Business owners and managers often wonder how to make the best use of employee hours. Yet for many businesses, it remains difficult to achieve, as a lack of project planning, excessive downtime, or even time theft can become common.
In fact, time theft is one of the biggest challenges that prevent the optimization of employee time.
According to research conducted by the American Payroll Association (APA), it affects about 75% of businesses in the U.S. This has been reported to lead to productivity losses of $400 billion per year.
While many employers may overlook the harm of time theft, it has turned into a silent killer of efficiency and profits in a wide range of industries.
According to APA, four hours and five minutes per week is the average time that an employee reports without actually performing work.
The few minutes pile up to hours, which grow exponentially for larger teams. The results can be more detrimental than one can imagine.
In this guide, you can find the basics about time theft and how to prevent your employees from wasting company time.
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What is time theft?
Employee theft can take many forms, but people typically link it to stealing company property or money. However, it is important to differentiate between employee wage theft vs. other types of theft.
Time theft is a huge problem that not all employers realize or take measures to prevent.
It constitutes employees receiving payment for logged hours during which they have not performed work.
This is, in essence, stealing time, which is also classified as counterproductive work behavior (CWB). It results in higher payroll costs and reduced productivity, which adds up over time and can seriously harm the overall performance of your company.
What’s more, the fraudulent practices of some employees can frustrate and demotivate the rest of your workforce, who are honestly recording their hours.
They may also resort to such actions if they see that time theft is not addressed.
In fact, stealing time is highly demotivating for the employees committing it, as well. Thus, the reasons to understand and adequately address the issue are numerous.
What is considered stealing time?
Before you can do anything about the issue, it’s best to get acquainted with the various ways in which your employees may be wasting time at work. They include the following:
- Buddy punching. Employees arrange between themselves so that the person who goes to work earliest signs the time card of a peer. It can also mean an absent or late employee is punched in by a colleague.
- Covering up late clock-ins and early clock-outs. This is another prominent version of time clock theft in which an employee lies about the actual time of starting or finishing work. For teams that report hours on an honor system, this can happen whether the employee knows it or not.
- Prolonging breaks. While this may be unintentional, taking longer breaks and not clocking out is a common way in which employees are wasting time. Read more about employee break laws here.
- Taking excessive personal time. In this case, employees use working hours to conduct personal calls, browse the internet for non-work-related purposes, and send private emails. It can also involve employing company technology and software for personal use.
- Unauthorized or overtime hours. Logging extra time which has not been pre-approved by management can be considered as another form of theft.
Time theft statistics
Statistics around time theft in the workplace show a disheartening picture: the issue is widespread and leads to considerable losses for companies that don’t address it.
According to Nucleus Research, 74% of businesses suffer losses connected only with one form of time theft, buddy punching, which results in 2.2% of gross payroll costs.
How much time do employees waste at work?
A study by Robert Half International reported that employees lose an average of more than four hours per week in non-work-related activities.
Additionally, Software Advice’s report on time theft found out that 43% of employees inflate the hours in their timesheets.
The signs of time theft
Time theft looks different in various work settings today.
Depending on the specifics of your business, you need to be looking for different indicators that may show employees are stealing time.
Your first reason to suspect time theft may come from a relatively common occurrence: missed deadlines.
If someone from your team is unable to deliver an appropriate amount of work on time but hasn’t changed their working hours, that time may be going elsewhere.
Something else could be the cause, such as faulty software or lacking the tools or resources to complete work, but if all things remain the same as deadlines start to get skipped, you should inquire further.
In the case of an office or a distributed company, two common problems to look out for are long breaks and using excessive personal time while on the job.
When it comes to retail or any business with a central clock-in station, employees might use buddy punching or pad their clocked-in time.
The exact situations will vary for each company, but knowing what time theft looks like might bring more awareness to the issue.
Time theft laws
Please note: The information on this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
The working relations between employers and employees are set in the Wages and the Fair Labor Standards Act (FLSA).
The main stipulations in the Act relate to minimum wage, overtime and worked hours definitions and recordkeeping. They are mostly focused on protecting employees from unfair practices on the side of employers.
Thus, it is difficult to handle timesheet fraud committed by workers.
