Time sheet or time card fraud is when an employee puts down hours they did not work and collects payment for them. There are rules and laws in place against it but some employees still try to game the system to get more pay and commit time theft.
For businesses time is money. This is especially true if you are a small business. Adding 10 to 15 minutes usually doesn’t get noticed. But over a year’s time it can get to be a real issue. For the business owner it is taking money from their pocket.
The Fair Labor Standards Act says that employers must record, and pay employees for all of their hours worked, but it does not specify which type of timekeeping system the employer should use. Still, the burden of tracking and paying accurately falls on the employer. It is in your best interest to ensure that you have a time tracking system that will make it easier for you to ensure accuracy, and help to prevent time fraud, as well as accidental errors.
So what are the ways that employees could be padding their Time Sheets / Time Cards?
Inflating Hours/False Entries
When using paper based time sheets it is easy for the employee to write in the time they were supposed to be in but actually they started 10 to 20 minutes later.
Even if you use machine stamped time cards they can wait to clock out long after they quit working or even punch in before start time. These extra minutes can add up to a lot of additional paid hours each year for time that was not productive.
If your company doesn’t have attentive managers who have the time to double check employee time cards then you could be paying employees for hours that they did not work.
This is the old standby for employees when using a punch clock. They ask a fellow employee to punch them in when they are running late so it looks as if they were in to work on time. If this goes unnoticed by management then it can become costly for the company.
Break Abuse or taking Personal Time
Employees that take an extra long scheduled break, long lunch or even taking care of personal situations while on the clock can add up over time. You need to make sure you have clear policies in place that detail the scheduled breaks, lunches and returning to work on time. They should also detail which activities are prohibited, such as using the internet or the company phones while they are clocked in or doing personal business when clocked in.
Working Unauthorized hours
Working extra hours that have not been authorized is another form of time fraud. You may want to have a policy that their manager must sign off for any extra work hours. That way you know that those hours were necessary.
All though it may not necessarily be fraud but when employees fill out time sheets at the end of their pay period, instead of on a daily basis, the time reported may not be accurate. Do you think that they can accurately remember their lunch times from a few weeks ago? Reality is they will not.
How do you resolve these situations?
The following suggestions are a few ways that you can limit Time Sheet / Time Card Fraud.
You should develop written policies regarding timekeeping, breaks, lunch breaks as well as starting and quitting times. Spend some time to go over these policies with your employees to make sure they understand them and where the policies will be posted. Note that policies are a great deterrent only if management abides by them as well. If you set policies and do not enforce them then your employees will know they do not need to abide by the policies either.
It would also benefit you to train your supervisors to check employee’s time cards on a daily basis to make sure times are correct. Also have them review the time cards before they are submitted to payroll. The supervisors should also question the employees on any times that do not seem correct. The employees will then take fewer risks if they see that the time cards are being reviewed.
One of the ways would be to use a web based time keeping system that can minimize or prevent fraud. OnTheClock.com is one of these web based systems whose capabilities include Fingerprint Sign In, GPS punch location recording, limiting Mobile punches to a specific location, Punch location restrictions, IP restrictions, Group Punch and browser authentication. You can pick which option works best for your situation. Managers are also capable to review to make sure they are accurate and they can approve time cards before submitting them for payroll.