Time Clock Fraud: Effective Ways to Prevent Time Theft
Time theft plagues businesses of every size, industry, and globally. Whether the loss comes from work avoidance or fraudulent time tracking, there are financial repercussions for your business. Chances are, it’s a challenge facing your company, too. After all, sources estimate time theft impacts 75% of US employers.
What is time theft?
Time theft refers to the unauthorized or fraudulent manipulation of timekeeping records by employees, usually hourly employees, although it can also occur with salaried employees, leading to the loss of productivity and financial resources for employers. This can occur in various forms, some common types of time theft include taking personal calls on company time, employees clocking in late or leaving early while still being paid for a full day’s work, taking longer lunch break times or smoke breaks than allowed on company time for personal activities, or having coworkers punch in or out for them (buddy punching in time cards). Time theft not only affects the company’s bottom line, but the consequences of time theft create an atmosphere of mistrust among employees, impacting overall morale and employee productivity and sometimes even leading to legal action.
Why is it important to address employee time theft?
Addressing time theft is crucial for maintaining both financial stability and employee morale. When organizations or business owners experience increased labor costs due to inaccurate time reporting, it can lead to budget cuts, reduced resources, or even layoffs. Furthermore, if employees perceive that some colleagues are not adhering to work policies, this can foster resentment and decrease overall productivity. Establishing a culture of accountability, disciplinary action, and transparency is essential for a healthy work environment.
What does employee time theft look like?
There are five main types of time theft service companies typically experience:
- Rounding time worked. This occurs when employees round the clock-out time, usually to the next quarter hour.
- Buddy punching. This occurs when one employee clocks in or out for another employee.
- Extended breaks. This occurs when employees take longer breaks than given when not required to clock out.
- Socializing. This occurs when employees socialize rather than complete work while on the clock.
- Unscheduled stops. This occurs when members of a distributed workforce make unscheduled stops while performing a route.
Combat different forms of time theft with time clock software
There are two key ways to prevent and avoid time theft: some common forms include implementing the right technology to safeguard timekeeping practices and implementing the right processes to set your time and attendance policy and protocols up for success.
Technology
Time and attendance solutions should be able to provide status updates and periodic checks. That way, managers can view the real-time status of employee clock-ins/outs, lunches, and breaks so they know if employees are where they need to be at the right time (this includes remote employees). Not only does this help prevent time fraud, but it also lowers the risk of compliance issues for your company when keeping in line with regulatory requirements (like meal and rest breaks in the US, or other labor standards internationally).
Other solutions that help decrease time theft include biometric authentication (which lessens the risk of fraud like buddy punching), voice verification, or geo-location verifications.
Process
Oftentimes, time fraud is not malicious. By setting up clear processes, you can lessen the risk of time fraud by inadvertent or intentional means.
First, set expectations. Create a clear-cut time theft policy about time and attendance expectations and communicate them to employees. If you use a self-service portal, have this documentation easily accessible for ongoing reference.
Second, focus on engaging employees (and recognizing good work.) Employees who are engaged typically don’t look for ways to avoid work, as they are incentivized through recognition programs to continue to perform highly.
Third, check on your employees. Similar to how your clients require proof of work, perform regular audits and inspections to ensure work is being completed to scope. If the activity isn’t completed, use your software solutions to initiate a check where the team member needs to respond within a certain amount of time. With automated and mobile timekeeping options, you can also lessen the risk of fraudulent labor costs impacting your bottom line.
4 Tips for software use to prevent time theft
Fraud can be committed in minutes. Here are some tips to prevent time theft.
- Use role permissions. Often, we’ll see companies default to letting all users—at least in the back-office—have the same permissions rights in a software solution. Instead, ensure you’re setting up roles with customizable features to allow either read-only, takeaway, or additional permissions based on what they need to successfully complete their job. Customize features by roles to allow read-only, additional permissions, or take-away permissions.
- Set up checks and balances. Especially when dealing with your company’s money, you don’t want a single person to be able to write a check, void a check, or do bank reconciliation with no oversight. Those handling, receiving, or paying out money don’t have chances to change master file records, potentially taking advantage of your bottom line.
- Run consistent audits. Run queries and audits frequently to gain visibility into how many timekeeping changes are happening and why. This can help provide insight into who is making changes, why they’re making changes, and how often those changes are happening.
- Have processes in place for user security. Users can lock down some software or roles past extended hours to limit access to personnel outside of regular working hours. This can be especially helpful during the separation process.
Employee Time Theft Statistics
Use this handy guide to help you understand the prevalence of time theft, and remember our recommendations to prevent it. However, your business can take steps to combat time theft by using the right technology and strengthening your time and attendance processes.
Don’t believe time theft or other kinds of labor fraud can happen to you? Read how one company was haunted for nearly a decade by ghost employees who cost the company an estimated $1 million over 10 years. With the help of TEAM Software’s time and attendance technology and improved hiring and payroll practices, the company is better prepared to prevent fraud and save money. Learn more in this case study.
The TEAM Software and Findd partnership
Traditional timekeeping solutions are vulnerable to misrepresentation from employees and supervisors. By eliminating instances where employees have to manually punch in and out of work, biometric time clocks increase the chances of accurate time and attendance tracking.
TEAM Software has partnered with Findd to provide access to the latest in biometric time-tracking technology. By collaborating with this recognized brand, TEAM remains focused on addressing workforce management needs to better manage employees.
Other leading commercial cleaning and security TEAM Software clients have already successfully deployed and still use Findd in their operations because the TEAM Software workforce management solution is still their main source for records and employee scheduling information.
Benefits of Time and Labor Management Software
Some of the key benefits of using TEAM Software for time and labor management include:
- Automate to simplify: Stop relying on spreadsheets and paper time cards. Time and labor management software automates this business-critical function and eliminates manual processes, resulting in fewer errors and cost savings.
- Manage Your People: Provide proof that guards and cleaners are on-site and on time. Boost engagement, productivity, and accountability with business management software for service contractors. Address attendance issues immediately to keep shifts filled and work done.
- Support Site and Customer Needs: No matter the site or customer, you have options. Choose a cloud-based telephone call-in option, biometric identification, mobile apps with GPS, or a combination to collect time easily and track attendance at every site.
- Field to Back Office: With time and labor management, you need to track attendance from anywhere. Use alerts and notifications to gain visibility and ensure coverage. Review time and attendance records for payroll, and view reporting on call stats, errors, and exceptions.
Closing Thoughts
Time theft can significantly impact a business’s bottom line, making it essential for organizations to implement effective prevention strategies. By leveraging advanced technology, such as biometric time clocks and comprehensive time and labor management software, businesses can safeguard against fraud and ensure accurate tracking of employee hours.
TEAM Software‘s partnership with Findd equips companies with innovative tools that enhance the accuracy and reliability of timekeeping processes. This partnership not only helps mitigate the risk of time theft but also streamlines workforce management, allowing businesses to focus on what they do best.
Incorporating these advanced solutions into your operations can lead to substantial cost savings, improved employee accountability, and heightened productivity. By automating time tracking and simplifying payroll processes, organizations can reduce administrative burdens and minimize the potential for human error.
Partnering with TEAM Software and utilizing their advanced time and labor management solutions can transform how businesses manage their workforce. With features such as biometric identification, mobile tracking options, and real-time reporting, companies can achieve greater accuracy in attendance records while significantly reducing the risk of time theft. This not only enhances operational efficiency but also fosters a culture of accountability among employees. See it for yourself; request a demo!
