Trust is at the core of every employer-employee relationship. You trust your people to do their jobs, and they trust you to compensate them for their work. Most of the time, it works. However, there's always the person looking to bend the rules or get away with doing less. And when it comes to employee time theft, small bits of stolen time adds up to real money and can impact your bottom line.
Employee time theft is when an employee gets paid for work that they didn't do, or for time that they didn't actually put into their work.
One oft-cited study by the American Payroll Association notes that 75% of companies experience some form of time card fraud. The time theft can cost organizations up to 7% of their total payroll annually—in many cases, that's enough to hire additional staff. There are numerous ways employee time theft can happen, and being aware of them is essential.
Fortunately, it's also becoming much easier to prevent time theft before it becomes an issue. The right people platform can help by providing time fraud prevention features ranging from geofencing job sites to setting rules for lunch breaks and hours worked each day. By educating yourself on how time theft happens and leveraging technology to deter it, you can ensure your employees are as productive as possible.
Understanding time card fraud
There's no one way to steal time from an employer—there are actually several. Before you can stop time theft, you need to understand the many ways that it can occur. Here are some of the most common ways that employees steal company time:
Buddy punching
This isn't a humorous shoulder jab among friends. Instead, it's when co-workers clock in for one another. If you're still using paper time cards and/or time clocks to track time and attendance, fraudulent clocking in is much easier to accomplish.
Exaggerated work hours
By adding 15 minutes to each day or an extra hour here and there, employees can falsify their time cards to reflect more time than they worked. This can happen with either an electronic timesheet or paper and unless a manager is paying close attention to each entry—it's hard to catch.
Extended lunches and breaks
Many states mandate some amount of break time within an eight-hour workday. But when employees take longer than the required 15-minutes or 30-minutes and don't record it, that's time theft. Whether intentional or not, extending mandatory breaks for personal time costs employers productivity and ultimately, money.
Not working, but on the clock
Jobs that have employees out in the field, whether working job sites alone or in small groups, or visiting customers individually, are ripe for time theft. That's because employees can easily log into a time tracking app and be on the clock, but instead of working, they're taking care of personal business.
Overtime favoritism
Sometimes employees need to work overtime to complete a job or meet a deadline. However, when given a choice, the most cost-effective way to address additional work is to use employees who have yet to reach their 40-hour week. With overtime favoritism, managers may intentionally choose employees who are already over their hours and give them even more.
Preventing time theft with technology
Smart people platforms not only make it easier to prevent time theft, but they ensure your company remains compliant with labor laws. Here are five ways that Hourly can help your organization avoid card time theft:
- Know your employees' real-time locations. GPS and geofencing make it possible to know whether people are at the job site. With Hourly, employees can only clock in once they're in the appropriate place.
- Create custom time tracking rules. Hourly allows you to designate the length of workdays and the length of breaks. So you can track employees that clock in after a 45-minute lunch that was supposed to be 30-minutes. Or monitor who leaves a job 15 minutes before the end of an eight-hour day.
- Automatically calculate overtime. Decisions about who works overtime—or who still has time available within their regular week—become that much easiereasy when you can automate overtime tracking. Use Hourly's data analysis to decide whether overtime makes sense or if there's a more affordable way to get the job done.
- Set reminders for breaks. While you don't want employees abusing their break time, you also need them to take breaks. Automated break reminders ensure employees stop work as required by labor laws. It's an easy, reportable way to stay in compliance with regulations.
- Eliminate manual time card hurdles. Of course, time clocks and paper timesheets—and apps that allow employees to enter their hours manually—open the door for false reports. With Hourly, employees clock in and out via their smartphones. There's no data entry required, and your company can track hours worked in real-time.
Time card fraud is a common problem, but it doesn't have to be an issue for your company. With Hourly, you can prevent employee time theft and ensure your employees are as efficient and productive as possible.
Employee time theft: Frequently asked questions
Here are some of the common questions and concerns employers have regarding time theft and time card fraud.
Can you fire an employee for time theft?
The short answer is yes. The longer answer is that you'll want to be able to document and prove that the employee was stealing time and not working the hours that he or she claimed. Be sure your policies for tracking time are clear and provided to employees on their first day. Make sure employees have access to time tracking tools. And if you believe an employee is stealing time, document it properly before you take action.
It time theft illegal?
In extreme cases, it could be. However, federal labor laws mostly address that employees be paid for the time that they worked and reported via their time cards. So from a legal perspective, employers that suspect, but can't prove that their employees stole time, still need to pay them for the time they recorded. Otherwise, they could face a lawsuit. If you do suspect time theft, you need to conduct an investigation, document your findings, and deal with the employee in a way that's consistent with your HR policies and advice from legal counsel.
What is considered time theft?
Time theft happens in many intentional, and even unintentional, ways. As we noted above, employees may make fraudulent time card entries, have their coworkers punch them in, or clock in but not actually work. More commonly, employees may just be goofing off on the job, surfing the internet, or browsing social media when they're supposed to be working.
Is conducting personal business at work time theft?
There's no right answer here. For example, most employees will take a personal phone call or two at work, and that's likely expected. However, if an employee is on his phone all the time, then time theft may become an issue. Conducting a side business while all the clock or taking large chunks of time to run personal errands is also problematic. Set clear expectations for your employees about what's permitted when it comes to personal business at work and address potential problems early before they get out of hand.
What's the best way to prevent time theft?
Creating policies for time tracking and reporting is important. So is moving away from paper time tracking systems such as timesheets and time clocks. Automating employee time tracking makes it harder to falsify records and ensures that your company can easily document when and where employees are working.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe