Employee Time Theft: Definition, Examples, & Prevention

For all the known ways that business owners try to improve employee productivity and increase profits, employee time theft often flies under the radar. This is an issue since just one employee engaging in a few minutes of time theft consistently can cost your business thousands of dollars a year.

What makes employee time theft so devastating for a business is a combination of several factors:

• Time theft is often persistent. A lot of time theft is the result of employee misconduct. Traffic makes them five minutes late to work, but they say they arrived on time. They take slightly longer breaks than what they’re allocated. Your team members believe this has little impact, which makes time theft likely to become a habit.
• Time theft can be invisible. You may not even realize it’s happening in your workplace, especially if you’re using manual methods of timekeeping, which are common for small business owners.
• Time theft impacts your business negatively in multiple ways. It eats into how much time your employees work, how many of their tasks they accomplish, and how much money your business makes.
• Time theft spreads. Employees watch and emulate each other. If Jerry notes that Sarah never gets reprimanded for arriving at work five minutes late, he might start to feel lax about the attendance policy and start coming in several minutes late as well.

Time theft isn’t something that goes away on its own. Once it first appears in your workplace, it only digs its roots in more. This is why it’s so critical for business owners to fully comprehend time theft, from what it is, to how to identify it, and how to remedy it in their workplace. 

In this guide, we’ll teach you everything you need to know to ensure your business never falls prey to employee time theft again.

What is time theft?

Time theft is any occurrence of an employee being paid for time they didn’t actually work. This includes anything from claiming they clocked in earlier than they actually arrived at work to taking extended breaks and not representing them on their timecard.

These forms of time theft are less than ideal but often come from an employee not understanding the impact of their actions. In such cases, you might be able to remedy this by simply explaining the impacts and making it clear you want them to be more considerate in the future.

However, time theft can take on a much more malicious form. Sometimes employees are fully aware of the potential impacts and still choose to engage in extreme versions of time theft. One such example occurred when a BART (Bay Area Rapid Transit) system technician was noted to have stolen over $9,000 in falsely billed wages and benefits before being caught.

Examples of time theft in the workplace

To address time theft in your workplace, you have to first be able to identify it. Here are the five most common forms of time theft that you’ll see in any workplace:

Exaggerating work hours

This form of falsifying time cards includes anything an employee does to inflate the number of work hours they spend on a task. An example is an employee finishing up their work on a customer’s project but then sitting in their car on their phone for 30 minutes after the job was complete and pretending like the job took 30 minutes longer than it did.

Late arrivals and early departures

Another common type of time theft is an employee arriving late to work but not listing their scheduled time rather than their actual arrival time on their timecard. For example, arriving at 9:10 AM but claiming they arrived at their scheduled time of 9:00 AM. 

The opposite version of this is leaving early but claiming to have remained at work until the end of a shift, such as leaving at 4:55 PM instead of 5:00 PM — especially common on Fridays or any workday before a break. 

Some employers may be lenient with this form of time theft. After all, what really is the difference between 5-15 minutes of work?

Well, we can literally calculate it to find out. Let’s say an employee, Sally, tends to arrive 5 minutes late and leave 5 minutes early, and she’s paid $25 an hour. That means that each workday, she steals 10 minutes total of time, the equivalent of $4.17 (rounded up.) No big deal, right?

But the average full-time employee works 260 days a year. 

If Sally is consistent with stealing 10 minutes of time from your company each workday, that means that every year she steals $1,083.33 (rounded down). Not to mention the fact that other employees will notice Sally’s behavior and — if it goes unchecked by you — may begin to replicate it. 

Suddenly, you have multiple employees costing your business over a thousand dollars each year.

Extended or unauthorized breaks

Another form of time theft that employees rarely regard as malicious is when they take a break, such as taking a smoke break or a lunch break, and go over their allotted break times — think a 30-minute lunch break extended to 38 minutes. As demonstrated above, these stolen minutes really add up over time and cost your business in the long run.

In some scenarios, employees may take unauthorized breaks throughout the day, such as stopping work to stretch, using the bathroom, or conversing with other team members. These are the sort of breaks that you want to hesitate to crack down on since they directly or indirectly help employees stay productive. 

Determining when these sorts of breaks are veering towards excessive will depend on your personal sensibilities, but you certainly don’t want employees to feel overly comfortable being lax while on company time. 

Social media usage and personal activities

Every time an employee glances away from work to look at their phone, check their Facebook, or respond to Instagram DMs is a moment where they’re stealing time and money from your company for their personal benefit. 

