Stealing company time is nothing new. Time theft
has been around from as early as business owners had ways to track time. But often what is new are the methods “time thieves” take to get paid for time. So, it’s important to understand the basics behind time theft and why it happens to prevent it. Here are some key factors small business owners should consider and apply to keep time theft at bay.
What is Time Theft?
Time theft is the act of employees taking unauthorized company time, whether intentionally or unintentionally. It’s common and often directly violates company policies and sometimes even the law. That’s because time theft can be considered stealing, and depending on the jurisdiction of the company, employees can be held liable for these actions. However, it’s also important to note that small business owners can violate labor laws easily, too. For example, if a small business owner refuses to pay an employee for unauthorized overtime, they may be violating local and federal laws, such as the Fair Labor Standards Act or FLSA
. Time theft can also be expensive and even Thus, it’s critical for small business owners to take proactive steps to reduce and prevent time theft.
Why Does Time Theft Happen?
To effectively prevent and reduce time theft, small business owners need to understand why it occurs. Time theft can be intentional or unintentional. For example, a customer service representative who forgets to log out of her phone before leaving for the day sans prior incidents of this nature is an example of unintentional time theft. However, an employee who purposely leaves his phone logged in knowing that he is getting paid for the time he is logged in is an example of intentional time theft. Intentional time theft frequently increases labor expenditures for small businesses. So, it’s important that they understand typical methods intentional time theft occurs. Here are some common ways time theft happens:
- Falsifying Timestamps. When small business owners leave it up to employees to manually enter their time, they’re likely to experience more inaccurate information. That’s because logging time manually can increase incidents of time clock fraud and error, including rounding up hours instead of entering the exact hours worked.
- Buddy Punching. Sometimes intentional time theft involves co-workers clocking in or other co-workers. One co-worker may provide the other with his log-in credentials so that she can log in for him in the event he is running late. This is referred to as buddy punching. According to an American Payroll Association study, buddy punching is the reason why as much as 75 percent of businesses lose money. This makes this practice the most common form of intentional time theft.
- Using Personal Time During Work Hours. Whether surfing the internet to buy their favorite electronics or taking time to schedule doctor appointments for their family, when employees use work hours as time to do personal activities not authorized by the company, they are stealing time.
How to Reduce and Prevent Time Theft
Reducing and preventing time theft calls for a plan of action. Here are some effective ways to get it done:
- Create Awareness. One of the most important ways small business owners can prevent time theft is to inform their employees of the rules and policies of the company. These rules and policies should be communicated clearly in a written format as well as expressed clearly to employees. Small business owners and their human resource personnel should ensure everyone understands these policies, provide employees with the opportunity to ask questions about these rules and have them sign an agreement that they are aware of the policies. Post signs reminding employees of how to correctly log time and provide a copy of the company’s policies as a reference.
- Utilize Time Theft-Prevention Technology. By including software programs that record time at integral moments, small business owners can help employees more accurately track their time without relying on them to manually input the hours they work. For example, small business owners can use Homebase for tracking time and automating timesheets and employee scheduling. It provides a timestamp for the time employees start using a system. Employees can also use a unique PIN to log in, and this time clock software can even be used to take a photograph of the person logging the time so that employers can ensure the correct person is signing in. It’s also useful for tracking time for remote or off-site workers. This helps save time for employees since they won’t have to manually input time. It also helps prevent unintentional time theft for employees that enter the wrong time when they work over their scheduled time or clock in too early. With Homebase, you can also choose to not allow employees to clock in before their shift is scheduled to start.
- Be Aware of Patterns. It’s also important for small business owners and their managers to quickly identify patterns of abuse and time clock fraud before it gets too late. This helps to reduce incidents of intentional time theft.
- Set Expectations. Small business owners should set clear expectations for employees and ensure they understand what they are expected to do during work hours. They should also verbalize consequences for time clock fraud and violations of the company’s time policy. It’s also important for managers and leaders of the company to follow through with appropriate disciplinary action to prevent future incidents.
The larger a small business’ operations grows, the more likely it faces time theft. Thus, it’s critical for small business owners to have a plan for reducing time theft incidents and stopping it in its tracks. By using tools, such as Homebase, and having a strategy for handling time theft cases, small business owners can control time theft.