tell your employees why you created the policy and what each section means. Employees will understand the guidelines, so no confusion happens after consequences.

You can create an employee handbook (like this one) that details the policies and the disciplinary measures.

The employee handbook will include details such as:

The meaning of late and early clock-ins
Types of time theft
How employees should track their time
Instructions on the use of time cards
The consequences of time stealing

Practices like early clock-ins look minor. You should explain to your employees how this time adds up and what it can cost you monthly or annually. This can be helpful for your company if you have had to cut costs due to budgeting problems. Help your workers understand how time stealing can lead to job insecurity and the need to be conscious of the hours worked.

Additionally, clarify to your employees what is considered time theft. Let them know they can take break times and handle personal stuff. Employees can also change their timesheets if they don’t remember to track their work. You should be fair to ensure that your employees get fair pay and that you protect yourself from overpaying.

Employees can feel discouraged due to the new policies. An employee will feel that you are finding ways of not paying their hourly wages. To ensure that your employees get on board, you can give rewards. Set a team goal that focuses on clocking in and improving productivity. If your team reaches the goal, you can give them an attractive reward.

attendance policy

2. Monitor employees without intruding

It is crucial to ensure that your employees are working smoothly. You need to check your team’s progress without excessive intruding.

Here’s how you can monitor your employees whenever you’re at work:

Watching your employee’s goings and comings and spot an employee who attempts time theft
Setting schedules for employees, so you know when each employee should come in and leave work
Learning the specific tasks employees do during company time to tell if they are job-related.
Watching the uncompleted functions because it is a sign of low productivity
Checking time cards to ensure what they record matches your observation

3. Use time tracking software

Employees easily steal time through paper timesheets. Use time and attendance software to prevent buddy punching and other time theft. Time and attendance software allows employees to clock in through cell phones or computers.

Here’s how time tracking software is beneficial to your company such as:

It is harder to manipulate the time and attendance software than pen and paper timesheets.
You will reduce the misreported hours by programming your rules in the software. You can prompt employees to use their smartphones to clock in after the breaks.
Time and attendance software will also decrease employees’ time on personal tasks or other websites. Some tools need workers to track their time when dealing with different tasks.
You can also use software like geofencing rules or GPS to track off-site employees while wasting time doing non-work-related tasks.
You can use advanced software like biometric time clocks that need additional pictures to prevent buddy punching.

Time and attendance software help employees clock in and out and form a time punch. Employees can create their log-in information. This helps reduce cases of workers clocking in for their colleagues. TimeCamp is a time tracking tool that helps you increase project profitability. The software incorporates unlimited users and projects, automated time tracking, and 30+integrations.

TimeCamp will help you in the following ways:

Track employee hours across different projects. It will reduce the time you take going through spreadsheets; hence you can focus on work that matters.
End manual reporting headaches. Time camp will be your project manager, and you access all information in one place. It will record your employees’ clocking in and out time.
Track your employee’s attendance automatically with one click. You don’t have to deal with an attendance checklist and in-and-out cards.

How to deal with an employee stealing time

If you suspect that your workers commit time fraud, you have several ways to deal with it. The most crucial step is having clear proof before taking action. Incorporating measures like time clock software will help you quickly identify time fraud.

One common way employers utilize the evidence is by offering the worker a chance to restitution. If one employee continues to steal time, you can sue them, but it’ll drain your business money, and it’s not worth it.

Here are the three steps to take when deal an employee time theft occurs:

1. Make an accurate investigation

You should examine time fraud with the same energy as you would when investigating the theft.

You can follow specific guidelines when investigating, which include:

Involve a third party
Ensure you maintain strict confidentiality
Document the whole process

Additionally, you can work with a certified public accountant or attorney. A thorough investigation that follows the law is essential before moving forward.

2. Take disciplinary procedures

If you prove that your employees committed time theft and it was intentional, you can take disciplinary procedures against the employee. There are many ways to discipline workers, ranging from termination to suspension.

3. Develop employee morale

Disciplinary procedures are essential, but it isn’t always practical. The best thing to do is build employee morale hence increasing engagement and employee productivity. Additionally, the employees will be loyal to your organization, thus fewer chances of stealing time.

Happy employees will make your customers happy. On the other hand, stressful working conditions will lead workers to lie about time and reduce loyalty.

Productivity drops when workers see other employees getting away with time theft. You shouldn’t be surprised that this will affect your business because customers will complain. It is crucial to apply ways that can increase productivity among your workers. This applies to employees working from home. While it may seem harder to manage, it’s not impossible to supervise and increase the productivity of remote employees (read more).

You can increase employee morale by:

Rewarding and recognizing employees that work hard- for instance, you can give them time off or add extra shifts.
Creating an environment that thrives with transparency, honesty, and trust to prevent time stealing
Applying a time clock software that tracks your employees- time tracking software like TimeCamp can help increase productivity in your workplace.

increase employee morale

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Employee time theft can lead to paying labor costs that employees have not worked. It can be detrimental for your business and decrease productivity among hard-working employees.

There are many types of time theft. Some workers steal time by spending too much time on personal tasks, while others take long breaks. To prevent this, create and communicate policies that revolve around time stealing. Help your team understand how stealing time can lead to labor budget cuts and job insecurity.

Do you want to eliminate time theft in your organization?

TimeCamp is time tracking software that helps you keep track of your workers’ attendance. The software will also help you eliminate your project management headaches. With TimeCamp, you can easily monitor your workers.

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Lorea Lastiri Lorea is a freelance SEO writer and has spent the last five years researching and writing about time management, productivity, and SaaS. She's an avid traveler, skier, and surfer; when not in the office, you can find her riding waves or exploring the alps.

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