10 Types Of Time Theft And How To Prevent Them

checking clock to prevent time theft

Time theft is a very real problem for businesses large and small around the world. And the really insidious thing about the problem is that you may not even notice it’s going on unless you take a good, hard look at your time-tracking process and the way your team works.

We’re here to help.

In this article, we’ll define time theft so you know exactly what it is, introduce you to some of the most common types of time theft, and discuss how you can prevent time theft in your business.

Table Of Contents

Time Theft Defined

time theft

Time theft is the deliberate, accidental, or negligent act of accepting pay for work that wasn’t actually done.

While time theft most often occurs among non-exempt employees (those that your business pays by the hour), it can also occur in various ways among exempt employees (those that don’t typically track work hours).

Regardless of who perpetrated the theft or whether it was deliberate, accidental, or negligent, the loss of both time and money can have a very serious effect on the way your business operates.

The Actual Cost Of Time Theft

The Actual Cost Of Time Theft

Time theft is insidious because it often flies under the radar for long periods of time and gradually eats away at your bottom line — even redirecting funds that you’ve earmarked for other purposes.

Over time, the money you funnel into paying for time theft can seriously hinder the forward progress of your business and restrict the options you have available.

For example, if an employee regularly adds just six minutes at the start of the day and six minutes at the end of the day, that totals up to 12 minutes.

That might not seem like much at first, but if the employee adds those 12 minutes every day for a week (five days), that’s a full hour of extra work they can claim on their paycheck.

If you pay the employee $20 per hour, that’s a loss of $20 to your business.

Granted, $20 may not seem like anything to get worked up over, but imagine that the employee added those twelve minutes to their time card every day for a full year (let’s say 48 weeks to be realistic).

In that case, you would be paying your employee an extra $960 a year (48 weeks x $20 per week = $960). Is there something else you could be spending that money on? Of course there is. And that something could benefit the business itself or everyone on your team.

But, instead, it’s money that’s only benefitting one person.

Now, imagine that more than one person is adding 12 minutes to their time card. If 10 people on your team are doing so, that’s a loss to your business of almost $10,000.

That could potentially be the monthly payments for the two new vehicles you need to open up new territory or the down payment on the new piece of equipment that can increase revenue.

So, in many ways, time theft isn’t just about the extra money you pay to one or more team members; it’s also about the lost income your business could have enjoyed if it had used that extra money for a more productive purpose.

Is Time Theft Illegal?

Is Time Theft Illegal?

Technically, time theft is not illegal. No federal law exists that criminalizes this type of activity. As a result, time theft is typically classified as employee misconduct rather than a misdemeanor or a felony.

But, just because it’s not a crime by the legal definition of the word doesn’t mean there aren’t severe consequences. The employee would most certainly face disciplinary action and, quite possibly, lose their job.

In addition, if an employee perpetrated the time theft by falsifying records — e.g., time cards, timesheets, or other documents — they could face criminal charges after the fact (fraud is a crime in all 50 states).

If you have proof that an employee committed or is committing time theft, consult with an attorney immediately before taking any action.

Types Of Time Theft

time clock on a computer

1) Mistakes

Making mistakes in the tracking process is one of the most common types of time theft. In most cases, the mistakes are completely accidental and consist of an employee simply forgetting to clock in or clock out when they’re supposed to.

Regardless, simple mistakes like this can inflate their paycheck and take a bite out of the operating capital your business has available for other things.

2) Rounding

Though rounding is a legally permissible part of your time tracking system, when employees use it contrary to the policies you’ve established, it’s considered time theft.

This happens when, for example, an employee arrives a few minutes late or leaves a few minutes early but still writes down a full eight hours of work.

This might not seem like a serious issue, but even one employee adding one or two minutes every day over the course of a year can add up to some rather large dollar amounts.

3) Overly Long Breaks

Along with mistakes and a few of the other entries on this list, taking long breaks is one of the most common forms of time theft out there.

How can an employee use a break to steal time? Here’s an example.

If you’ve made it a policy that team members must take a 15-minute break every two hours, employee A might leave for that break five minutes early and come back five minutes late.

If employee A adds that time on either side of their break every day for an entire work week (five days), your business will pay them for almost a full hour they didn’t actually work.

