Do you know how much time theft affects your labor costs and business? Chances are, the cost is much higher than you’d think. If you own a business, you need to come to terms with the fact that some of your employees may have stolen from you. Perhaps not cash, merchandise, or office supplies – but time. This is referred to as time theft.

Time theft is prevalent in many workplaces, no matter the size, and the act of time theft adds up. The American Society of Employers did a study, and they found that approximately 20% of every dollar earned by U.S. companies is lost to employee time theft. Another study discovered that time theft can cost U.S. employers over $400 billion per year.

You may be thinking to yourself, how can one employee stealing 5 minutes hurt my business? Well, chances are time theft is being done by several employees and on a weekly basis. 10 or 15 minutes stolen every day by dozens of employees can add up over time.

Let’s dig deeper into time theft, how it impacts your business, and how you can reduce it. 

Employee sneaking out of work early, but still being paid. Leaving early and mis documenting work times is a common form of time theft.
Time theft is a prevalent problem that, if not addressed swiftly, can result in your business losing hundreds or even thousands of dollars that can be better spent elsewhere.

What Is Time Theft?

Time theft occurs when an employee bills their employer for the time that they haven’t worked. This can happen in many different ways, including:

  • Buddy Punching (A co-worker punching time for another)
  • Working unauthorized overtime
  • Adjusting work hours 
  • Starting late
  • Finishing early
  • Taking too long of breaks
  • Doing personal activities during work hours

It is important to note that time theft isn’t always done intentionally. It can sometimes be an accident. An example of accidental time theft would be an employee forgetting to punch out during their break or accidentally punching out a few minutes late. Also, if an employee doesn’t have a way to track their time accurately, they will tend to overestimate their time worked or round their time up or down.

Employee calculating the cost of time theft without employee time clock software.
Time theft doesn’t just impact a business financially, but can also impact employee morale and productivity.

The Cost of Time Theft

If you have a large workforce and have several employees engaging in time theft, this can add up very quickly. You may come to realize that your employees are submitting fraudulent timesheets or being paid for unproductive time and that you are spending hundreds (or likely even thousands) more in labor costs than you should. 

According to a survey done on time theft by Robert Half International, employers can lose up to 4.5 hours per employee per week to different forms of time theft. Another study found that 1 in every 4 workers has admitted to fraudulently exaggerating their time worked nearly 75% of the time.

Every penny counts when you own or run a  business, so it is crucial for business owners to do everything they possibly can to reduce time theft.

The cost of time theft isn’t only extra wages being paid for fraudulent or unproductive hours. If your employees have made time theft a habit, this can have drastic negative impacts on your business as a whole.

As an example, employees who frequently arrive to work late or leave early, but change their hours to meet their working schedule, can make other hardworking employees who show up on time resentful. It is frustrating for people if they arrive on time every day and work hard, only to see someone else successfully cheat the system.

Time theft can also impact customer service and your business as a whole. If your customers are receiving poor service because your employees are chatting or playing games on their phones, there will be fewer sales, and in turn, your company will struggle to make a profit.

Employee receiving punch in reminder directly to their computer.
Reminding employees to punch in or out is just one way to ensure they are tracking their time worked accurately. Many employee time clock solutions have built-in reminders to help employees stay on top of their hours.

Ways to Prevent Time Theft

Thankfully, there are many different strategies you can use to reduce the risk of time theft at your place of work. This includes:

  • Talking to your employees about time theft and how it not only hurts your business but will hurt them in the long run too if your company goes out of business or needs to let people go.
  • Develop a clear and concise policy for time tracking that outlines how employees should track and record their time. Also, be sure to include the potential consequences for not following the policy.
  • Avoid using outdated time tracking systems, which tend to be easy to defraud. Instead, invest in web-based employee time clock software, which offers a much more accurate way to record shifts. Employee time clock software makes it nearly impossible for time theft to occur – whether intentionally or unintentionally.
  • Invest in employee time clock software that includes biometric options such as facial recognition or fingerprint. Using a solution that has a biometric feature can help you prevent buddy punching.
  • Choose employee time clock software that automatically captures the location of an employee when they punch in or out. This way, you can be confident that they are on-site when they punch time – even if you are not.
  • Send out messages as needed to employees to remind them to punch in and out the moment they arrive or leave work – as well as whenever they take an unpaid break or lunch. To automate the process, invest in employee time clock software that allows you to set up alerts and reminders to go out automatically.
  • Ensure checks and balances are in place by having management review and approve all timesheets before they are finalized. Employees will be much less likely to falsify their time if they know the information will be checked over carefully before being sent to payroll for processing.
  • Pay your employees a competitive and fair wage. Employees will be less likely to engage in time theft if they are adequately compensated for their work and time. 

You can start preventing current and future time theft immediately by investing in employee time clock software such as Buddy Punch. We have time theft deterrent features in place, including facial recognition, time card approvals, GPS, and geofencing. Sign up for a free 30-day trial today!