Would you allow customers to openly steal from your business? Of course you wouldn’t. But, what about your own employees? Well, odds are that it’s happening at this very moment. 

For example, how often are employees surreptitously scrolling through social media during work hours? Are they arriving a few minutes late and sneaking out before their shifts have ended? Are they extending their lunch breaks beyond the allotted time? While these innocuous moments may seem arbitrary, when applied across your entire team, they add up quickly, menacing productivity and profit. 

Unfortunately, workplace time theft happens more often than we’d like to admit. The American Payroll Association (APA) reports that approximately 75% of U.S. businesses are affected by time theft.  

In this article, we dive into this pervasive issue, exploring its root causes, potential consequences, and proactive steps you can stop these crimes before they occur. 

What Is Time Theft?

Time theft in the workplace refers to the intentional or unintentional misuse or misappropriation of time by employees, resulting in the loss of productive work hours or resources for an employer. It encompasses various activities where employees receive compensation for time not actually spent on work-related tasks.

Stolen hours may trigger financial losses, as companies pay wages for unproductive hours. According to Statistics Brain, time theft costs U.S. businesses $50 billion annually.

Moreover, employees involved in time theft lack full engagement in their work responsibilities, leading to missed deadlines, incomplete projects, and reduced team performance. Employers lose about 4.5 hours every week per employee to time theft, states a Robert Half International study.

Finally, honest employees may feel slighted if dishonest workers aren’t penalized, compromising workplace culture and team morale. 

Is Time Theft Illegal?

While stealing from your employers is certainly unethical, whether it is illegal depends on the specific actions taken by employees and the laws and regulations governing labor practices in a particular jurisdiction.

For example, in cases where employees are misrepresenting hours worked or engaging in fraudulent activities to receive compensation for time not actually worked, such actions could be considered illegal and may constitute grounds for disciplinary action or termination. Additionally, if an employee's actions constitute a breach of his or her employment contracts or company policies, the individual could face legal consequences.

However, not all instances of time theft may be explicitly illegal. Some minor infractions, such as occasional personal internet use during work hours, might not violate any laws but could still be grounds for disciplinary action based on the company's policies.

While not all instances of time theft may be illegal, certain actions taken by employees to misrepresent their work hours or violate labor laws can have legal implications and may result in disciplinary action or legal consequences. Employers should be vigilant in addressing time theft issues and ensuring compliance with relevant laws and regulations.

Identifying Time Theft in Your Workplace

Identifying time theft in the workplace requires vigilance, attention to detail, and the implementation of effective monitoring and tracking mechanisms. Here are some strategies to help identify time theft:

Scrutinize Time Sheets: If your company utilizes manual time sheets, make sure you examine them for inconsistencies, patterns of early or late arrivals, or unusually long breaks. 

Monitor Internet and Computer Usage: Browser trackers and VPN networks can be used to identify employees who spend excessive time on non-work-related activities, such as social media, personal emails, or online shopping, during work hours.

Review Badge Access: If your company utilizes badges to enter specific areas, analyze data logs to identify employees who are entering or exiting frequently during work hours and the time they spend away from the workplace. 

Common Types and Methods of Time Theft

Time theft comes in many flavors. Let’s examine a few of the more common occurrences:

1. Time clock theft

In an effort to fulfill their hours, employees may deliberately manipulate the information on their timecards. This may include inflating worked hours, clocking in earlier or out later than actual times, or falsely claiming they were working when they were actually not. These actions distort attendance records, risking unjustified compensation and financial losses as well as eroding trust and fairness in the workplace.

2. Buddy punching

Buddy punching occurs when one employee asks another to clock in for them, effectively "punching" the time clock on their behalf. Whether the requesting employee is running late or playing hooky, the result is manipulated time records that don't accurately reflect hours worked.

Buddy punching affects payroll accuracy and erodes the sense of responsibility and honesty among employees. Additionally, this process challenges the transparency and reliability of the workforce management process.

Buddy punching is a cog to productivity and is estimated to cost U.S. employers $373 million annually, per HR Daily Advisor. 

3. Taking long lunches and breaks

Unauthorized or extended breaks occur when employees take reprieves exceeding approved durations or timing. These actions reduce actual working hours, diminishing productivity and operational efficiency. Extended breaks disrupt workflow, delay tasks and projects, and impact team collaboration and timelines. Moreover, inconsistent break schedules foster a sense of inequity among compliant employees, potentially harming morale and workplace cohesion.

