October 22, 2021 | Payroll Software | Posted by Brandon Grinwis, Chief Financial Officer at Ascentis
How to Prevent Time Card Fraud in the Workplace
Every employer knows that the hours your employee's log in their timesheets every week only tell part of the story. The number of hours recorded and submitted don't always add up to the number of hours actually worked, and telling the difference can be a tricky proposition. Time card fraud is a problem in nearly every field, but it can be especially troublesome in labor-driven industries such as manufacturing, construction, and healthcare. Unlike businesses with a high percentage of salaried employees, industries where a large portion of employees clock in and out every day and get paid on an hourly basis are vulnerable to a wide range of fraudulent behavior.
What are common types of time card fraud?
The first step to shutting down time card fraud is identifying some of its most common forms. A study by the American Payroll Association found that 75% of American businesses experience some degree of time fraud, while 43% of employees admitted to some level of time theft. Clearly, this is a widespread issue that impacts employers of all stripes. Let's look at a few key time fraud practices to stay alert for.
- Buddy punching: The practice of buddy punching -- one employee clocking in on behalf of a coworker who isn't at work -- costs millions annually for employers, and those who use manual time and attendance systems are especially at risk.
- Falsifying time sheets: Paper-based time sheets and time clocks that require a physical punch-in make it much easier for workers to enter extra work hours each pay period, or to alter data that inflates their time worked.
- Starting work late or leaving work early: Every employee will be late for work at some point, but some make it a habit. A time and attendance system that allows workers to regularly clock in late or clock out early hurts productivity for the entire workforce.
- Extra long breaks: Break time is another essential aspect of the workday that can be tainted by a few unethical employees. Employees stretching their meal time and other breaks a few minutes longer may not seem like a big deal, but those minutes add up over time.
- Improper overtime: Sometimes paying employees time-and-a-half for overtime work is an unavoidable expense for labor-driven employers, but without constant time management it can be easy to slip into unauthorized hours that can rack up expenses and create compliance risks.
- Spending time off-task: Easily the most prevalent form of time theft is one that just about everyone has engaged in at some point: basic slacking off while on the clock. As constant access to social media and smartphones continues to blur the lines between employee time and company time, it is important to set limits and develop systems to keep your workers working.
How to combat common types of time card fraud
It's important to keep in mind that very few employees consciously set out to steal time from their employers. Many may not even realize that they are doing anything wrong. In many cases, developing consistent processes, setting training standards, and investing in the right time and attendance software can be enough to preserve productivity and curb time theft. Here are a few of the ways investing in technology can keep your organization operating smoothly while reducing fraud.
- Electronic and mobile time clocks: For any employer still relying on paper time sheets, basic electronic spreadsheets, or manual time clocks, the easiest way to reduce time card fraud is upgrading to an automated time clock system. Not only does an automated time and attendance solution make it much more difficult to pull off many common time fraud practices, it also simplifies timekeeping for employees. A mobile time clock app is especially useful in blue collar industries where workers frequently clock in from the field.
- Customizable time tracking: Every business is unique, and there is no such thing as a one-size-fits-all timekeeping system. An automated time and attendance system with options for customization allows an employer to set limits that work for your business's specific needs. Your time system should allow you to track the length, frequency, and timing of breaks, while also generating valuable data about how well your workforce is complying with those limits.
- GPS location tracking: Adopting a mobile time tracking app allows an employer to keep closer tabs on their workforce and ensure more compliance with time-related policies. With GPS location tracking and geofencing, you can eliminate time clock fraud at the beginning and end of hourly workers' shifts by only allowing system access within a certain distance of the worksite.
- Automated overtime management: Employers can eliminate unnecessary overtime hours and ensure fair distribution of overtime pay with software that checks workers' schedules against available hours. That equitable treatment helps to maintain higher employee morale while also keeping your business compliant with Fair Labor Standards Act (FLSA) regulations about overtime pay.
As noted earlier, some degree of time card fraud is unfortunately always going to be a part of any workplace. Fortunately, new automated time and attendance solutions make it easier than ever for employers to minimize fraudulent behavior and establish policies that keep the workplace operating on time with maximum productivity. Learn more about the ways Ascentis timekeeping solutions for labor-driven employers can protect your business against time theft.
Brandon joined the Ascentis executive team in 2019. He brings more than 15 years of leadership in driving growth, efficiencies and profitability at high-performing technology companies. As CFO at Ascentis, Brandon is charged with managing financial operations to support the company’s growth as well as leading the finance and accounting departments. Before joining Ascentis, Brandon was Vice President of Finance & Business Operations at Code42, a fast growing global enterprise SaaS provider of data security technology. Brandon has held financial leadership positions at Digital River and Lawson Software, two other high growth, Software-as-a-Service based businesses.” Brandon received a B.A. degree from Ohio University and a master’s degree from Notre Dame.