75% – That’s the percentage of businesses impacted by time theft worldwide.
Time theft, a form of employee theft, can occur when an employee gets paid for the time when they weren’t actually working. It can occur in many ways and can cost a company billions of dollars.
So what can be done to prevent time theft?
It’s better to create a workplace that doesn’t provide opportunities or motivation to steal time in the first place. The next thing is to have mechanisms, like policies and time-tracking tools, to deal with such incidents and prevent any long-term damage.
Read this blog to understand how time theft occurs and what you can do to prevent it. Also, learn what you can do if your workplace indeed faces revenue leakage due to productivity loss caused by time theft.
What Is Employee Time Theft?
Time theft can be defined as an event where an employee gets paid for the time they spent away from work or doing unproductive activities.
Also known as time stealing, it can be done intentionally by employees who wish to avoid responsibilities and those who indulge in fraudulent behavior via malpractices like manipulating the recorded work hours. Employees can also commit time theft unintentionally if they’re unaware of the company’s policies or just do it by mistake.
Still, time theft may result in payroll errors and payroll fraud. There are legal implications as well, but it can be very difficult for employers to prove that time theft has occurred without proper time-tracking systems in place.
That brings us to the question – who commits time theft?
Employees in any type of industry can commit this act, but it’s more common among employees who are paid by the hour instead of salaried employees.
Let’s have a look at a real-life example to understand how time theft occurs.
Besse vs. Reach CPA Inc.: A Case Study in Time Theft
What started out as a case of wrongful dismissal turned into an all-out time theft accusation when Karlee Besse sued Reach CPA Inc., an accounting firm in British Columbia, Canada.
Besse had been terminated by her employer after discrepancies were discovered between her timesheet records and logs of software usage, amounting to a total of 50.76 hours.
Her argument was that she had completed tasks that didn’t require her to use any software, which included printing paper copies. But it emerged that she could have logged that separately in her timesheet. That way, it would have turned into productive time.
In the end, the Tribunal found that the employer had paid her for work that was neither logged nor reported honestly. As a result, she was ordered to repay an amount of $1,506.34 for 50.76 hours of time theft based on her annual salary.
An interesting point to note here is –
Time theft has existed for many years but why is its impact highly concerning for businesses in the current scenario?
Today, a substantial part of the workforce is mobile and has easy access to the Internet. Due to this, it’s becoming easier for employees to either be away from work or get distracted easily.
How Do Employees Steal Company Time?
The concept of time theft may seem simple so far, but that’s not the case. There are a number of ways in which time theft can take place – ranging from buddy punching, extended breaks, slacking off, and time tracking frauds to excessive focus on personal time.
Buddy Punching or Unauthorized Clocking in and Out
One of the most common ways that time theft takes place is buddy punching when a coworker makes time entries for another employee without proper authorization. Now the employee in question could arrive half an hour late to work or depart early. Yet their time entry will show that they were present at work for the designated hours.
If not checked in time, this practice of tricking the system can be easily adopted by multiple employees resulting in a large number of time tracking errors which, in turn, can cause payroll errors.
Another common and seemingly harmless form of time theft occurs when employees take long breaks away from work to have meals or take smoke breaks. While it’s okay to be away from work for essential activities to maintain a proper work-life balance, having extended breaks during work hours can become a habit for employees.
The time extension can seem small at first, but if you do the math, it adds to huge productivity losses in the long run.
Take Matthew, for example, who steps away from work every day to visit his favorite diner a few blocks away from his office for lunch. It takes him a total of 50 minutes to reach there, order food, have it, get back to the office, and eventually resume work.
This is way more than his stipulated lunch break time of 30 minutes, i.e. he’s spending 20 extra minutes for lunch every day!
Suppose there are 22 working days in a month, excluding the weekends, for a standard 5-day workweek.
Now 20 x 22 = 440 minutes
His employer doesn’t care until the minutes pile up into hours and then there’s a realization that Matthew is getting paid for extra 440 minutes each month!
Excessive Internet Usage
Distractions during work hours can arise due to various reasons, but in the modern age, it’s mainly due to excessive Internet usage. In many cases, it’s unintentional but can result in an employee being away from work for hours as this becomes a habit.
Internet usage that results in time theft includes but isn’t limited to:
- Doing unproductive research online
- Checking non-work emails
- Online shopping
- Playing online games
- Using social media
Excessive Personal Time
Work hours usually include breaks where employees can get away from their duties to do anything they want. The issue arises when they start spending a lot of time on performing personal tasks.
While it’s natural to need some extra time for oneself during any work day, the solution is to take time off when they need more time to complete personal work. Instead, some employees lose track of time or think that they’ll waste their time offs this way.