4. Having fun and socializing

While socializing can provide positive returns in the workplace, excessive socialization may distract employees from their tasks and responsibilities, leading to decreased productivity. Lengthy conversations, coffee breaks, or gatherings around the water cooler may seem harmless, but they can disrupt workflow, resulting in missed deadlines or incomplete assignments. Additionally, team members may form cliques, which could lead to feelings of exclusion among certain employees, undermining team cohesion. 

5. Using the internet

Internet use during work hours presents a significant distraction, particularly for employees who spend much of their time in front of computer screens. This diversion often leads to hours wasted weekly on personal social media or unrelated websites.

According to a 2023 study by RescueTime, employees spend an average of three hours and 17 minutes per workday on non-work-related websites and applications. 

Each time an employee shifts focus, such as moving from a work tool to a personal site, momentum and attention wane. The cost of such task switching is steep, resulting in both financial losses and wasted time. It takes several minutes for the brain to fully re-engage with work after being distracted.

6. Hiding from the manager

In certain situations, employees may vanish from sight. This is particularly common in environments with expansive open floor plans or outdoor work settings where supervisors are frequently mobile. Detecting this misuse of company time may take considerable investigation, but its impact on productivity is substantial.

Organizations boasting spacious offices and amenities, like cafeterias and gyms, are particularly susceptible to this issue. With the widespread adoption of remote work since the pandemic, distractions abound. Whether it’s household chores, errands, or leisure activities, remote workers can easily veer off course. 

7. Sleeping at work

Sleeping at work is a clear example of time theft because it involves employees deliberately using work hours for personal rest rather than fulfilling their job responsibilities. Whether it's a brief nap during breaks or extended periods of sleep while on the clock, the act can have significant consequences for both the employee and the employer.

8. Slow working for overtime pay

Are employees achieving their desired outcomes? If not, there’s a chance workers may be deliberately working at a slower pace than they’re capable of with the intention of extending their work time to qualify for overtime pay. This practice can be detrimental to both the employer and the overall productivity of the organization. 

Overtime pay typically offers a higher hourly wage, so some employees may intentionally prolong tasks to reach the threshold for overtime compensation. This act can breed a culture of complacency and mediocrity, leading to inflated labor costs, reduced productivity, and hampered competitiveness. 

Understanding the Costs of Time Theft

Time theft is a costly endeavor, in terms of dollars and productivity. Recognizing its true impact on a company’s bottom line and overall productivity is crucial. Here’s a look at a few ways time theft may affect a small business.

Financial Losses: Time theft directly translates into financial losses for a company. When employees are paid for time they did not work, or when they are not productive during their paid hours due to engaging in personal activities, the organization incurs unnecessary labor costs without receiving corresponding output or value.

Decreased Productivity: Time theft leads to decreased productivity as employees divert time and resources away from their assigned tasks. Whether it involves extended breaks, unauthorized personal activities, or deliberate inefficiency, time theft diminishes the amount of work accomplished during work hours, slowing down projects and hindering overall workflow efficiency.

Missed Deadlines and Delays: When employees engage in time theft, it can result in missed deadlines and project delays. This may lead to tasks taking longer to complete than anticipated, causing bottlenecks in project timelines and potentially impacting client satisfaction. This can damage the company's reputation and lead to lost opportunities for future business.

Overtime Costs: In cases where time theft involves employees deliberately working slowly to extend their hours and qualify for overtime pay, the company incurs additional labor costs. Overtime pay rates are typically higher than regular pay rates, so if employees exploit overtime opportunities through time theft, it can significantly inflate payroll expenses.

Poor Work Culture and Morale: Time theft can contribute to a negative work culture characterized by mistrust, resentment, and low morale. When employees observe their peers engaging in time theft behaviors without repercussions, it can create a sense of unfairness and erode trust in management. This can lead to disengagement, increased turnover, and difficulty attracting top talent.

Legal and Compliance Risks: Time theft can also expose businesses to legal and compliance risks. Violations of labor laws, such as failure to accurately record hours worked or provide required breaks, can result in costly fines, lawsuits, and damage to the company's reputation.

Opportunity Costs: Beyond the direct financial impact, time theft also represents missed opportunities for the company to allocate resources effectively and invest in activities that drive growth and innovation. Time stolen from productive work hours cannot be reclaimed, potentially hindering an organization's ability to seize opportunities and stay competitive in the market.