Multiply that by the number of weeks in a month and then by the number of months in a year, and you can see how much this simple method of time theft could cost your business.

4) Unauthorized Personal Time

Employees will sometimes conduct personal business while at work. They make or take personal calls, check their personal email, or text a friend. Often, these quick diversions only take a few minutes so you might choose to allow them — up to a point.

However, if you notice that an employee is taking unauthorized personal time that exceeds 10 to 15 minutes in one go, you might want to talk to them about time theft.

5) Unauthorized Overtime

computer on a desk

Another big form of time theft that can have a serious negative impact on your bottom line is unauthorized overtime.

This method is particularly egregious because, for hourly employees, you’re legally obligated to pay time-and-a-half (or, 1.5 times their regular pay rate) for any overtime hours they work.

Compounded over a full year, that can cost your business thousands of dollars, or even tens of thousands of dollars, in lost capital.

6) Buddy Punching

Buddy punching (also known as ghosting) is when one employee clocks in for another employee who isn’t actually present at work. For example, employee A may be running late for work so they contact employee B to clock in for them.

Buddy punching may cost your business only a few dollars at a time, but, sometimes, employee A won’t show up for their entire shift after their friend clocks them in.

7) Too Much Talking With Coworkers

While you may encourage a bit of socialization between team members now and then, too much talking about non-work-related topics can lead to lost productivity, wasted work hours, and even conflict with coworkers who are trying to pick up the slack.

Again, a few minutes of chit-chat is fine. But should that chit-chat extend into double digits, consider it time theft and talk with those involved so it doesn’t go any further.

8) Personal Internet Use

One of the more difficult methods of time theft to monitor is personal internet use (sometimes called cyberslacking or cyberloafing).

Unless you have a dedicated I.T. professional who can monitor internet activity, employees may use business time to read social media, shop online, or surf their favorite websites.

9) Job-Specific Time Theft

Some jobs (or tasks) are more conducive to time theft than others.

For example, if you send employee A to pick up the mail at the post office while they’re still clocked in for work, they could take a few extra minutes and swing by the coffee shop for a snack.

Again, it may not be a large amount of time lost, but, if the behavior continues over a month or a year, your business can lose revenue it dearly needs for other activities.

10) Hiding Or Disappearing

In large offices or open work sites, employees may take advantage of the lack of supervision and hide or disappear for a few minutes or more.

This form of time theft even extends to remote and distributed teams where employees may leave their workstations for a time to take a nap or conduct other types of time theft on this list (e.g., personal internet use, talking with other employees, long breaks, etc.).

How To Handle Time Theft

Man learning how to handle time theft

When you have proof that an employee has perpetrated time theft, you might be tempted to withhold their wages in an attempt to recoup your losses. Don’t do that!

Withholding payment to employees is considered wage theft and is a crime under the Fair Labor Standards Act (FLSA). It comes with some pretty hefty consequences for businesses that make this mistake.

As we mentioned earlier in this article, if you have proof of time theft, the first thing you should do is consult with an attorney who is familiar with labor law in your industry.

If the time theft has been going on for a long time or has resulted in significant financial losses for your business, the attorney may recommend legal action against the employee. In most cases, however, they may recommend disciplinary action or outright termination.

Whatever route you choose, it’s also important to take a look at what got your business to this point and implement preventative measures and practices so this doesn’t happen again.

How To Prevent Time Theft

Coworkers working in an office over looking the city

1) Lead By Example

Because you’re the head of the group, team members will follow your lead. Be sure to set a good example.

If you think your employees might mistake your behavior for time theft (e.g., taking extra time at a business lunch with clients), explain to them what you’re doing so they don’t get the wrong idea.

2) Create Clear Policies

Create clear policies for everything that pertains to tracking time, including:

Be sure to define time theft so that everyone understands what it is, and then outline the penalties if it occurs.

3) Implement Time Tracking Software

One of the best ways to reduce time theft in your business is to implement time-tracking software into your workflow.

With software such as Inch, you can eliminate ghosting, long breaks, unauthorized overtime, and many of the other types of time theft altogether.

4) Keep The Lines Of Communication Open

Communicate regularly with your team to find out what’s working — and what’s not working — in your business.