Top ways employees commit time theft by spending excessive time on personal tasks are:
- Running personal errands
- Too much socializing/chatting with coworkers
- Checking personal emails
- Excessive personal phone calls
- Sleeping on the job
- Doing a side business
Did you know?
According to a survey conducted by the National Sleep Foundation, 29% of workers have reported falling asleep at work.
An interesting phenomenon that occurs across workplaces is when employees stop working and do the ‘bare minimum’ on certain days of the standard 5-day workweek. This usually happens as they either experience ‘Monday blues’ or ‘Friday weekend moods’.
After experiencing a relaxing or event-filled weekend, employees tend to feel sluggish (termed Monday blues) as they start the workweek. Then the approaching weekend makes them excited, and they start slacking off from Friday afternoon itself.
Such slacking off simply translates into many unproductive minutes, adding up to a considerable number of hours in a month, resulting in time theft.
Slacking off can also occur if employees are unhappy with their tasks and are simply turning up to work.
Time Tracking Frauds
Many organizations have time-tracking software or spreadsheets that help record productive time. This helps with effective task management, payroll management, and cost management. It even helps comply with legal requirements.
But what happens when there are errors in this data?
All the functions mentioned above get affected and the organization has to bear a heavy cost.
Such errors can be caused by employees intentionally filling out wrong time stamps for punching in and out to show that they’re completing the required work hours.
This takes place in the following ways:
- Stalling before logging off
- Punching out after waiting for some time after a shift ends
- Punching in several minutes before actually starting work
- Forgetting to punch in/out and entering data based on guesswork
This usually happens if an employee wants to complete their hourly requirements even if they’re not working for that duration. In some cases, employees may unintentionally round off the hours to make it easier for payroll calculation but ultimately, it’s a case of timesheet falsification.
Some more fraudulent ways of time theft include:
- Working slowly to qualify for overtime pay
- Taking unauthorized time offs
- Taking up extra time on client visits
- Traveling on company expenses for official work but actually going on a personal vacation
What’s the Cost of Time Theft?
Depending on the scale of time theft, it can range from a few hundred dollars to billions of dollars.
The truism ‘time is money’ is nowhere as apt as in the case of time theft. If we look at time theft data closely, then we can see how quickly stolen minutes can turn into hours, and days that translate into considerable costs for an organization.
Consider these numbers:
- Each year companies lose about $400 billion in lost productivity.
- As per a survey of shift workers conducted by Software Advice, 43% of hourly workers have exaggerated the amount of time worked.
- According to the American Payroll Association, employees steal 4.5 hours’ worth of wages per week on average, with three-fourths of employers losing money to buddy punching.
As illustrated in the examples above, taking extended breaks or not differentiating between productive and unproductive time in work hours can add up to considerable losses for an organization.
Want to know how every stolen minute can add to business costs in a year?
Try our Time Theft Cost Calculator:
- Enter the number of employees followed by the hourly wage for each individual.
- Then, enter the tentative time that you think is being stolen by the employee in each shift.
- Then, add the total number of days they work in a year.
As you enter this data, the calculator will show you how much this costs you on a 2-week, monthly and yearly basis.
Calculate the Cost of Employee Time Theft
2 Week Loss (Average)
Monthly Loss (Average)
Yearly Loss (Average)
How Do You Prevent Time Theft by Employees?
Time theft can be prevented in a number of ways – from setting up rules, offering flexibility, ensuring proper employee engagement, and implementing time-tracking software to taking disciplinary action where required.
Although time theft is a preventable offense, it can’t be treated like other forms of employee theft because:
- At times it’s difficult to prove
- It impacts the trust factor in the employer-employee relationship
Still, as mentioned above, there are strategies that can help you prevent time theft. Let’s have a look at these in detail.
Set up Rules and Policies
Providing proper information is key to preventing time theft. Make sure your employees know what constitutes time theft and what they can do to avoid it. You must educate them about how work time is tracked at your organization, how time theft can be checked, and what the repercussions are if someone is caught stealing time.
You can create and add a time and attendance policy that clearly defines this and add it to the employee handbook so that new and old employees are well aware of this.
How This Helps
This strategy helps by creating the required awareness to prevent time theft. It shows the employees that your organization is proactive in dealing with such matters and takes productivity-related matters seriously.
- Ensure the policy is clearly explained so that employees can’t exploit any loopholes.
- Provide a platform where employees can seek clarity, so that mistakes can also be avoided.
- Send reminders or notifications so that employees don’t forget.
Some other ways in which you can prevent time theft include:
- Framing policies that limit cell phone/mobile phone usage.
- Blocking external websites that could result in misuse of work hours or work devices.
Make it clear that employees are supposed to work for a pre-defined number of hours to provide certain planned deliverables.
For example, if you see some employees slacking off or spending time on unproductive tasks, such as organizing, checking spam mails or spending extended time in meetings, then it could be that they simply don’t know what to work on.
