How time theft is impacting your business (and how to fix it)

As the saying goes, time is money. That means that time theft is something no business owner ever wants to think about. But it happens—sometimes by mistake, and sometimes on purpose. Unfortunately, the reason doesn’t matter. Intentional or not, handle it efficiently and effectively, or run the risk of it costing your business a lot of money.

In this article, we’ll review the ins-and-outs of time theft, the different types, and how much it can cost businesses like yours.

And since hey, we’re here to help, we’ll also share how your business can prevent it. 

What is time theft?

Time theft can be a result of many things. It comes down to an employee not working for all the time they’re supposed to, but being paid for it.

Time theft is considered an abuse of time in the workplace and can happen unintentionally or on purpose.

But sometimes, the reasons for time theft can be blurry. For example, you might have an employee who invites their friend to the coffee shop for a visit during their shifts. When it’s slow—and even when it’s not— they spend a chunk of their time behind the counter chatting. They get a gossip update, but counters don’t get wiped, and floors don’t get mopped.

Is this act of socialization considered time theft? Yes. But is it intentional time theft? That depends.

How was your employee was trained? What are the expectations set out by their manager? And does the team member recognize that they should be working instead of socializing, even in slow times?

This is why it’s so important for every team member to understand your work policies around what to do during slow shifts, why clocking in accurately is important, and how it impacts the success of the business. They need to know what can happen when time theft occurs—whether they mean for it to, or not.  

Time theft statistics 

Time theft adds up. Your team might think that 5 minutes here and there, or a late lunch every now-and-then doesn’t really matter. However, it can make a big dent on your budget and the morale of your employees.

According to website TotalRetail.com, 75% of companies in the United States lose money from a form of time theft called “buddy punching”. This is when a team member has a coworker clock in or out for them. It’s quite common, and not always done maliciously. Some employees do it to avoid reprimand, while others may believe they’re looking out for a friend.

Time theft can also be committed by the employer, but in a different form. This is called wage theft, and it’s when a business doesn’t pay an employee for things like overtime, working through their breaks, or when an employer asks a team member to come in early or stay a bit late.

Just like employee time theft, wage theft can be both unrealized and undocumented. Employees might not track the extra time they’re working, and without a proper way to do so, businesses might not either. In fact, the Economic Policy Institute, a nonprofit think tank, estimates that unreported wage theft could amount to as much as $50 billion per year owed to workers.

Any type of time theft can leave employees feeling a drop in morale. If a team member witnesses a coworker frequently showing up late, but still getting paid without reprimand because they’re “buddy punching”, they might feel resentment toward their teammates or the business itself, setting the foundation for a toxic workplace.

This is just one reason why time theft should be prevented at all costs.

4 types of time theft you can prevent

Time theft doesn’t always look like a villain running away with a bag full of money. In reality, it can look like an employee scrolling on their phone a little too often, or a team member clocking in for their friend who’s “just running 5 minutes late!”. 

Here are 4 common types of time theft that you can start preventing today. 

1. Buddy punching

Buddy punching is when a coworker is running late or doesn’t make their shift and asks a coworker to clock in for them. It can be done for a variety of reasons, but mainly to avoid losing wages or to avoid being reprimanded by a manager. 

2. Inflated time

When an employee says that they’ve worked longer than they have and gets paid for it, that’s considered inflated time. In a recent report, 43% of hourly workers who were surveyed admitted to exaggerating the amount of time they worked during their shifts. This type of time theft can be easier for offsite workers who don’t have to show up to a workplace or who are less accountable for their hours. 

3. Using the Internet

We know what you might be thinking. Isn’t the Internet a normal part of many jobs these days? Yes, but that doesn’t mean employees should be using it to do anything other than the role they were hired to do. Whiling away the hours on the Internet can include things like scrolling through social media, accessing personal email, online shopping, or just reading the news.

Make sure Internet and phone usage rules are clear for employees. They need to know the expectations of the business and what they can and can’t do on their shifts. For example, if you’re noticing that your employees have been texting instead of helping customers, you could implement a no-phone-on-the-floor policy

4. Taking longer or extra breaks

In a busy workplace, or one that doesn’t actively monitor an employee’s time, it can be difficult to know how many breaks employees are taking, and for how long they’re taking them. Even without actively monitoring team members, employers should always communicate expectations around breaks.

Explain what’s considered a break, how long they should be, what’s paid, and what’s not. The more you can clearly communicate your policies, the better employees can follow them. 

No matter your break policy, stick to it. If you talk about having hard and fast rules for breaks, your employees will notice if others are sliding by. Not only can that be bad for team interactions, but it has an effect on you as well. Your team won’t know when you’re serious about guidelines and policies and when you’re lax. Or worse—they’ll think you’re playing favorites.

Is time theft a crime?

We know about the different types of time theft, but is time theft actually illegal? Is it a crime?

The short answer is yes—time theft is considered a crime.

Time theft can be categorized as payroll fraud, which occurs when an employee steals funds from a business by falsifying timesheets. Examples could be:

• An employee clocking in too early or clocking out later than they’ve actually worked
• An employee not working during their scheduled shift
• An employee who takes too long of breaks or extra breaks
• An employee who has a has a friend punch in for them if they’re running or late or not showing up
  

According to Samfiru Tumarkin Law Firm, in Canada, non-unionized workers can be punished by their employer for committing time theft. Results include a team member being put on paid or unpaid leave and potentially terminated. 

