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Time theft – What is it and how to prevent it!

Time theft is a huge issue for employers in terms of finances & other operational costs. We break down how time theft occurs, the impact it has on your organization, and how you can prevent it.

Time theft is a common and costly issue for employers. In fact, 49% of US employees and 62% of Canadian employees admit to time theft. In the U.S alone, time theft costs employers more than $11bn per year! This is before factoring in lost productivity and other indirect costs.

43% of hourly workers have admitted to exaggerating the amount of time worked during their shift.

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What is time theft?

Time theft is the result of employees manipulating processes in order to receive pay for hours that they have not worked. While there are multiple methods of time theft, they all result in the employee receiving pay, without having worked to earn them.

time theft - clocks

More often than not, time theft is an issue for employers who manage hourly workers. Hourly workers often have to complete timesheets for their work, making it relatively easy for them to exaggerate their hours. While they might only be slight adjustments, these false claims add up throughout the year. When you consider that 43% of hourly workers have admitted to exaggerating the amount of time worked during their shift, you can see how big a problem this is.

One of the biggest problems with time theft is that it often goes unnoticed. Unless one was to actively go looking for occurrences of time theft, it is easy to miss. Time theft itself certainly is an issue, but more than that, it is often related to other workplace issues. The longer the issue continues, the worse it gets, and the more costly it becomes.

Types of Time Theft

There are many ways in which employees can engage in time theft. Let’s take a look at each of these methods.

Abusing breaks

One of the easiest ways for employees to steal time, is by abusing their breaks or shift start/end times. Of course, breaks are essential, both legally, and for employee well-being. However, some employees fall into the habit of abusing their breaks, and taking them for longer than allowed.

Timesheet padding

As mentioned above, hourly workers often have to submit timesheets. When there is no further verification, such as time clocks, employees can easily add on extra time to their shifts.

time clocks

Buddy punching

Buddy punching is when an employee clocks another employee’s timecard on their behalf. According to QuickBooks, 16% of US employees and 34% of Canadian employees who track time admit to buddy punching. 

Spending work time on personal tasks

With recent moves towards work-life balance and employee wellbeing, employers have become a lot more forgiving towards employees and their personal tasks. However, there is a fine line between providing balance and ignoring blatant time theft. Employees who frequently take advantage of work time to complete personal tasks, impacting productivity, are in fact engaging in time theft.

There are other methods of stealing time, but the above are the most common. Now that we understand how time theft occurs, let’s break down the impact it has on your organization.

Impact of time theft on your organization

Financial costs

As mentioned above, time theft is very costly to your business. When it comes to hourly workers, every minute counts, literally. While individual employees may see it as an hour here and there, when you have 50+ employees, that will add up very quickly. Hourly employees that exaggerate their time cards generally steal 4.5 hours per week. If that employee earns $20 per hour, you’re losing $4680 to time theft every year!

time theft - employee conflicts

Employee conflicts

More often than not, employees engaging in time theft can make other, hardworking employees resentful. As you can imagine, this resentment can lead to frustration, which can lead to conflict in the workplace. These conflicts impact the entire workforce and can lead to other issues with morale, absenteeism, teamwork, and possibly even turnover.

Lost productivity

Finally, time theft ultimately leads to lost productivity. While it sometimes involves employees claiming pay for work they have not completed, it also involves employees stealing company time. This means they are using company time for their own personal needs. This impacts production, operations, customer service, and other crucial business functions. This could further add to the financial costs of time theft to your organization.

How to Prevent Time Theft

Now that you understand how time theft occurs, and what impact it can have on your organization, it’s important to take steps to mitigate risk.

Create a clear time & attendance policy

time theft policy

Time theft generally results from poor time and attendance procedures. If this is the case for your company, it’s time to create a clear time and attendance policy. This policy should cover clocking in and out procedures, break periods, and use of company time for personal tasks. It should also detail the disciplinary procedures that will be used to discourage time theft.

Once the policy has been created, be sure to educate employees on it, and incorporate it into your employee handbook. It can help to also ask your employees to sign a declaration saying that they have read and understood the policy. It is also important to follow through on these new procedures from the beginning so that employees know how serious time theft is.

Improve employee engagement

More often than not, employees who carry out time theft are not well-engaged. Employees who struggle with motivation find it much easier to pad timesheets, or use company time to complete personal tasks. Well-engaged employees on the other hand are generally punctual, honest, and committed to their work.

As an employer, there are many steps you can take to improve employee engagement across the board. Regular check-ins with employees, regular feedback and other incentives can be used to improve morale. If you’d like to read more about improving employee engagement for your employees, check out our blog post here!

Use time tracking software

The best way to remove time theft from your organization is to change the way you are tracking time and attendance. Time and attendance software can improve every element of your process, from how employees clock in/out, to how attendance is matched to hours worked. Celayix time and attendance software is best-of-breed, with a mobile app, automated attendance matching, and GPS geofenced check ins.

  • Mobile App – With the Celayix mobile app, employees can check in and out of shifts directly from their mobile phone. This will prevent buddy punching of any kind.
  • Automated attendance matching – with Celayix, data from employee check in/outs can be used for payroll. The data can easily be exported and sent directly over to payroll, reducing the risk of payroll errors. It also tracks clock in/out data down to the minute, rather than rounding up/down to the nearest 15 minutes. This ensures that you are only paying for the time that your employees actually work.
  • Finally, Celayix offers GPS verified geofenced check ins. This means that employees on the road or out in the field can only check into their shift once they are actually on site. This prevents the padding of timesheets by mobile workforces.

If you’d like to hear more about Celayix’s time and attendance solutions, and how we can help you eliminate time theft, reach out to a solutions advisor here!

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