You’ll just need to support them with guidance, the right tools and training to set things right.
How This Helps
Knowing what needs to be done sets up employees for success. It gives them a clear roadmap. Providing timelines also makes people more focused on the job.
- Set up clear plans or goals with appropriate task allocations. Make sure these are communicated to the employees well ahead of time.
- Use a project management tool with visualization charts to track progress.
Ensure High Employee Morale and Engagement
A lot of time theft can occur due to employees’ low morale.
That’s why it’s important to maintain a workplace that employees would love to be a part of. Studies show that employee morale is directly related to productivity and that of a business unit as a whole.
Unfortunately, modern workplaces are experiencing a variety of challenges with fast-evolving technologies, a climate of uncertainty, and economic upheavals. Feeling a slump, especially if an employee feels that they or their work isn’t valued, is quite normal.
That slump, however, can lead to a situation where there’s disengagement from work and productivity goes for a toss.
Understanding this well ahead of time can prevent issues like time theft and other complications, such as increased employee turnover, other types of theft, and ultimately diminished profits.
Here’s what you can do to keep your employees engaged:
- Keep a check on their productivity levels and motivate those who are falling behind to do better
- Take employee feedback from time to time and enforce any required changes
- Automate tasks that take time or are repetitive in nature
- Optimize processes to remove tasks that don’t add too much value
- Regularly check in with employees to know about their wellbeing
- Offer adequate time offs and ensure the time away from work is respected
How This Helps
Providing an environment where employees feel valued, heard, and taken care of instills feelings of loyalty as they feel connected to their jobs.
Dave Ulrich, management consultant and author of ‘The Human Resource Champions’, also known as the ‘The Godfather of HR’ mentions the following practices to keep employees engaged:
- Giving productive feedback/coaching at regular intervals
- Fostering an inclusive environment
- Leveraging technology for connection and collaboration
- Creating innovative career development paths
Also, here’s a tweet by the expert himself on the virtues of checking in:
In 1982, @tom_peters & Bob Waterman popularized the concept “management by wandering around” (MBWA) where leaders build relationships through casual conversations throughout a workday.
Today, with remote or hybrid work, we do not physically and casually bump into employees.
— Dave Ulrich (@dave_ulrich) January 18, 2022
A strict working schedule can often wreck productivity and prompt employees to take longer than the required time to complete projects or even steal time to be away from work altogether. What works in such cases is offering flexibility in terms of working hours.
You can experiment with different workweeks depending on your industry and work requirements to see what’s best for your employees.
For example, you can implement work schedules like 4/10, 2-2-3 or 9/80. Or different work shifts like morning, evening, and night can be structured based on the industry or project-specific requirements.
Flexible hours or a little extension on meal breaks can also help. According to the Americans with Disabilities Act, employers shouldn’t encourage addiction. So, you can even curb smoke breaks while extending these within a reasonable time limit.
How This Helps
A 4/10 work schedule, for example, gives employees an extended weekend to complete their personal tasks and enjoy more leisure time. This increases their accountability to complete tasks and helps attract top talent to the workplace as prospective employees see how it can benefit them.
Also, having resources working in different shifts rather than extending the working hours of only a set of employees helps deal with physical and mental burnout.
Make sure you have good workforce management software that can help set up various schedules easily and also take payroll management into account, keeping compliance requirements in mind.
Set Good Examples
The simplest way to avoid time theft is by setting an example where such instances are avoided and timeliness is appreciated – whether it’s for reporting to work, completing tasks on time, avoiding extended breaks, or even punching out when the work hours are over. Managers can certainly lead here by example by following this and prompting their reportees to manage time effectively.
Employees can also stop time theft by refusing to support anyone committing a time theft or reporting as soon as they see any time fraud happening.
How This Helps
Preventing deviations from work hours or adopting a disciplined way of working helps set the right tone for everyone at work. Having good work habits and a professional attitude as a norm affects employees at a behavioral level in a positive way.
- Timeliness for work hours can be rewarded via monetary and non-monetary ways, for example, by giving shout-outs or food coupons to employees who are regular.
- Consistent overtime shouldn’t be encouraged. If it’s happening, then it’s time to investigate why such overtime hours are being required for any project and if something can be done to get things on track, like better resource management or process optimization.
Implement Time-Tracking Software
Nowadays, several time-tracking tools are available to not just track time for payroll purposes but also help with time theft and other productivity issues. As opposed to manual time tracking, which can be cumbersome and erroneous, time-tracking software can help analyze employee performance.
It’s the perfect choice for remote employees too.
Taking it a step further, an AI-based time-tracking solution can help you capture accurate time data from different software and apps that employees use so that you have full visibility into what they’re working on.
How This Helps
Having a robust time-tracking mechanism in place sends a message to the employees that their time is being tracked and valued by the organization. Such software gives employees an automated system with more transparency while employers get the flexibility to set various work schedules.
