According to the Association of Certified Fraud Examiners, companies lose about 5% of their annual revenue to employee theft.
While physical theft of money or products likely are the first types of theft that come to mind, this isn’t the only way employees steal from their employers. Employees can also steal time by manipulating attendance or time clock tracking systems.
But why should you care about time theft as a business owner or manager?
Let’s break down, ”What is time theft” and discuss how it occurs and why it matters.
What is time theft?
Time theft in the workplace is when an employer pays an employee for work that was not completed. It typically happens with hourly employees, but it can also occur with salaried employees.
Time theft can happen in a variety of ways – but in general, time theft occurs when employees are on the clock but not working.
According to The American Payroll Association, around 75% of companies experience time theft.
Is time theft illegal?
Time theft at work is not in itself a crime, and there are no federal laws in place to make time theft a criminal act.
This being said, “theft” is a crime, and a person could be charged with a felony if the dollar amount of “time” stolen meets the threshold. The exact charge would depend on the state’s specific laws and the amount stolen.
Keep in mind, this would require working with lawyers, insurance agents, and attorneys. The amount of money it would take to seek restitution could largely outweigh the dollar amount of time stolen.
Keep Reading: Attendance write up sample
How do employees steal time at work?
Manipulate the clock
Some employee clocks are designed to round up or down depending on when an employee punches in or out. Once employees figure this out, they can use it to their advantage.
For example, let’s say an employee clocks out fifteen minutes late – on purpose. Due to how this particular system rounds up time, the system will record the employee as working 4.5 hours.
While this may not seem like that big of a deal, it can add up fast. More specifically, up to 10 hours of unworked pay every month. At $15 an hour, this boils down to an additional $150 per month and an additional $1,800 per year.
Keep Reading: 10 creative ways to reduce labor costs
Employee clocks for punching in and out are huge hubs for time theft, and buddy punching is a major reason why.
Buddy punching occurs when a coworker punches in or out for another employee. While this can be done for innocent reasons (the employee has their hands full and asks someone to punch in for them), buddy punching can also be done for more nefarious reasons.
For example, two employees who work on the same days come up with a system to clock each other in and out an hour early.
Extended breaks are a huge area of concern when it comes to time theft. This is especially true since a lot of employees may not necessarily see this as a bad thing. For example, what’s the big deal if a 15-minute break turns into a 25-minute break?
On top of this, time theft in the form of extended breaks can happen accidentally on a regular basis. This naturally makes it less nefarious and more justifiable, which can quickly become problematic for employers.
Employees get distracted and easily spend more time than they realize doing activities that do not directly relate to their job duties. The more often this happens, the more lost work time your company will experience.
Dilly dallying time theft could be anything from answering personal phone calls to spending too much time socializing with other departments. While it’s probably not realistic to expect people to spend an entire 8-hour shift working, there is a reasonable expectation that employees will be productive and work while they’re at work.
One source of employee time theft is the internet and social media. Since both of these are so completely integrated into everyday life, most employees don’t consider it time theft. This is especially true when it comes to answering personal phone calls or responding to text messages. What’s the big deal if you take 60 seconds to respond to a text message?
However, the problem starts to compound when that one 60-second response occurs multiple times throughout the day.
Keep Reading: 4 ways to track employee attendance
Swipe card problems
Many employers use time cards to track work hours. These tools are supposed to create an accurate tracking record of an employee’s time at work. Unfortunately, some employees look for ways they can take advantage of the system.
As an example, let’s say someone comes back late from work at 1:20 instead of 1:00.
Instead of clocking in at 1:20, they don’t clock in at all. The employee then waits until the end of the day to inform HR that they forgot to clock in from lunch. Rather than admitting to being late, they tell HR that they came back from lunch at 1:00.
In this case, not only did that employee steal 20 minutes of time, but they lied to their employer. They’re also avoiding consequences that other, more honest employees would face in similar situations.
Hide and seek
When employees work remotely or don’t perform some or all of their work tasks at the job site, it can become harder to track performance and whereabouts.
In these situations, what’s stopping an employee from running personal errands, taking a nap in their car, or meeting a friend for some coffee? These detours can easily go untracked and can create major hiccups in productivity and customer service.
Keep Reading: 5 tips on how to manage remote employees
How to better avoid time theft
Even if you don’t think employees are committing time theft, it’s always a good idea to prepare for it and to possibly start tracking it.
Here are some effective ways to track time theft:
Regularly review labor costs and align it with employee output
Install cameras above time clocks to deter false punches
Create a time theft policy and ask employees to sign it on an annual or semi-annual basis
Use customized time tracking and attendance software that is hard to take advantage of
Interested in learning more about employee management?
At Teamworks Group, we help companies all across the country better manage and understand time tracking and attendance. With automated and customized solutions for time and attendance, we give companies the ability to avoid time theft, improve tracking, and get a more holistic view of their business.
If you want to learn more, reach out to us online or check out these additional resources: