Understanding Time Theft: Laws, Consequences, and Prevention

Employee Time Theft
Time
By Brian Paul | 4 minute read

Time theft is no different than embezzlement or the physical theft of goods and materials. At the end of the day, employers (and eventually, their customers) foot the bill for employee time theft in one way or another. 

The impact of time theft on a business’s bottom line cannot be overstated. When employees, through carelessness or malice, can take advantage of an outdated timekeeping system, the problem will only worsen over time.

When our parent’s generation had the same time theft problem, they had far fewer tools to resolve it. Usually, the solution was to add additional supervisors, so often the solution was just as expensive as the problem.

In modern construction, the most successful (and profitable) construction companies employ technology to help prevent time theft in a way that fits the business. Modern timekeeping applications are also mobile and include built-in security.

Here we will discuss the merits of using modern timekeeping technology to help prevent time theft, and how modern software tools can pay for themselves over time.

What is Time Theft?

Time theft refers to the act of employees falsely or dishonestly manipulating their work hours so they can get paid more. This can include activities like clocking in for a coworker who isn't present (buddy punching), taking extended breaks without proper reporting, leaving work early but recording full hours, or engaging in personal tasks during work hours. 

What Causes Time Theft?

Sloppy, manual timesheets, outdated timekeeping punch card systems, and malicious intent can contribute to time theft on a regular basis. Left unaddressed, time theft can cause a business failure if it occurs at a critical time.

Example:

A business employs a worker who earns an average wage of $10 per hour - six days a week. But, they steal 20 minutes per day by asking their colleagues to punch in the time clock (while not present.) With that, the employee steals an extra $20 per week that they did not earn. The business has to pay them an extra $20 per week. While this may seem like a small sum, it can add up to thousands of dollars if many employees of the business indulge in the same practice. 

In the construction and field service industry, accurate time tracking is essential to maintaining control over cash flow. When a project goes over budget, the problem is often related to unanticipated labor costs. If you can’t reliably forecast the labor cost of a project, you’re not in control.

Legal Aspects of Time Theft

What are the legal consequences of time theft? Is time theft a crime or a civil matter? What happens when an employee commits time theft? Is time theft a crime if it is done accidentally?

Here’s a brief overview of the effects time theft can have on the employee and the employer experiencing it:

Time Theft Laws

there are no federal employment laws that outline what repercussions an employee caught stealing company time will face. Federal laws typically deal with overarching protections of issues like work safety, equal compensation, and preventing discrimination. There are exceptions, but time theft violations are generally an employer problem, even on the local level.

A significant problem employers face is tracking time without the benefit of human supervision. This may explain why forward-thinking companies are more profitable. Instead of spending time searching for solutions to problems, they invest in preventing the problem from happening.

Is Time Theft Considered a Crime?

Although time theft is technically stealing, federal laws do not typically classify time theft as a crime. This may be why employees are tempted to commit time fraud since the punishment is generally left up to the employer.

This is magnified when hourly paid workers are just “milking the clock” because they sold their time, not a product or service. If the employer failed to make use of the time they purchased from the employee, who is to blame?

Time theft is actually quite easy when there are no effective tracking systems in place. For example, if a crew foreman is responsible for keeping up with manual time cards, they may be forced to spend time and effort keeping track of where everyone is, and for how long.

This means an employee can often commit time theft by providing misleading information, like false locations and hours worked. 

What if the crew foreman was notified when a crew member left a certain perimeter, or work zone? Could “buddy punching” be reduced when GPS tracking features are used to create real-time reporting of crew members and their locations?

Employee time theft

Consequences of Employee Time Theft

Time theft dilutes the profits of the employer and may jeopardize the financial health of the company.

Let’s imagine a $40.00/hr worker is given two paid 15-minute breaks per day, and a 30-minute lunch period. However, the worker is consistently late returning, and actually takes 1.5 hours away from work, on average, every work day.

Since the worker stole time in small increments, the practice can go unnoticed. Over time, however, the actual cost to the employer could be significant. By stealing ½ hour every day, the employee can cost the employer 4500.00 per year working 225 days per year.

Conversely, a hard-working employee might want to get paid twice for the same hours. They might simply charge the company twice for the hours worked by simply changing the address on the timesheet. Without accurate cross-checks the employee might get away with it.