(We’ll discuss more about this in the next section.)
- Choose a time-tracking tool that helps you manage work time and payroll as per the labor laws and regulations.
- Ensure the employees are properly trained to use the tool and can see how it can benefit them.
- Opt a tool that’s easy to use and ensures accurate time and work data capture.
Conduct a Thorough Investigation
In the unfortunate scenario that time theft occurs despite taking various preventative measures, you’ll need to know how time theft has taken place. A detailed investigation can include cross-checking the time data with the set policies for verification.
You’ll need to conduct the procedure fairly ensuring accuracy and transparency at every step to avoid costly litigations later.
How This Helps
A thorough investigation is necessary to not only find the culprit but also discover any loopholes or improvement areas in your system.
- Maintain strict confidentiality throughout the investigation process.
- Have the incident investigated by someone other than the person who discovered it.
- If it’s a large-scale fraud or something significant that could have a big impact, then seek help from an industry professional – it could be an attorney or a certified accountant.
Follow Through With Disciplinary Action
Taking disciplinary action would not be your first resort but don’t hesitate if it’s required while keeping the Fair Labor and Standards Act (FLSA) or any other applicable regulations in mind.
Things you’ll need to do will include the following:
- Have open conversations with the concerned employees.
- If there are personal reasons that are impeding their ability to work, then you may suggest taking time offs.
- You can reprimand or keep them on probation for more serious offenses.
- Withholding pay should be your last resort, as it may result in costly lawsuits. Make sure you have credible witnesses and evidence for the same.
How This Helps
Having open lines of communication and taking mild disciplinary action can stop time theft in its tracks by making sure such behavior doesn’t become a habit. It also sets an example for other employees to follow best practices at work.
- Make sure your timekeeping policies and solutions are up-to-date to record accurate time data.
- If there are no substantial costs in employee payout due to time theft, then don’t risk taking the legal route. Instead, keep things in house.
Consider Your Options
With time theft, you have five options to consider: Prevention, Accommodation, Reprimand, Training, or Termination.
In the sections above, we have discussed where you can employ each of these strategies and how these can help you prevent time theft. All you need to do is gauge what would be the right course of action depending on the nature and degree of the time theft offense.
Always remember that litigation could be costly and impact your company’s image, so that should be the last option.
When it comes to time-tracking solutions, many organizations still rely on the all-too-familiar traditional spreadsheets. But they forget that spreadsheets don’t have the capabilities to deal with complex tracking requirements and require a lot of manual effort to track data which can ultimately even be inaccurate.
The next option is developing in-house solutions, but these have limited capabilities and are not very scalable.
That leaves you with investing in an external time-tracking software. Let’s discover how these can help organizations prevent or capture time theft.
But before that, let’s have a look at how various solutions discussed above can help you deal with the different types of time theft:
Preventing Time Theft With Replicon
As discussed in the sections above, it’s always better to prevent a situation where time theft can take place. Yet it can seem downright daunting to do so. You need a solution that doesn’t seem hard or overbearing for the employees.
That’s where Replicon’s unified time-tracking platform can help you. Here’s how:
- Prevent buddy punching via photo audit trail and cutting-edge biometrics based on facial recognition technology where employees’ images can be captured for punching in and out.
- Validations for timesheet filling and time off booking to prevent any unauthorized punch in/punch outs.
- Validation of punch locations with geofencing and GPS tracking to track remote and field employees in real time. This ensures employees can’t clock in if they aren’t in the working area.
- Filling timesheets can feel like a never-ending task. Replicon can enable your employees to submit accurate and completely pre-filled timesheets that their supervisors can review and approve.
- Leverage ZeroTime™ to automatically capture accurate work-time data from more than 100 work apps, including Slack, Jira, Asana, and Zoom, to prevent employees from slacking off or doing the bare minimum.
- Ensure timely submission of timesheets by employees with real-time notifications.
- Capture accurate work time data anytime, anywhere, and on any device.
- Capture data for meal and rest break clock outs, and work durations for jobs and activities.
- Ensure global labor law compliance with a detailed dashboard to identify potential issues and get audit-ready data.
Lastly, Replicon’s time-tracking platform integrates seamlessly with CRM, HR, project management, accounting, ERP and other proprietary systems to help you manage your workforce easily.
Stop Time Theft Starting Now
Time theft can be a complicated issue to deal with, so it’s best to approach it with a strategy where you start by spreading awareness and monitoring without making the process seem too intrusive. Our time theft guide can help you get started and navigate the journey to create a more productive workplace in the long run while facing various business challenges.
As you move forward with setting up such systems, remember what ultimately helps curb time theft – it’s cultivating an atmosphere of trust with robust time-tracking mechanisms rather than policing.