How to Reduce Time Theft at Work: Employer’s Guide

As an employer, one of the most crucial roles you have in terms of maintaining productivity and paying your employees fairly is managing their work hours. However, one challenge that can often make this difficult is time theft at work. This is where employees are paid for time that they haven’t actually worked. If you don’t implement proactive measures to prevent this issue, then it can significantly impact the bottom line of your business.

So, what’s the secret? How do you know if your employees are stealing company time? What can you do to reduce time theft and boost productivity and engagement?

In today’s post, we will answer these questions and more. We will also explain how implementing time theft prevention strategies and using the right tools and technology can help you build a culture of accountability and fairness, where employees are both happy and productive.

• What Is Time Theft at Work?
• Common Examples of Time Theft at Work
• The Impact of Time Theft at Work
• What Does the Law Say About Time Theft at Work?
• How to Reduce Time Theft at Work 
• How Factorial Can Help You Reduce Time Theft at Work
• Calculate work hours and fill timesheets with our simple online time card calculator ✅

What Is Time Theft at Work?

Time theft at work occurs when an employee is paid for work they have not actually done, or for time when they were not actually at work. This can either be intentional, as we will see in the next section on examples of time theft, or unintentional, due to disengagement or a lack of employee awareness about company policies.

Time theft can be a real burden for businesses, affecting their bottom line. To address this issue, employers need to implement clear time-tracking policies and invest in electronic timekeeping systems. In addition, fostering a positive work environment with open communication can also go a long way in boosting accountability and reducing time theft. 

We’ll explore these strategies below in a bit more detail. But first, let’s take a look at a few examples of time theft to help you identify if any of your workers are stealing time.

Common Examples of Time Theft at Work 

Here are some of the most common examples of time theft at work. Does any of this ring a bell?

Examples of time theft:

• Buddy punching. Where employees clock in or out on behalf of their absent colleagues, misrepresenting their actual working hours. For instance, John might clock in for his coworker Mike, who is running late for work due to traffic. This makes it appear that Mike was on time, even though he actually arrived 30 minutes late. 
• Excessive personal time. Where employees use work time for personal reasons, such as making long phone calls, extended personal internet use, overly frequent coffee or smoking breaks, or running personal errands. For instance, Brian might spend an hour on the phone to his wife after returning from his lunch break instead of attending a meeting.
• Unauthorized long breaks. Where employees take longer breaks than scheduled without permission. For instance, Maria might take a 2-hour break to meet a friend for lunch in town instead of her allotted 30 minutes.
• Leaving early or arriving late. Where employees are consistently late for work or regularly finish early for the day without approval or adjusting their time records. For instance, Sarah has developed a habit of arriving at work 20 minutes late most mornings and often leaves 15 minutes before her scheduled departure time. She doesn’t report this on her timesheet or inform her supervisor of the changes in her schedule. 
• Time wasting. Where employees don’t use their working hours efficiently. For instance, Graham might spend too long chatting with colleagues around the water fountain every morning or procrastinating on non-essential tasks. This form of time theft not only reduces his own output but also distracts his colleagues and disrupts the overall workflow of the department.

The Impact of Time Theft at Work 

So, what is the impact of time theft at work? How can employees stealing company time affect the bottom line of your business?

In fact, time theft can impact your business in a number of ways.

This includes:

• Financial losses. Firstly, time theft at work can lead to significant financial losses if you are regularly paying employees for time when they haven’t actually been working.
• Reduced productivity. Secondly, if employees are not working as hard or as frequently as they should be, then this can affect overall productivity. Not only because they themselves are not working, but because the non-work-related activities they are undertaking could be causing a distraction for others.
• Employee morale. Thirdly, if employees are aware that one or more of their colleagues are frequently stealing time and getting away with it, it can be demoralizing. Employees might feel that they are unfairly carrying a heavier workload or that their efforts are undervalued.
• Workplace trust. In addition, if a manager knows or suspects that a member of their team is frequently stealing time, it can damage the working relationship and erode workplace trust.
• Impact on business reputation. Moreover, time theft at work can negatively impact your reputation. This might be internally, if employees feel that the issue is not being proactively managed, and someone else’s time theft is impacting their own workload. It can also impact your external reputation if the drop in productivity impacts service delivery or product quality.
• Legal and compliance issues. Finally, there can be legal implications, such as fines and penalties, if time theft leads to violations of labor laws, especially in terms of the legal requirement to accurately report working hours and overtime.

