Although there are rules and laws in place against it, many employees are padding out their timesheets; putting down hours that they didn’t work, and collecting payment for them.
As a business, you rely on the honesty and hard work of your employees. Employees are responsible for entering the correct time and data onto their sheets, and managers are responsible for ensuring those hours are correct. Unfortunately, though, the process is filled with opportunities for employees to pad out their timesheets, or commit other forms of time theft.
So just how do employees commit timesheet fraud and what can you do to prevent it?
While most timesheet fraud occurs when employees round up their time to the nearest hour, there are many different ways for employees to manipulate their timesheets. While 10-15 minutes might not seem like a lot, over time, those minutes turn into hours. If someone were to do this every day, at the end of a year an average employee could easily be compensated 65 hours’ worth of unworked time. Multiply that by however many employees you have and suddenly those 15 minutes here really add up.
The Fair Labor Standards Act says that employers must record, and pay employees for all of their hours worked, but it doesn’t specify which type of timekeeping system you should use. Still, since the burden of tracking and paying accurately falls on the employer, it’s in your best interest to ensure that you have a robust time tracking system that’ll make it easier for you to ensure accuracy, and help to prevent time fraud, as well as accidental errors.
With this in mind, let’s take a look at a few different forms of time theft, and see what steps you can take to help prevent it from happening.
When paper sheets were the only form of time tracking, padding out timesheets was a lot easier. Overpayments were then issued based on the employee’s inaccuracy. Having an updated time tracking software system in place, though, will help to prevent this from happening. Most modern time tracking systems today require people to sign in, and out; no need to have them manually track their time.
Unfortunately, of the worst offenders for inaccurate timesheet data is human error. When the payroll department manually enters the numbers in, there’s always a chance of that data being entered incorrectly. While this might not be a form of fraud in the strict sense of the word, it still results in paying out for time that wasn’t worked.
Clocking in for Coworkers
Another form of fraud results when employees sign in for a late coworker. With a robust time tracking system, it’s far more difficult to falsify an employee’s attendance record. This is especially the case if you have a system that requires verification at the time of sign-in, such as a code from their phone or webcam verification.
Break or Personal Time Abuse
Taking an extra long lunch break, or having personal time while on the clock can also add up over time. When it comes to keeping employees honest while on the clock and preventing this type of fraud, you’ll want to make sure you have clear policies in place that outline the importance of taking designated breaks, and returning to work on time, as well as policies that outline which activities are prohibited; such as browsing the internet or using phones, while they’re on the clock.
Another form of fraud involves creating ghost employees and paying them. This is an especially serious form of time fraud, and is more likely to happen in a larger organization than a smaller one. Still, holding regular audits is the best way to make sure there are no fraudulent payroll practices occurring.
Working Unauthorized Hours
Working time that hasn’t been authorized is another form of time fraud. When it comes to your team, consider requiring a manager’s signature on timesheets to prevent employees from working unauthorized hours.
When it comes to preventing timesheet fraud, having an updated timecard system is an important part of reducing fraud. It’s also a good idea to have clear policies in place that your employees have read and signed. You may also want to consider having your managers sign off on your employees’ timesheets to verify that they authorized the hours worked. Finally, make sure you perform regular audits of your payroll, just to keep everyone honest.