From the employer’s side, committing wage theft carries a different penalty. If a business owner refuses to pay an employee for unauthorized overtime, they could be violating local and federal laws, like the United States Fair Labor Standards Act (FLSA). 

How to prevent time theft

There are many ways to prevent this, and not all require someone monitoring the break room 24/7. With the proper tools and rules you can make sure your employees are showing up when they should, and spending the shift actually working. 

Implement time theft policies

Implementing strong policies can start with communication. Talk to employees about the value of their time. Explain what happens when they’re on shift but not actually working, and what’s lost when team members have their coworkers clock in-and-out for them.

Ensure that employees know that these policies do more than prevent the loss of money, but that they’re there to build trust and transparency. Team members should feel open to communicating with their boss about any issues, including running late or missing a shift so they can get support, not reprimanded. 

Establish time theft repercussions

Once you’ve communicated time theft policies, explain to employees what happens if they don’t follow them. Document a formal write-up in their file, or consider assigning them less shifts for a set period of time. If it’s their first offense, try a direct conversation (but ensure it’s still documented).

Clearly communicate any repercussions, document them, and have your employees verify that they understand them. Including this feature in your onboarding package for new team members is a great way to ensure everyone has read the policy and digitally signed off.

Use tools to identify and prevent time theft

The best way to take control and prevent time theft is to use modern software solutions. This includes implementing tools like a GPS digital time clock, digital timesheets to prevent fraud, and messaging apps for teams so you can check in with employees if you notice they are clocking out late or showing up too early.

Homebase: your partner in preventing time theft

We know that it’s easier to push the idea of time theft out of your head. But as a business owner, it’s something that you need to be aware of and on top of. And because we know that you’ve got other things on your mind and on your plate, Homebase is here to help.

Sure, you could post signs reminding employees of how to correctly log time or provide a copy of the company’s policies as a reference. However, if you’re ready to go one step further, consider online business tools that are designed to prevent time theft. Even better: look for a tool that also supports team communication and workplace transparency. 

At Homebase, we’ve got exactly that.

Smart automated tools

Small business owners can partner with us for time tracking, automating timesheets and employee scheduling.

Our free time clock app can be downloaded to smartphones, iPads, computers, POS devices, and more. That way you can effectively track hours, breaks, overtime, and paid time off. 

Employees can use a unique PIN to log in. And if you need to, our time clock software can take a photo of the person clocking in so you know that the correct employee is signing in. That’s right: no buddy punching on our clock. 

On top of the prevention perks for you, employees get to save time since they won’t have to manually input their shift start or end times. It also helps prevent unintentional time theft for employees that clock in early by accident, or forget to clock out.

If you need help setting up prevention policies, Homebase has just the thing.

Skip the worry and set up your break and overtime rules to comply with federal, state, or city laws.  We’ll store all your time cards—including all edits—to help you comply with FLSA record-keeping rules. We’ll even send alerts when labor laws change at the state or federal level.

Need a bit more support? We’re here for you. That’s why we have certified HR Pros to review your policies.

Time theft FAQs

What is time theft?

Time theft is when an employee is being paid for moments during a shift that they didn’t actually work. It’s an abuse of time and can happen unintentionally or on purpose. Examples include an employee socializing too much, using the Internet for too long, or having another coworker clock them in if they’re running late or unable to show up for their shift.

Employees might not know that they’re committing time theft. In that case, they should know your expectations for the role, and how their contribution during their shift impacts the work they’re doing. It also affects the success of your business, and therefore their job.

Is time theft illegal?

Yes, time theft is illegal. It’s considered a type of payroll fraud. However, there aren’t federal rules in place to regulate how a company should deal with it, which means employers can decide how to take action.

That might mean a business gives an employee a warning, puts them on leave or terminates their employment.

What are some examples of misuse of company time?

Unfortunately, there are a number of ways to run the company’s clock that can be considered as time theft.

Buddy punching is an example, where coworkers clock in and out for each other to make up time or to prevent being reprimanded by their superior.

Other examples include over-socializing, which can happen when two or more employees talk or hang out on the job instead of working. Using the Internet for purposes other than work is also considered time theft, even though it can be unintentional.

How can companies prevent time theft?

Use modern solutions like digital time clocks, timesheets, and messaging apps to prevent time theft. This helps keep track of attendance, while letting you check in with employees who may be clocking in and out late or early, or unintentionally committing time theft.

By setting and communicating time theft policies with your employees, you can ensure they understand the value of their role, their time, and the impact they have on the business.

Team members should know how time theft is defined in your workplace, and the consequences of committing it. Employees should also know how their time is being tracked and monitored. Train your team properly on whatever time clock you are using in your business. 

Time theft is common, but doesn’t have to happen on your watch. With modern technology that’s easy to use for both you and your employees, you can take back control of the hours in your day, while letting your team do the same.

Is your business struggling with time theft? Get Homebase for easy scheduling, time clocks, payroll, messaging, HR, compliance, and more — all in one app. Get started for free.