If you don’t pay an employee for logged hours, a suit can be brought against you under the FLSA. Instead, you will need to conduct an investigation and potentially take disciplinary measures against the person. The best approach is to work with a lawyer and with your insurance company to get expert advice.
Nevertheless, time theft is still considered a crime. While the cases are more complicated, a person can be sued for it and would have to recover all unlawfully obtained money.
The practice shows that in most cases, this is not brought to the attention of the judicial system. Substantial timesheet fraud can lead to employees being fired for stealing company time, or other forms of disciplinary punishment. Again, this depends on where your business is located so it’s best to consult an attorney. However, it is very rare to see wage theft criminal charges against employees.
For this reason, it’s best to try to prevent time theft instead of reacting to it once you discover it’s happening.
How to prevent time theft
What are the best ways to keep employees from wasting time at work?
How can you prevent time theft?
These questions remain mind-boggling for managers and business owners who find themselves in the middle of a time theft dilemma.
They are difficult to tackle because the flipside of letting time theft slip unnoticed is to micromanage your team.
Taking this extreme approach can be harmful to your company culture, and can even be counter-productive.
So what is the right approach to prevent your employees from stealing time, while retaining your best employees and maintaining a positive working atmosphere that is conducive to growth and development?
1. Create a clear time theft policy
The first step to preventing employees from stealing time at work is to define your company’s time theft policy.
It should be extensive and clear, covering all possible situations that your business would consider time theft.
Then, you need to find effective ways to communicate this policy with your team. Delivering it via email is not sufficient.
It would be useful to hold a meeting where you all together delve into the topic so that it becomes well-known quickly.
Of course, the policy should also include the disciplinary measures that ensue from time theft, as well as a way to employees to confirm they’ve read and understood the policy.
2. Install a fair approach and the right company culture
The more your employees feel that they are not being treated fairly in your company, the more likely they are to cut corners in their timesheets or find other ways to get properly compensated (in their opinion).
In order to counteract this, you have to ensure that your team receives fair remuneration and that the positive vibe in the workplace is alive.
You should also take care to instill a spirit of collaboration, togetherness, and a feeling that the team is working toward shared goals.
It’s worth investing time and effort in employee satisfaction practices. They may be difficult to get started with at first, but in the long run, they will pay off in the form of motivated employees who work according to clear guidelines and expectations.
3. Use the right time and attendance software
One of the best ways to truly prevent time theft is to ditch paper timesheets and use time and attendance software. Hubstaff is among the top solutions on the market that can help you stay on top of employee timesheets with ease. It allows simple desktop, web, and mobile time tracking with GPS locations, detailed timesheets, and automated clocking in using geofence time tracking, all of which minimizes the possibility of human error.
With its iOS and Android apps, Hubstaff provides GPS location for every logged entry. To ensure that employees are actually performing work on the clock, you can also use the randomized monitoring functionality. It takes unobtrusive screenshots of your employee screens in random intervals, thus providing you with a clear overview of how company time is being spent.
You can also view apps and URLs used while the timer was running, to give you a clear picture of work hours.
The tool is available on many devices, which allows you to stay on top of employees’ use of time and from all locations.
4. Set regular but unobtrusive checks
You should have a defined system for checking the accuracy of logged hours.
At the same time, you should make sure that it is not invasive, as this can alienate employees and make them feel constantly monitored. The best approach is to find a balance between team trust and healthy levels of managerial control.
For some businesses, restricting access to the internet and social media has proven as an effective approach to curbing excessive personal time during working hours.
There are software solutions that can be applied in that respect, but the decision for such restrictions should be made in accordance with the nature of your work.
5. Speak openly and truthfully with your employees
Good communication is at the heart of successful company culture.
If you are facing time theft issues, or better yet if you aim to prevent them, hold regular talks with your employees.
There should be a two-way process in which you clarify how stealing company time is hurting the business, but you should also open up the floor and listen to the input of team members as well.
By doing this, you can understand structural issues that you may be unaware of that contribute to time theft.
Get started with anti-time theft measures
Whether you’re already struggling with time theft or want to take steps to prevent it, it’s important to realize the sheer effect that this practice can have on your business.
The statistics are startling and clearly show that stealing time on the job is a widespread phenomenon.
With the tips in this guide, you’ll be well prepared to launch your own anti-time theft campaign, taking into consideration ethics and company culture.