What Does the Law Say About Time Theft at Work? 

So, what does the law say about time theft at work? How can failing to prevent time theft potentially lead to legal non-compliance?

Although there isn’t a specific law that aims to prevent time theft at work, there are a few potential legal implications if employees regularly steal time.

Most notably, frequent time theft can make it difficult to comply with the requirements of the Fair Labor Standards Act (FLSA). Specifically, the Fair Labor Standards Act includes provisions to control the number of hours a non-exempt employee works in any given time period. The FLSA also states that if an employee works over 40 hours in a week, you must pay them overtime. However, if an employee is regularly stealing time, then it can be difficult to accurately calculate how many hours they have actually worked. This puts you at risk of non-compliance for failing to pay overtime when due and failing to maintain accurate records of hours worked.

In addition, 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. However, you must resist this temptation as holding back on wages constitutes wage theft, which is a violation of the Fair Labor Standards Act.

How to Reduce Time Theft at Work 

Ok, so we’ve seen what time theft at work is and the impact it can have on your business. Now let’s take a look at a few essential strategies that can help you identify, address and prevent time theft in your organization.

Above all, keep in mind that the more proactive you are about this issue, the easier it will be to nurture a working environment where employees are honest and accountable.

Let’s get to it!

Establish a Clear Time Reporting Policy 

First of all, make sure you establish a clear time reporting policy and include it in your employee handbook so that everyone is aware of your timekeeping expectations and understands the consequences of violating these standards.

Make sure your time reporting policy covers the following aspects:

• Clear reporting guidelines. This includes how employees should record their working hours, procedures for clocking in and out, how they record their breaks, and your process for reporting overtime.
• Acceptable practices. Specify what constitutes acceptable use of work time, including rules for personal phone calls, internet browsing, and other non-work-related activities during working hours.
• Break policies. Clearly outline the duration and frequency of scheduled breaks, including meal breaks and rest periods. Also, detail if there are any restrictions on when breaks can be taken. 
• Remote work. If any of your employees work remotely or on a hybrid or flexible schedule, make sure they understand how you will track their hours worked, including any tools and technology that they must use to clock in or out.
• Reporting deadlines. Set deadlines for when employees must submit their time records (daily, weekly, monthly, etc.).
• Consequences of timekeeping violations. Clearly state the consequences for failing to adhere to your time reporting policy, such as disciplinary action or loss of privileges.

Use Time-Tracking Tools

Timesheet templates and spreadsheets have been the standard solution for tracking employee hours for many years. However, while they can be helpful in certain situations, there are some common problems associated with them. This includes manual data entry errors; time-consuming updates; vulnerability to time theft; lack of real-time data; and difficulties in tracking overtime and compliance with labor laws. 

As a result of all these limitations, many organizations are now seeking alternatives to traditional timesheets. Examples include time-tracking software, biometric time clocks with facial clocking, time card apps, and remote employee time-tracking solutions, all of which provide significant advantages.

For one thing, timesheet alternatives like these improve accuracy through the precise recording of work hours and breaks. They also enhance efficiency by streamlining the time-tracking process, reducing administrative tasks, and enabling employees to address time management challenges and focus on more productive activities.

In terms of time theft at work, modern time-tracking tools can offer you real-time updates on employee timekeeping. You can easily keep track of time and attendance through an automated employee clock-in system, and gain much more visibility into the hours that each employee actually works. Aside from reducing the likelihood of time theft and buddy punching, this can help you minimize disputes and ensure fair time-tracking practices.

Train Managers and Supervisors 

Another important strategy is training your managers and supervisors so that they know how to identify and handle potential cases of time theft at work. For example, you could explain what clues and patterns of behavior might indicate that an employee is repeatedly stealing time and teach them how to address these situations tactfully and legally. 

You can organize these training sessions internally with a training dashboard or outsource them to consultants with expertise in time theft prevention. This investment in training will empower your management team to enforce your timekeeping policies, encourage employee accountability, and uphold the integrity of your workplace culture.

Promote Transparency and Open Communication 

As we mentioned at the start of the post, nurturing an organizational culture that values transparency and open communication is one of the most effective strategies for reducing time theft at work. The key is creating a safe space where employees feel comfortable discussing any workload and time management issues that might contribute to time theft if you don’t address them. 