A funny cat meme may immediately boost an employee’s mood, but the minutes spent looking at it bleed money from your company.

Buddy punching

Buddy punching is the process of one employee punching in for another, such as if Paul knew he was going to be late for work so he asked Morgan to use his timecard and punch in for both of them at the start of work. 

Buddy punching allows one employee’s tardiness or absence to go completely unnoticed by an employer if they’re not present on-site to catch the lie in action. 

This version of time theft is one of the more insidious ones because of the frustration it causes other team members. If your team members who arrive on time and remain productive watch an employee be lax with attendance yet get paid the same amount as them, anger is going to spread.

Worse, if you’re relying on manual methods of timekeeping, you may not even notice that buddy punching is occurring. Then your team members may think you’re either allowing it to happen or are so negligent that they can get away with it too.

Are there laws preventing time theft?

There are no federal laws that directly prohibit time theft, and there is no mention of it in the Fair Labor Standards Act (FLSA). 

However, if an employee has managed to steal total wages exceeding that of felony theft (greater than $1,500), they have technically committed a felony and you can press charges as such.

Ultimately, how you handle time theft is left entirely in your hands. This can be empowering if you have a plan for various types of time theft, from how you’ll identify it to how you’ll remedy it. 

Such details are best laid out in an employee attendance policy, a document that you should require employees to read and agree to during the onboarding process. This ensures that both you and your team members have a clear understanding of how time theft will be handled. 

How to deal with employees who are stealing time

Let’s say you recognize time theft in your workplace. What should be your strategy to make sure it’s handled?

Create (or update) your employee attendance policy

The first step you want to take is to create or update your employee attendance policy to ensure that your definitions of time theft are clearly outlined. 

This is critical to establish a base definition of acceptable and unacceptable behaviors for your employees, and it also ensures consistency in what you and your administrators see as issues in the workplace. This attendance policy should also outline how you plan to deal with employee time theft. 

What disciplinary actions will you take? We recommend using a progressive approach to discipline, giving your employees chances to correct their behavior while simultaneously increasing the severity of your actions towards employees who don’t. The final disciplinary action is usually termination, but it’s important that you document and remain consistent until taking this final step to avoid potential legal issues. 

Contact the employee privately

Just because you’ve noticed employee theft in your workplace doesn’t mean the employee in question is aware of their actions or the overall impact those actions have. 

The first step you should take is to single them out and inform them. This can be accomplished either in person or through an email or written warning, though ideally, you don’t do it in a public manner that can cause them embarrassment (and make them less receptive to what you’re saying).

Regardless of how you handle this step, you’ll want to make sure you inform them clearly what they’ve been doing and why you want it to stop: because it costs the company money, because it can be a negative influence on the team, because it can cause jealousy and anger in their team members, etc. 

If you’ve been particularly vigilant or are making use of timekeeping software with detailed reports, you may be able to bring up specific examples of the employee’s time theft. 

Resort to disciplinary measures as needed

While we recommend being patient and understanding throughout your disciplinary process, you don’t want to be so soft that your employees feel no need to correct their behavior. 

After the initial conversation and acknowledgment of time theft, it’ll be on you to follow the guidelines in your employee handbook for dealing with continued instances of misbehavior. Common disciplinary actions for infractions include written and verbal warnings, audits and write-ups, suspension of employment, and outright termination. 

The reason we recommend going through this in a progressive fashion, rather than jumping towards termination — beyond the potential legal issues — is that it is far more costly to replace a new employee than it is to have an already-trained employee correct their behavior. 

The most important thing to note in regard to disciplinary action for time theft is that you want to remain consistent in how you identify it and how you handle it. That’s part of why it’s important to keep your attendance policy up-to-date and to make sure you adhere to it in every case. Otherwise, you open yourself up to accusations of discrimination and favoritism.

Underlying factors that contribute to time theft

Sometimes time theft is a symptom of a greater issue. Here are some examples of indirect problems that may lead your employees to commit time theft.

Personal conflicts

Sometimes an employee arriving late to work has nothing to do with the work environment and everything to do with the home environment. Stress, lack of sleep, sickness, and family emergencies — all of these can contribute to an employee consistently arriving late to work. 

Without time or ability to resolve these personal issues, they may resort to lying about their arrival times hoping to avoid any additional conflicts arising at work as well. 

Employee burnout

If an employee is feeling burned out due to overwork or stress, they may do everything in their power to avoid tackling their feelings about work head-on. This can manifest in them trying to arrive a few minutes late just to feel like they’re saving themselves some additional stress from being on the job.

