Time Theft – What Is It and How to Prevent It?

What Is Time Theft?

Time theft occurs when an employee or a contractor (usually paid hourly) either reports a higher overall number of work hours that they’ve actually put in or spends their work hours engaged in activities unrelated to their job obligations.  

Time theft, if left unaddressed, can quickly and negatively affect costs, payroll, and company budgets, leading to a series of troubles.  

Just to give you an example of what unchecked time theft can lead to, Joseph Winstead, a postal worker from Washington, managed to defraud the USPS for a sum close to 40,000 $ by faking court documents that showed he was on an extended jury duty. He managed to get away with his crime for around three years before one of his supervisors caught on to what’s been happening.  

Another more recent example comes from Canada, where a remote working accountant had been streaming shows during work hours. When she was finally caught, her employers and the court investigators found that she reported over 50 unaccounted work hours for which she was paid around 30 $ per hour. 

If we multiply those numbers, it becomes clear that the accountant stole around 1,500 $ from her employer. While 1,500 $ probably won’t make or break a company, time theft will easily become an issue if this becomes a common practice among employees.

Most Common Ways Employees Commit Time Theft and How to Address Them

So, before you can prevent time theft, you need to be able to spot it. There are various different ways in which employees can commit time theft, with some of the most common ones being:

Fabricating Time Card or Timesheet Data

Fabricating or falsifying time card or timesheet data usually happens when a specific employee records inaccurate information regarding their work hours. 

These types of inaccuracies usually lead to employers incurring extra costs (that should’ve been avoided in the first place) and tend to be more prevalent with businesses using manual time-tracking or time-clocking systems.

How To Fix It?

The easiest and most reliable method to address this issue is using automated time and attendance software. Regular paper timesheets allow too much wiggle room for employees and can easily be exploited. 

Likewise, physical time clocks that require employees to manually punch in when they start working are susceptible to “buddy punching,” which means lending their punch card to a colleague who clocks in for them. 

With time and attendance software, you can prevent this type of fraudulent time theft from ever occurring and save a lot of money on unnecessary and easily avoidable costs.

Taking Unauthorized or Prolonged Breaks

Another clear example of time theft comes into play when employees take unauthorized or prolonged breaks. This type of behavior can take many different forms, from blatant violations of company break policies (e.g., taking breaks whenever an employee feels like it) to a more subtle way of time theft, such as extending a regular lunch break by 5-10 minutes.  

In these situations, the problems become visible if this behavior persists or is adopted by multiple employees.

How To Fix It?

Breaks are an important part of an employee’s workday. In fact, many studies show that regular breaks can positively affect a worker's productivity and performance levels. 

So, fixing time theft in this particular case should not be about forbidding or discouraging employees from taking breaks but about taking scheduled and managed breaks.  

The best way to do this is to create a healthy and positive culture around taking breaks. You can do this by: 

• Motivating employees to take their scheduled breaks – The easiest way to do this is to set up a notification or reminder system that automatically prompts employees to take their breaks. Occasionally, managers can take charge and invite their entire team out to lunch, turning communal lunch breaks into a habit.
• Having managers serve as role models – Have your company's entire managerial staff take regular breaks to show and exemplify the importance of break time to their teams/employees.
• Providing a comfortable space for your employees to take breaks – Having a separate space, i.e., a break room where employees can take their scheduled breaks, can positively impact employees’ mental health and lead to them taking fewer days off due to medical reasons.

Using Social Media Sites During Work Hours

According to some surveys, people spend around two and a half hours per day browsing or scrolling through social media sites. Taking these numbers into account, we can gauge that an average person will spend more than a thousand hours a year on various social media platforms.

With such a high number of hours, it’s not impossible to imagine that some of your employees will use their work time on social media, which would constitute time theft. And, when it comes to spending work time on non-work-related activities, visiting social media platforms accounts for around 50% of that time, according to a study done by DeskTime.

How to Fix It?

The issue of employees using social media or spending too much time on their phones during work hours is unfortunately not going away. In fact, any attempt to fully prevent it might cause resentment amongst your employees, which would be counterproductive and could cause even more problems in the long run (apart from the obvious time theft). 

Instead of trying to prevent it completely, you should focus on developing clear policies aimed at regulating social media use on the company’s time (i.e., What sort of behavior in this regard does your company deem acceptable?). You could develop policies that contain information, such as: 

• Clear differentiation between using social media platforms for work and personal purposes;
• Specific times during the day or places where social media use is acceptable. For instance, employees can use social media during their breaks but only inside a designated break room or outside the office. This means that the use of social media will be prohibited in areas designed specifically for work.
• Specific policies and rules that regulate taking photos or videos on company grounds or dressed in company attire (i.e., specific uniform related to the company’s brand).

Dealing With Personal Stuff During Work Hours

Some employees will feel comfortable dealing with their personal stuff (e.g., taking personal calls, running errands, etc.) during regular work hours. Taking one personal call in the case of an emergency should not be looked at as a big deal. No one can control every aspect of their lives, and, for the most part, these types of things will happen to everybody.  

However, where it gets problematic is when you have an employee who’s regularly dealing with personal stuff during work hours. And that's when that behavior should be regarded as time theft.

How to Fix It?

There are numerous ways companies and employers can deal with the issue of employees using work hours for personal dealings. Some of them include: 

• Creating a work culture that promotes employee engagement – When employees feel engaged with their work, the chances of them committing time theft are drastically lowered.
• Reward high-performers with extra days off – This can improve employee morale and can lower the overall desire to commit time theft.
• Promote personal accountability and transparency – Employees will be far less likely to engage in time theft in a work culture that promotes personal accountability.

What Are the Consequences of Time Theft for Employers?

The main consequences that businesses can face as a result of time theft are: 

• Financial losses and incurring additional costs – Employees engaging in time theft essentially receive payments for hours they didn’t spend working. This behavior results in wasted resources and companies needlessly spending money on virtually nothing.
• Scheduling issues – Time theft can cause serious scheduling problems. If employees are regularly late to work or take extended lunch breaks, it can become difficult for companies to maintain optimal workflows amongst their working staff. This can also lead to an increased workload for employees who don’t engage in time theft, which can easily decrease their morale.
• Loss of trust and degradation of employer-employee relationship – When an employer discovers that a specific employee has engaged in time theft, this will inevitably lead to a loss of trust between the two parties. This behavior can also have a cascading effect where an employer loses trust in all employees, including those who do not participate in time theft.

What Are the Consequences of Time Theft for Employees?

The main consequences an employee engaged in time theft may experience are:

• Termination of employment contract – Time theft could be seen as a violation of the contract and a reason for firing an employee that engaged in such activity.
• Damage to professional reputation – Employees who participate in time theft are increasing the risk of damaging their reputations as business professionals, both inside the company they are employed at as well as their entire work industry. Thus, this behavior can significantly affect their careers and future job prospects.
• Employer losing trust – Engaging in time theft can completely erode the trust between employer and employee. This type of conduct can also create a negative perception of the employee’s work ethic, reliability, and professionalism.
• Various legal consequences – On some occasions, employees engaging in time theft might experience legal ramifications. The extent and exact type of legal issues and consequences will depend on the country, state, or city the company is located in. These can range from simple fines to more complicated criminal charges. 

Time theft can have a negative effect on almost every aspect of your business and company – from increasing costs and causing payroll and scheduling issues to adversely affecting budgets. 

That’s why it's important to address it as soon as possible by creating clear policies around time tracking, breaks, attendance, and similar. Additionally, you could utilize time and attendance software to help you implement these changes more successfully.