Ninety-two percent of employers have a time theft issue, according to a TSheets by QuickBooks survey of 242 accountants and bookkeepers who work with clients regularly. The respondents also estimate that the average cost of time theft is roughly 5% of their gross payroll costs.
Time theft, although often unacknowledged at work, is a serious problem for employers. Even when employees inflate their working hours by just 15 minutes a day — which more than half of employees report doing, also according to TSheets — this issue can be costly both monetarily and morale-wise. So, what can you do about it?
Time theft is time for which an employee receives payment that they didn’t actually work. This can take many different forms, from clocking in early or clocking out late to spending work time on personal activities. It can occur deliberately or inadvertently.
While it may sound innocuous — 15 minutes here, another 20 there — it can add up and have serious consequences, especially when the problem is so pervasive across a wide variety of companies and industries. In fact, it costs businesses millions of dollars per year.
Be in mind that time theft does not describe sanctioned breaks, such as lunchtime unless an hourly employee is reporting this as time they’ve actually worked.
Often, time theft is not malicious — employees may not even realize what they’re doing is wrong. They might see others do it, for example, and believe this is simply par for the course.
Time theft could also be a sign of a problematic work culture at your organization. If morale is low, chances are, employees aren’t too happy with the company and overall structure and may believe they’re entitled to pay for time they haven’t worked as “payback” for the stress they’re under.
But other times, it’s just something that happens because, well, employees just can do it.
This is one of the most common occurrences of time theft because it’s usually pretty hard to catch. In this example, hourly employees will clock in early and or clock out later than the times they actually started and ended work, respectively. In extreme cases, they may even record full days or partial days they haven’t actually worked at all on their timecards or timesheets.
Unlike some of the other ways employees steal time on this list, this is a conscious effort on the employee’s part to commit time fraud. This occurs when one employee asks another to log in to the time-tracking system to clock in on their behalf when they haven’t actually shown up to work, perhaps because they are running late or will be absent for the full day. Or, if the business uses an actual timecard system, they punch in on another’s behalf.
Both hourly and salaried employees can end up taking excessively long breaks. While all employees are entitled to breaks (the times vary by state and location), if hourly employees are claiming that they’ve worked times they’ve actually been spending elsewhere and salaried employees are taking longer-than-sanctioned breaks, then they are committing time theft.
Making personal calls, scheduling doctor’s appointments, checking their non-work email and even running to grab coffee — these are all examples of spending work time on personal tasks, and they amount to time theft if you’re claiming that you’ve been working during this time or the breaks weren't authorized.
In other instances, they could actually spend time working for another employer, such as spending time on freelance work when they’re claiming to be on the clock for you.
We’ve all done it from time to time — checked Facebook and Instagram, had a non-work-related conversation with a colleague, read a blog or interesting article and so on. But while it seems relatively harmless — why can’t you just take that quick Buzzfeed quiz? — it’s not sanctioned, and it is time theft. That doesn’t mean it’s not difficult to avoid — distractions abound in the digital age.
While there is no particular federal law in place that is specific to time theft, there can be severe consequences for it. An employer could terminate you, and with good reason. They may also require you to pay restitution for your time theft, expecting you to return the payment you received for time you didn’t actually work.
Still, it may be difficult for an employer to prove their grounds for firing you for time theft. Under the Fair Labor Standards Act (FLSA), an employer must pay for time an employee has worked, and if you have been keeping a time log or reporting your time worked on a card or sheet (including a digital system), it’s often hard for an employer to claim that your reported hours are inaccurate. Without evidence, they may not have a substantive case. Employees could bring a lawsuit against employers who are unable to prove their case of time theft, and without real, concrete proof of wrongdoing, it will be difficult to put up a defense.
Happy employees are less likely to be motivated to steal time from you. That’s because they are engaged, so there’s no impetus that will make them not want to, well, do their actual jobs. So, if you’re wondering why time theft is a problem at your organization, take a look at your company culture. Are you doing all you can to support and engage your employees? If not, then think about what you can do to improve the workplace for your team.
If you have a company-wide login for time-tracking, change it immediately. Every employee should have a unique login to fill out their timesheets.
Discourage password-sharing, too. While it may be difficult to prevent this entirely, if you acknowledge the problem and make the case against it, then employees may understand the pervasive issue. You could even make logins consistent with sensitive information, such as part of a social security number, to make this less likely.
It’s not ideal, and it’s not as feasible when employees are working remotely, but it can be done. If you’re concerned about time theft at your company, you can invest in time-tracking software that has GPS tracking, letting you know if employees are on-site or elsewhere when they say they’re on-site. This is somewhat of a last resort because trust is critical in the workplace.
If your employees are working on-site, you can use blockers to prevent them from checking certain websites, such as social media accounts and Gmail, while they’re using company devices. Of course, when they’re using personal devices or working off-site, this isn’t possible.
Provide training and seminars to teach employees about time theft and explain why it’s wrong. Again, some people simply may not be aware that what they’re doing is unacceptable — or they could be of the mindset that everyone’s doing it, so it must not be a problem. As part of this education, explore the different forms time theft can take.
This one goes hand-in-hand with education. Create clear policies that spell out what time theft is and the fact that it won’t be tolerated. Spell out the consequences for time theft in your policy, too. It’s a good idea to consult an employment attorney about your policy. Make sure it’s readily accessible to all your employees.
You don’t need to fire employees immediately for checking Facebook during the workday. But you should make it clear that you will enforce the consequences outlined in your policy. For example, the first step could be a warning, followed by progressively more severe disciplinary measures, including suspension and eventual termination. Be consistent with enforcing consequences. This is more likely to discourage time theft and demonstrate that you’re being fair.
Time theft is a problem at many organizations, but you can take strides to address it and keep your workplace productive.