Micromanagement

You might be surprised to learn that taking more steps to cut down on time theft can actually produce more of it, but you can actually be counterintuitive in your approach to employee management. 

If, for example, you drastically adhere to your outlined breaks for employees and try to force them to remain at their desks, they might do so, but they’ll slack off during work in other ways. Instead of going on social media sites, which you may have blocked, they’ll just stare at the screen. The fact is that stress and overwork are natural parts of being human.

Eligibility

Sometimes, even when you’re doing your best to reach an understanding with your team members, the simple fact that they can reasonably get away with time theft will cause some of them to resort to it. 

They know you’re not around; they know no one’s watching; they know that they can easily lie about the time they arrived on paper timesheets. Temptation can be hard to resist, especially if they fear the consequences of being honest in the ways that they failed to arrive or perform work in a timely manner.

4 ways to prevent time theft

Can you stop time theft before it even occurs? That answer depends entirely on how you approach employee attendance in your workplace. 

If you’re often not present at work and rely on manual methods of timekeeping, the truth is that you will likely have instances of time theft occurring throughout the year — ones you may or may not ever become aware of.

Let’s go over how you can create an environment where time theft is unable to thrive. 

1. Ensure clear communication 

Do your employees understand what time theft is and looks like? Do they know the consequences of time theft in your workplace, including how you’ll identify it, try to rectify it, and discipline it if nothing else works?

The first step to stop time theft before it occurs is to make sure all of your employees are on the exact same page as you are when it comes to time theft. The easiest way to do this is to write a clear policy for all things time theft and include it in the employee handbook. 

2. Improve company morale

As we covered previously, there are some emotional and personal reasons that can cause employees to resort to time theft, such as burnout or turbulence in their home life. Both of these fall under the umbrella of lowering employee morale. 

Additionally, they’ll likely result in other impediments to company culture, such as negative attitudes, poor communication and collaboration, and reduced productivity. 

By addressing these hits to your company morale, you may be able to inadvertently solve or reduce time theft in your workplace as well.

Increased communication, encouraging stressed employees to take small breaks throughout the day or to make use of their paid leave, and being flexible with scheduling to accommodate an employee’s temporary situation are all ways you might improve your company’s morale and address latent issues causing time theft.

3. Reward productivity

Monitoring and discouraging time theft is a method of negative reinforcement, but it can be beneficial to establish methods of positive reinforcement as well. Some of your team members may respond more to one over the other. There are a few ways to go about this:

• Establish a reward program for productivity. Think employee of the month, bonuses for task completion, or a gift card raffle for your top three performing workers. Anything that will encourage employees to be more mindful with their time and attendance while on the job is a solid choice.
• Record productivity and reward benchmarks. When you take into account that burnout can lead to time theft and reduced productivity, you start to understand that short breaks during the day can inadvertently improve your team member’s work completion. In that way, it’s more helpful to look at data about projects and tasks than it is to take what you can see, such as an employee not working for 10 minutes, at face value. 

The only problem here is that it can be difficult to get insight into productivity data without using software, which leads us to our final tip to prevent time theft.

4. Upgrade your time-tracking system

Upgrade from using paper timesheets and manual spreadsheets. For example, some business owners prefer the security provided by on-site, physical time clocks. However, these tools are expensive, clunky, and really only effective if you’re only managing employees at one specific site. 

That’s why, for greater flexibility and cost-effectiveness, more business owners turn to using time clock software to manage time theft.

Using software to prevent time theft

One of the most effective ways to clamp down on time theft is to make use of time-tracking software with features that streamline the process. Time clock software is particularly good at managing time theft for three reasons:

• These tools have automatic features that cut down on time theft without requiring your constant oversight, such as GPS tracking or geofencing. No worrying about checking on your employees throughout the day and no need to fall into “micromanagement” territory.
• Most time-tracking software records employee data so you can see the impact of various features over a set time period. These records can usually be accessed at any time and allow you to pull up real-time employee data without any human error at will.
• With functions such as notifications and reminders, you can encourage employees to build long-term habits that will encourage better timeliness and productivity while on the clock. 

Time clock software greatly empowers you to enforce time and attendance rules in your workplace, and it does it in a manner that also ensures freedom and power for your team members as well. For a great demonstration of this, look no further than Buddy Punch.

How Buddy Punch combats time theft

We first turned to looking at time-tracking apps to help us monitor our employees when we were struggling to manage work hours for 20 employees at three different locations. That was our first reckoning with all the ways that our manual methods of timekeeping were ineffective. 