To the same effect, it’s also important to establish communication channels so that employees can easily and confidentially reach out if they are feeling overwhelmed with their workload. For example, an employee portal can be a great platform for maintaining open lines of communication with your workforce. Employees can use it to submit feedback, raise concerns, or ask for support when needed, safe in the knowledge that their message will be heard and addressed by management.

Finally, you can encourage employees to provide feedback not only on workload issues but also on the effectiveness of your existing time management policies and procedures. You can do this with a suggestion box (physical or virtual) or by conducting periodic pulse surveys to measure employee satisfaction levels, identify potential sources of stress or frustration, and uncover any underlying issues that might be contributing to time theft at work.

Foster an Engaging Work Environment 

Creating a positive and engaging working environment will help your employees feel more motivated to work (and less inclined to slack off). Engaged employees show up earlier, work harder, and are more invested in helping their companies achieve organic growth.

So, can you achieve this?

Essentially a positive and engaging working environment is one where employees have all the tools, resources and support they need to perform their duties to the best of their abilities. But it goes beyond that. You also need to work on improving your work culture so that employees feel a sense of job enrichment.

For example, make sure you communicate the value of nurturing a healthy work-life balance so that employees feel that you care about their physical and mental wellbeing, not just their productivity and output. This will help you create a sense of organizational commitment that boosts your existing employee engagement levels. And the more engaged and productive your employees are, the less likely that they will be tempted to steal company time.

Implement Disciplinary Measures Consistently 

We mentioned above how important it is to explain the consequences of violating your company’s timekeeping standards when you create your time reporting policy. This point now is all about enforcing these standards and applying disciplinary measures consistently when you identify cases of time theft at work. Consistent enforcement sends a clear message that your company takes time theft seriously and that you will not tolerate it in any form.

Moreover, when you address cases of time theft, make sure your disciplinary measures are proportional to the offense. For example, for minor issues such as occasional tardiness or unauthorized breaks, a verbal warning might be enough to remind the employee of the importance of meeting company standards. However, for repeated or deliberate instances of time theft, you will probably need to up your game and use more severe measures such as written warnings, probationary periods, or even termination of employment in extreme cases. Make sure you assess each situation individually and consider factors such as the employee’s past performance, intent, and impact on productivity before determining the appropriate disciplinary response.

Reward Good Behavior

Finally, don’t forget to reward employees who consistently comply with your time reporting policy. A little acknowledgement can go a long way, after all, and reinforcing positive behavior through an employee recognition program or the like can be a great way to reduce cases of time theft.

There are many different strategies that you can use for this. You could award an employee with extra paid time off, give them a bonus, or share an employee spotlight. The possibilities are endless.

The most important aspect to keep in mind when you design your employee recognition program is your employees. This is why it’s always a good idea to use a mix of recognition strategies. You also need to make sure that the program you design aligns with your company values and meets the needs of your employees.

How Factorial Can Help You Reduce Time Theft at Work

And that’s pretty much it! All that you need to do now is implement the strategies we shared above and use the right tools to manage employee timekeeping and you’re golden.

But which tools should you be using for this?

Don’t worry, we’ve got your back with our time-tracking software, which includes an electronic time clock, a time clock app, project management features, and an employee self-service portal to deliver a seamless and efficient timekeeping solution to organizations. Employees can use it to log their work hours, breaks, and tasks in real time through our user-friendly web platform or mobile app. This streamlines time tracking, ensuring accurate automated data with minimal effort.

What’s more, this software comes with a range of additional features, including employee clock-in and clock-out tracking, shift scheduling, overtime tracking, leave management, timesheet management, geolocation tracking, reporting and analytics, and integration with payroll software.

Moreover, thanks to the biometric technology included in Factorial’s electronic time clock, employees can effortlessly clock in and out straight from their mobiles using facial recognition. This completely eliminates the risk of buddy punching and time theft at work.

Factorial also offers a free time card calculator, providing businesses with an easy way to estimate labor costs during each pay period based on the hours logged. It’s an excellent resource for managers to quickly verify the accuracy of payroll before it’s finalized, ensuring that employees are compensated fairly for the time they’ve actually worked.

Ultimately, Factorial’s HR software offers valuable tools to meet every single one of your time-tracking needs. So much so that logging employee hours and avoiding time theft at work has never been easier!