Effectively Preventing Time Theft

While we previously addressed the causes of time theft, let’s now examine how to prevent it. 

Establishing a Clear Time Theft Policy

Establishing a clear time theft policy is essential for setting expectations, maintaining productivity, and fostering a culture of accountability within an organization. 

The first step is to clearly define what constitutes time theft within your organization. This definition should encompass any behavior or activity that results in employees fraudulently claiming payment for time they have not worked or using company time for personal activities unrelated to work. 

Next, outline specific behaviors that are prohibited, including extended breaks, excessive internet use, buddy punching, falsifying timecards, etc. Make your language as comprehensive as possible and include as many examples as you can to ensure you’re covered from all angles. 

Now, it’s time to distribute the policy to your employees. Ensure the language has been approved by your legal team and is available 24/7 online. It should also be included or referenced in your employee handbook. 

Once the policy has been enacted, create a forum for employees to report suspected instances of time theft confidentially. 

If and when a violation occurs, make sure you are enforcing the consequences as defined in your policy. These may include verbal and/or written warnings; loss of privileges; and, ultimately, termination. 

Leveraging Time Tracking Software

Overall, time tracking software plays a critical role in limiting time theft by providing organizations with the tools and insights needed to monitor employee work hours, enforce compliance with policies and regulations, and promote accountability and productivity in the workplace.

Modern solutions, such as OnTheClock, take this a step further, incorporating a number of unique solutions designed to streamline time management, including:

• Geofencing: Set up virtual boundaries around your workplace, ensuring employees can only clock in and out within designated areas. This prevents them from punching in from unauthorized locations.

• GPS Tracking: Monitor employee locations in real-time to verify they are where they should be during work hours. This feature provides transparency and accountability, discouraging unauthorized breaks or extended absences.

• Biometric Punches: Implement biometric authentication methods, like fingerprint scanning, to ensure that only authorized employees can clock in and out. This prevents buddy punching and unauthorized time entries.

• Alerts and Notifications: Set up alerts for suspicious activity, such as frequent clock ins from different locations or excessive overtime. Receive instant notifications to address potential time theft issues promptly.

• Time Audit Trails: Keep detailed records of all time entries, modifications, and approvals. This audit trail provides valuable insights into employee attendance patterns and helps identify any discrepancies or irregularities.

• Reporting and Analytics: Use OnTheClock's reporting tools to analyze employee attendance data and identify trends or outliers. This data-driven approach allows you to proactively address potential time theft issues and optimize workforce management strategies.

Improving Employee Morale

All businesses should strive to maintain a positive company culture. Thus, while time theft aims to denigrate fairness and transparency, maintaining a proactive approach and equal consequences for all perpetrators will contribute to maintaining morale. 

Trust and accountability are pillars of a quality culture. When employees know their time and efforts are respected, they’re more likely to feel valued and trusted by their employer, leading to higher morale. 

Giving Employee Flexibility

Working to curb time theft can actually enhance employee flexibility in some ways. When employers accurately track employees’ work hours, this creates a more precise documentation of the time spent on tasks. 

Employers may also consider offering flexible work arrangements, such as flextime, telecommuting, or compressed workweeks, in support of work-life balance. Granting employees more control over when and where they work may allow them to better balance their personal and professional responsibilities, minimizing a desire to complete non-work-related tasks during work hours. 

Conclusion: Taking Action Against Time Theft

Addressing time theft in the workplace is not just about safeguarding company resources; it's about fostering a culture of trust, accountability, and flexibility that benefits both employers and employees. Time theft undermines productivity, erodes morale, and poses legal and financial risks to businesses. By implementing proactive measures, such as clear policies, leveraging technology, and promoting a positive work culture, organizations can mitigate the impact of time theft and create an environment where employees feel valued, respected, and empowered. 

Moreover, curbing time theft grants employees the flexibility they need to effectively balance their professional and personal lives, enhancing overall job satisfaction and well-being. 

Time tracking software provides businesses with the tools and insight they need to adequately monitor employee work hours, enforce compliance with policies, and promote accountability. 

While there are many solutions to choose from, OnTheClock is certainly among the best. From geofencing to on-site punch clocks to time audits and much more, OnTheClock empowers businesses to efficiently curb time theft, promoting fairness, accuracy, and productivity in the workplace. Try it out for free, for 30 days, today. Come see why 150,000 individuals and 12,000 companies are using OnTheClock to tackle their time management needs.