We couldn’t even stamp down on time theft or ensure proper time tracking unless we were physically present at a job site. If we wanted to boost work productivity, we’d have to find a software tool with features to meet our goal.

Unfortunately, time-tracking options back then were limited, and many of the tools either lacked GPS features for better control over remote locations — or had complicated interfaces that would have tested the patience of our less tech-savvy employees. 

So we set out to build the tool we wished we had found, and Buddy Punch was born.

Here are the features Buddy Punch comes with to combat time theft.

GPS tracking

Buddy Punch’s GPS tracking ensures the accuracy of employee hours even at remote locations, preventing time theft or work hour inflation even if you’re not present on job sites. 

You have two settings: either GPS locations can be logged when employees clock in or clock out (for example, when remote workers arrive at a construction site) or you can consistently log employee GPS data in real-time throughout their shift. 

Either way, once employees clock out, Buddy Punch ceases all time tracking to preserve employee privacy.

Geofencing

Buddy Punch’s geofencing option allows you to create a radius called a geofence on an interactive map, up to a size of 5,000 feet. If any of your employees attempt to clock in or clock out while outside of this radius, they’ll be automatically denied. 

This prevents employees from claiming to be on site when they’re not and is great for managing multiple locations, such as retail stores or work sites.

IP address locking

If your employees work on computers, you can set up IP address locks to ensure they can only clock in and out while connected to the company’s Wi-Fi. This prevents them from punching from home or while they’re on the way to/from work if they’re running late or left early.

Photos on punch

With Photos on Punch, you can require employees to take a selfie when clocking in and out. Those photos are added to their timesheets, and you or a manager can review them at any time to make sure that the employee who clocked in was the employee who’s logging time.

Facial recognition

Facial recognition takes Photos on Punch a step further. Buddy Punch uses Face ID to scan an employee’s face when they clock in, matching it with a saved photo on file. This helps ensure that every team member clocking in and out is exactly who they say they are — no more buddy punching.

Job codes / project tracking

Regardless of where your employees are working, you can use Buddy Punch’s job codes (also known as department codes) to get insight into their task completion while on the clock. This feature lets you create a custom code for tasks and projects that employees can select and swap between during their shifts. 

Time spent on each project is automatically logged throughout the day, granting you deeper insight into what your employees are doing as well as the labor costs of each task.

Buddy Punch functions on any device with an internet connection, including Windows and Apple desktops, iOS and Android smartphones, and even tablets, which you can use to establish Buddy Punch as a time kiosk for employees to clock in and out throughout the day. 

This makes our time tracker simple and easy to use whether your team members work at different retail store locations or if you have field teams operating on construction sites. You can turn any device you require into a time tracker.

There are even more features Buddy Punch has to offer business owners for scheduling and attendance, which you can read about here. Alternatively, you can start a free trial of Buddy Punch (no credit card required) or watch a demo video.

The bottom line

Controlling time theft is about understanding, identifying, and remedying it, all before it begins to spread throughout your workplace. While there are several managerial steps you can take to reduce time theft on a personal level, one of the most effective steps is to upgrade how you handle time and attendance overall. This is why many business owners turn to using time-tracking software.

FAQs (Frequently Asked Questions)

Why isn’t time theft illegal?

There’s no particular reason that time theft isn’t illegal under American law; there just hasn’t been a law imposed for it. However, it does technically fall under the category of theft in general, meaning it’s possible for a company to pursue legal action in certain cases.

How common is time theft?

While there is no way to tell just how common it is — especially since employers not using attendance software may not even know it’s occurring — we know that time theft is pervasive across industries. It is estimated to cost U.S. employers more than $400 billion per year in lost productivity. 

What degree of financial losses will I face if I don’t crack down on time theft?

This is highly variable depending on your labor costs, industry, to what extent employees are committing time theft, and if their coworkers are emulating it. The only thing we can say with certainty is that failing to stop time theft makes it much more likely to spread throughout your company.

Is employee monitoring legal?

Yes, employers are allowed to monitor their employees while on the job. That said, having a clear company policy that describes what system you’ll use and how it will monitor employees ensures that you and your team members are all on the same page.

Can an employee be terminated for time theft? 

Yes. An employee stealing time from your company falls under being a “just cause” for their job termination.

What are other ways employees might commit time theft without manipulating timesheets?

Checking their phone calls, thinking about personal tasks, and even going as far as online shopping are ways that employees might commit time theft in a way that isn’t reflected on their timesheets.