What Is Time Theft & How Can You Prevent It?

What Is Time Theft & How Can You Prevent It?

Time theft might sound like something straight out of a blockbuster sci-fi movie but, the reality is, it’s a lot more mundane—and common—than it sounds. And for many small businesses, the financial costs of employee time theft can be far greater than what you might initially think.

What Is Time Theft

Time theft occurs when an employee uses paid work time for nonwork-related activities without their employer’s authorization. Despite the use of the word “theft” in its name, time theft is more commonly an employee misconduct issue rather than a case of outright employee theft. And it’s important to keep in mind that time theft is often not intentional.

For example, an employee might commit time theft by rounding down their start time from 9:05 a.m. to 9:00 a.m. or rounding up their end time from 4:57 p.m. to 5:00 p.m. because of a mistaken belief that the rounded times are easier for management to work with or for the payroll department to process.

The Cost Consequences of Time Theft

At first glance, time theft might not seem significant. Take the example above: Paying your well-intentioned employee for five minutes in the morning when they didn’t work those five minutes doesn’t look particularly consequential.

But when you do the math, the negative cost impact becomes clearer. Let’s say this employee consistently starts work at 9:05 a.m. every workday. Taking two weeks off for holidays, those five minutes a day over the course of a full work year add up to 1,250 minutes, or 20 hours and 50 minutes:

5 minutes × 5 (days) × 50 (weeks) = 1,250 minutes
1,250 minutes = 20.83333 hours or 20 hours and 50 minutes.

If you’re paying that employee $20 per hour, those five minutes a day amount to a yearly sum of $416 that you’re paying for time not worked. And the costs compound if other employees are also coming in a few minutes late or leaving a few minutes early.

Is Time Theft Illegal?

There’s no federal law that makes employee time theft illegal in the U.S., so in the vast majority of cases, time theft is classified as employee misconduct rather than a crime. But an employee who commits time theft still faces the possibility of severe consequences.

For example, in addition to disciplinary action or the loss of their job, if the employee orchestrated the time theft by falsifying their records or through some other fraudulent activity, they could face criminal charges.

If you do catch an employee committing time theft, you might be tempted to withhold wages equal to the amount they were paid for time not spent working. It’s critical that you resist this temptation, however, as holding back on wages constitutes wage theft and is a violation of the Fair Labor Standards Act and regulations.

While you could bring a lawsuit against an employee if their time theft has resulted in a significant financial loss for you, in most cases, the best course of action is to either discipline the employee or terminate their employment altogether—and then implement preventative measures to help guard against more time theft incidents.

7 Types of Time Theft

Time theft is a challenging issue for employers because there are so many ways it can occur, from the fairly innocuous extra five minutes in the example above to cases of fraud perpetrated via falsified timesheets or records. The list below explores some of the more common types of time theft that employers might encounter.

1. Extended or excessive breaks

Whether it’s a lunch break that extends beyond the time permitted or an excessive number of short breaks (with smoke breaks being a typical culprit), this type of time theft is not only common but can also be difficult to detect.

2. Inflation of work hours

This form of time theft involves anything that results in inflated work hours being reported and compensated. While an employee might do it unintentionally (or under a mistaken belief that it helps out the payroll department, as in the example above), inflation of work hours also includes timesheet falsification and time clock manipulation.

3. Personal, nonwork-related activities

Tackling a personal matter during work hours can be unavoidable sometimes, but when employees do this frequently or consistently—for example, answering personal calls, checking personal emails or working on a side hustle—those lost minutes add up over time.

4. Digital distractions and cyberslacking

Social media and web surfing are digital distractions that come with a double whammy: Not only does the time spent online for nonwork-related matters add up, it can also result in reduced focus on the work that needs to be done and an overall decline in both productivity and work quality.

5. Buddy punching

It turns out there’s a specific term to describe the practice of asking a coworker to cover for their late arrival or early departure by clocking in or out for them: buddy punching. Buddy punching can happen with both manual and electronic timekeeping procedures. For example, many electronic timekeeping processes assign users with PINs for signing in or out, which an employee can easily give to a coworker to clock in or out for them.

6. Late arrivals/early departures

As illustrated by the numbers in the example in the previous section, arriving a little late for work or leaving work early might look insignificant, but over time a consistent pattern of late arrivals or early departures can add up—especially if you have multiple employees engaging in this practice.

7. Intentional time wasting

This type of time theft covers a wide range of employee behavior, from taking too long to complete a project (sometimes resulting in otherwise unnecessary overtime) to padding the time worked on a task to stopping work early but waiting to clock out at the correct time.

Ways To Prevent Time Theft

For employers, managing time theft-related misconduct can be a tricky and challenging endeavor. The best way to combat time theft? As with a multitude of things in business and life, prevention is often the best approach:

Have a clear time theft policy

Time theft is often unintentional because employees aren’t clear about how they should be spending their work time. When there’s a lull in customers, for example, restaurant waitstaff may not realize they’re supposed to spend the downtime more productively.

You can counter this by crafting a comprehensive policy that clearly sets out what constitutes time theft and why engaging in time theft behaviors is detrimental to your business. For the example above, a time theft policy could describe tasks that waitstaff are expected to engage in during downtimes when there are no diners in the restaurant.

Enforce your time theft policy

No matter how clear and comprehensive your policy is, it won’t be effective if it’s not enforced properly and consistently. This means time theft policies need to be applied across the board, with no ad hoc exceptions.

Poor enforcement results in confusion among employees as to what’s expected and what’s condoned, which can eliminate any preventive effects of having a time theft policy in the first place.

Mitigating Time Theft Using TreeRing Time

In prior sections, we’ve emphasized the importance of averting time theft scenarios. While the task may seem overwhelming, an effective and user-friendly solution is crucial for employee satisfaction.

Enter TreeRing Time’s comprehensive time-tracking system. Here’s how it can assist you:

• Combat buddy punching with photo audit trails and advanced facial recognition biometrics, allowing for capture of employees’ images during clock-ins and outs.
• Implement checks for timesheet entries and time-off reservations to deter unauthorized time logging.
• Verify punch-in locations through geofencing and GPS monitoring, enabling real-time tracking of remote and on-field staff. This guarantees that employees can only log time when they’re within their designated work zone.
• Filling out timesheets can sometimes seem tedious. However, TreeRing Time ensures your employees can provide precise, auto-completed timesheets for supervisor verification and approval.
• Prompt timely timesheet submissions from employees via instant alerts.
• Log work durations accurately, irrespective of the device or location.
• Document specifics for meal and rest periods, as well as job-related activity durations.
• Maintain compliance with international labor laws using a comprehensive dashboard. This provides insights into potential discrepancies and offers audit-compatible data.

Moreover, TreeRing Time effortlessly syncs with CRM, HR, project management, accounting, ERP, and other specialized systems, simplifying workforce management for you.