Keeping the lines of communication open in this way helps you get a better idea of how your employees work so there’s less possibility of time theft.

5) Institute Progressive Discipline

If you find instances of time theft in your business, institute progressive discipline before the habit spreads.

Such discipline can take many forms, but consider this series of steps a starting point on which to build:

  • Verbal warning
  • Written warning in their file
  • Deduction in pay
  • Suspension without pay
  • Termination

6) Address Time Theft In Your Onboarding

Addressing Time Theft In Onboarding meeting

You can take steps to prevent time theft right from the get-go by addressing the subject in your onboarding process.

First and foremost, train your new hires on the ins and outs of your time tracking process so they understand all the details relevant to their side of the task.

You can even give them a general overview of what happens when they turn in their time card for payroll processing. Doing so can help them see the safeguards you’ve put in place to prevent time theft and dissuade them from intentionally trying to add unworked time.

Then, provide hands-on training with the software or physical time clock they’ll use to track their hours on the job. This can help them avoid mistakes that can unintentionally lead to time theft.

In addition, take the time to address the more personal forms of theft, such as personal internet use, extended breaks, and excessive socializing.

In many cases, employees don’t even realize they’re doing these things, so drawing their attention to the potential for abuse may help them control their behavior before it gets out of hand.

7) Set Standards Of Accountability

Another effective way to help prevent time theft is to set standards of accountability for all of your employees.

What do standards of accountability look like? It may be something as simple as a goal or target that each team member should strive for or abide by when doing their job.

For example, if a delivery driver has a certain route they take every day, their manager could find out how long the round trip takes (or, could potentially take with bad traffic), and then use that number as the standard of accountability for the driver.

If the round trip takes an hour — or an hour and a half with bad traffic — the driver is held accountable if it winds up taking them three hours.

Granted, there may be extenuating circumstances that cause extreme delays, but if the employee finds themselves in such a situation, they should communicate with the manager immediately and not wait until after the fact to claim a holdup.

8) Be Flexible

An employee’s reasons for using the internet for non-work purposes or taking unauthorized personal time may stem from the need to complete some pressing personal business.

You can prevent this from becoming an issue by being flexible with your team’s time and schedule.

For example, you may choose to implement flex time (a.k.a. a flex schedule) so your team members have the option to start and end their workday earlier or later according to their needs.

Being flexible (within reason) with the time that each employee starts and ends their day can make it easier for team members to give your business the time it deserves while still providing time in the day to take care of other aspects of their lives.

9) Build Morale

As you implement measures to prevent time theft, do your best not to get carried away to the point that it affects employee morale.

Instead, take the time to actively build morale so the preventative measures you put in place don’t feel like overly heavy restrictions.

For example, you might choose to allow your servers a half-hour of “unofficial” downtime — grabbing a bite to eat or just taking a breather — after the daily lunch rush so they can recover both mentally and physically and prepare themselves for the rest of their shift.

Eliminating that nonproductive downtime can be a detriment to the overall morale of the team and affect the way they perform during their remaining time on the job.

10) Make It A Part Of On-The-Job Training

We talked earlier about addressing time theft in your onboarding process, but that shouldn’t be the end of the discussion. Make it a part of your on-the-job training to keep mistakes and intentional overages from creeping into the workflow.

You don’t have to spend a lot of time on the subject, and you certainly don’t want to lecture or scold (unless there’s a real problem), but taking a few minutes during the monthly team meeting to remind everyone to be cognizant of time theft can help keep things fresh in their minds.

Prevent Time Theft With Inch

Prevent Time Theft With Inch

If you’re just beginning to address time theft in your business, the best place to start is to implement time-tracking software, like Inch, into your workflow.

Inch helps you track employee time and attendance so you can see exactly when they worked, both from beginning to end and on specific tasks throughout the day.

If your team works offsite, you can use Inch’s built-in geofencing tools to establish boundaries around the job. If they’re outside those boundaries, they won’t be able to clock in. If they leave those boundaries without clocking out (or without your permission), you’ll both get a notification.

And that’s just the beginning of how Inch can help you prevent time theft and manage your workforce better.

For more free resources to help you organize and schedule your team, track and calculate labor costs, and streamline the way you work, visit TryInch.com today.

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