3 Steps to Stop Employee Time Theft
Time theft isn’t an easy subject to discuss. By and large, we all seek to do the right thing – get to work on time, meet the deadlines we’re given and show up with a positive attitude. But, time theft (however unintentional) is one of those damaging acts that can fly under the radar. It’s rarely vindictive, yet it makes an impact on a company’s bottom line merely because it happens more often than employers think.
Time theft takes a few different forms:
- Employees or contractors who pad their timesheets, or even go so far as to submit timesheets for days they didn’t work at all.
- Employees who spend time at work on unapproved non-work tasks.
- Employees who punch in their friend or co-worker so it looks like that person is also at work (this is known as buddy punching).
- Employees who forget to fill out their timesheet until the end of the week and accidentally overestimate the time they worked.
- Employees who don’t clock out for unpaid breaks.
If this topic is new to you, you may be shocked to find out over half of U.S. employees admit to adding between 15 minutes to an hour to their timesheet each day. On its own, 15 minutes doesn’t seem like a lot, but added up over time, the sum total equals about $11 billion in unworked hours across the US.
This is a trend many bookkeepers are also noticing. A recent survey of 242 accountants and bookkeepers, conducted by TSheets by QuickBooks®, found that 92 percent believe their clients have a time theft problem. They estimate the average cost of time theft to be 5 percent of their clients’ gross payroll costs.
Knowing this is a problem, what can accounting professionals do to help their clients protect their companies from losses due to time theft?
1. Educate. Talk to your clients about time theft and its different forms. Many managers are surprised to learn their employees can and are clocking in for co-workers. Teach them how to spot buddy punching, and give them some tips for recognizing a timesheet that’s been padded.
Tips could include watching out for round numbers on timesheets and being cautious of employees who stay later than everyone else or come in after hours. Employees who constantly log overtime but don’t have any major projects going on could also be suspect.
When employees understand the importance of payroll being accurate on both sides, they’re more likely to see the fairness behind those rules. Just as it’s imperative for employees to report their time correctly, employers must avoid committing wage theft by paying employees fairly and accurately. Absolute honesty on all sides of the table is the best way to ensure everyone benefits from the exchange of work and pay.
2. Form a plan for prevention. If your client doesn’t yet have a section of their employee handbook dedicated to time theft, encourage them to work with their HR team to create a company policy that clearly outlines time theft and the repercussions for violating that policy. It’s important employees know time theft isn’t just wrong on a company level – it can also result in jail time, as this federal contract employee found out.
Explaining what constitutes time theft in the employee handbook has a second purpose, however. The fact is many employees who commit time theft aren’t doing it deliberately and may not even know they’re committing time theft in the first place. Laying out your company’s policy on taking personal calls at work or checking social media while on the clock can help prevent employees from making these mistakes later on.
3. Follow through by taking action. Help your client set up a companywide audit system to stop buddy punching and timesheet padding. If your client’s company is using an automated time tracking software, they can access functions like employee GPS tracking to help them see who’s on the clock.
Select a few individuals at random and check in with them, either by stopping by their workspace or viewing their GPS location. If someone has already left for the day or has not yet made it to the office but is clocked in, it’s possible someone else has clocked in for them or they’re padding their time.
A one-off timesheet fudge of five or 10 minutes might not make much of a difference, but repeated offenses, added up over weeks and months, can make a major dent in a company’s bottom line. As your client’s trusted financial advisor, it is every bit your responsibility to further their economic prosperity by spotting payroll violations.
Help your client get out in front of employee time theft through education, prevention and action, and reap the benefits of a lifelong happy customer.