What is Time Theft?
Time theft is often called time card fraud or time and attendance fraud. It occurs when an employee is paid for work and they did not actually work during that time. It hurts your business in many ways. In addition to reducing the productivity of your employees, your business can actually lose money as well.
In the event that you want to do your own research related to time theft laws, it is important to note that these laws aren't referred to as time theft laws. They are a subsection of criminal laws that fall under the criminal code in some way. You'll learn more about that in the next section.
Time theft can occur in many ways. Prior to the pandemic, one of the most common ways it occurred was through the manipulation of their timesheets, time cards, or time entries.
This is especially problematic when employees do not need to request supervisor approval or assistance to add their own time or correct their own time. Buddy punching is another common time theft technique. It occurs when one employee clocks in for themselves as well as for another employee who has yet to arrive.
This costs your company money by paying for an employee who isn't actually working. Many employees or contractors, regardless of whether they are remote, may also be tempted to abuse a flexible schedule. However, this is more common with remote workers since there is little way to monitor their activities.
Then, of course, there is the use of personal technology during work hours to use social media, check email, take phone calls, and send text messages. We aren't referring to these activities taking place during the employee's break time.
Socializing and extended break times are two more common means of time theft by employees. Unfortunately, this is only a partial list of the ways that time theft can occur.
Keeping an eye out for the various ways that time theft by employees can occur is the only way to address the matter. Addressing time theft when it occurs is the best way to stop it. Understanding the most common time theft risks that your company faces is the best way to prevent it.
For example, to prevent buddy punching, having a biometric clock-in system will prevent one employee from clocking in for another. To help reduce the use of personal technology during non-break times, introducing and enforcing device policies as well as more attentive management is necessary.
For employees who spend an overt amount of time socializing about non-work related matters, it is the job of management to redirect the flow of the conversation to business-related activities. It is also the job of management to ensure that break times are followed.
It is best to be upfront with your employees about the company's policy related to technology use, break times, clocking in for others, flexible scheduling, and their need to meet the deadlines and how it directly impacts their jobs in a positive manner.
Helping your employees feel like they are part of the team is the best way to keep time theft under control while management does their part.
Time Theft Laws to Look Out For
When you discover this happening in your company it often leaves the owners wondering what can be done about it. If you become aware of an employee that is wasting too much time at work, you must first understand that it is costing your business money. There are laws in place to protect companies, depending on what is happening.
Employers are required to pay for hours worked by the employee. If an employer does not pay for hours worked, the employee can file suit against the employer for two times their back wage, including attorney fees and court costs.
Alternately, if an employee is paid for hours they do not work, criminal laws exist that cover time theft that may allow the employer to recover their losses.
For example, when a contractor or employee intentionally lies about their work, embezzles, steals, purloins, converts with or without authority, sells, conveys, or disposes of any record, voucher, or any other property which owned by the company or was made under the contract, they may be prosecuted under criminal law.
Then, there's wire fraud. Wire fraud is a serious crime defined as a scheme or attempt to defraud or obtain property by false or fraudulent means, representations, or promises by using interstate wire or radio communications execute the scheme.
Both of these laws (18 USC 641 and 18 USC 1343) are federal statutes. However, states also have criminal laws that can be used as well. Employees who are found guilty of time theft could face fines, be ordered to repay the wages they received or face imprisonment depending on the laws in your state.
If you look at the impact of time theft on business, the statistics are surprising. The American Society of Employers reported that 20% of every single dollar earned is lost to employee theft in the United States.
Other studies have shown costs over $400 billion is lost annually in productivity. All of this is done by employees stealing around 4.5 hours per week from their employers.
That's over a half-day of productivity lost. This highlights the importance of better management techniques needs to minimize time theft by employees.
Time theft is a serious and expensive problem faced by companies in the United States-
- Also known as time card fraud or time and attendance fraud, it can include many activities including using personal technology on company time, buddy punching, extended break times, and abusing flexible schedules.
- Time theft laws are part of our criminal laws.
- Time theft costs businesses productivity and money- up to 20% of every dollar made.