1. Consequences of Time Theft for Employees

Reputation Damage: Engaging in time theft can damage an employee's reputation. It can lead to a perception of untrustworthiness, affecting their chances of promotions and career advancement.

Loss of Trust: Time theft can erode the trust between employees and their supervisors or managers. Once trust is lost, it can be challenging to rebuild, and it might impact the overall work environment.

Job Security: It can lead to poor performance evaluations and ultimately put the worker's job security at risk. Employers might be more inclined to lay off or dismiss employees who are not contributing their fair share of time and effort.

2. Consequences of Time Theft for Employers

Financial Loss: Time theft leads to a direct financial loss for employers. They pay employees for hours not actually worked, which can add up significantly over time and impact the bottom line.

Decreased Productivity: Employees engaged in time theft are not contributing their full potential to the company. This can lead to decreased overall productivity, as the job is not being completed on time or to the expected standard.

Negative Work Culture: A culture where time theft is prevalent can create a toxic work environment. Employees who genuinely put in their effort might become demotivated and frustrated seeing others taking advantage.

Decreased Employee Morale: When employees witness others getting away with time theft, it can lower their morale and overall job satisfaction. This can lead to higher turnover rates and difficulty in retaining top talent.

Employee Time Theft Punishment

Punishments for employee time theft can vary depending on the severity of the offense and the company's policies. Some common consequences for time theft might include:

Verbal Warning: A mild case of time theft might result in a verbal warning from a supervisor or manager. This serves as an initial alert to the employee that their behavior is not acceptable.

 Written Warning: More serious instances could lead to a written warning, outlining the issue, the company's expectations, and the potential consequences if the behavior continues.

 Loss of Privileges: Employees engaging in time theft might lose certain privileges, such as the ability to work flexible hours or access to certain company benefits.

 Suspension: In more severe cases, an employee might face a temporary suspension from work as a disciplinary measure.

 Salary Deduction: Employers might deduct pay for the time not worked due to time theft. This could be a partial deduction from the employee's salary.

 Termination: In cases of repeated or severe time theft, an employee could be terminated from their job. This decision is typically made when the behavior seriously undermines trust and damages the company's productivity and reputation. However, states have different work laws as they pertain to rightful termination. If the employment is subject to a union membership, for example, employment may be more, or less, difficult to terminate.

 Legal Action: In very serious cases of fraudulent time reporting, employers might consider legal action to recover financial losses or hold the employee accountable.

It's important for employers to have clear policies in place outlining potential consequences for time theft, and to apply these consequences consistently and fairly to maintain a sense of equity within the workplace.

Effective Strategies Against Time Theft

Avoiding employee time theft requires a combination of strategies that promote transparency, accountability, and a positive work environment. Here's how to do it:

1. Invest in Advanced Time-Tracking Systems

A time-tracking software provides accurate tracking of work hours, reducing the chances of manual errors and ensuring that your team is paid for the time they work. When combined with a location tracking feature, it leaves no room for employees to manipulate their timesheets, making them accountable for their actual work hours.

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2. Have Clear Policies in Place

Establish transparent and well-communicated time and attendance policies. Make sure all employees understand the expectations and consequences of time theft.

3. Create a Transparent Work Culture

Foster a workplace culture that values open communication, teamwork, and mutual support. A positive environment reduces the desire for time theft.

4. Regular Audits and Checks

Routinely review time and attendance records to identify any inconsistencies or patterns of time theft. Address these issues promptly.

5. Invest in Education

Provide training sessions or workshops to educate employees about the importance of honesty, accountability, and the negative impact of time theft on the organization and their colleagues.



Understanding Time Theft and How to Prevent It

Time theft has significant effects on companies. It costs money, reduces productivity, and can lead to missed deadlines. It also damages trust among employees and with management, causing low morale and high turnover. This hurts the company's reputation and relationships with clients. Preventing time theft isn't just about money – it's about building a positive, trustworthy workplace for long-term success.

Ready to put a stop to time theft and boost your company's efficiency? Try ClockShark today to prevent time theft with accurate time and GPS tracking. 

9,500+ companies use ClockShark to track employees and save time every month.

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