Timesheet or Time Card Fraud

Timesheet or time card fraud is when an employee puts down hours they did not work and collects payment for those hours. There are rules and laws against it, but some employees still try to game the system to get more pay and commit time theft

For businesses, time is money, especially if you are a small business. Adding 10 to 15 minutes usually goes unnoticed, but it can become problematic. For the business owner, it is taking money from their pocket. The American Payroll Association (APA) reported that time theft costs companies up to 7 percent of their gross annual payroll. For every $100,000 paid out, businesses lose about $7,000 just from employees misrepresenting their time cards.

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The Fair Labor Standards Act requires employers to record and pay all of their employee’s hours worked and save those records for at least two years, but it does not specify which type of timekeeping system the employer should use. Still, the burden of tracking and accurately paying falls on the employer. It is in the company’s best interest to have a time tracking system that will make it easier to ensure timesheet accuracy, help prevent time fraud, and mitigate any accidental errors.

So what are the ways that employees could be padding their Timesheets / Time Cards?

Inflating Hours/False Entries

Using paper-based timesheets makes it 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 starting. These extra minutes can add up to many additional paid hours for time that was not productive.

If managers are not consistently checking employee time cards for errors, you could pay employees for hours that they did not work. Check out an example of how an employee adding an extra 25 minutes a week can add up and cost you over time. 

Buddy Punching

Buddy punching is the old standby for employees when using a punch clock. Clocking in a co-worker when they are running late, so they look like they were at work on time, is another concern to be on the lookout for. If this goes unnoticed by management, then it can become costly for the company.

Learn more about how you can stop buddy punching.

Break Abuse or Taking Personal Time

Employees who take extra long-scheduled breaks, extended lunches, or even taking care of personal situations while on the clock, it will 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. Employers should also detail which activities are prohibited, such as using the internet or the company phones for personal use while they are clocked into work.

In a survey conducted back in 2015 about employee time theft, it was found that forty-three percent of 139 hourly employees committed time card theft by inflating their hours worked. When those 60 employees were asked what combination or method was used to achieve time theft, 45% said recording incorrect times, 43% said they spent time on personal business, 42% said they took frequent breaks, and 23% were buddy punched by a co-worker.

Working Unauthorized hours

 Ontheclock_Unauthorized_Overtime

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 additional work hours. That way, you know that those hours were necessary.

Human Error

When employees fill out timesheets at the end of their pay period, the time reported may not be accurate compared to when logged daily. Do you think that they can accurately remember their lunchtimes from a few weeks ago? The reality is, they will not. Although it may not necessarily be intentional, it is still considered fraud.

How do you resolve these situations?

The following suggestions are a few ways that you can limit timesheet/time card fraud.

You should develop written policies regarding timekeeping, breaks, lunch breaks, and starting and quitting times. Spend some time to go over these policies with your employees to endure 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, your employees will know they do not need to comply with the policies.

It would also benefit you to train your supervisors to check employee’s time cards daily 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 time recorded that does 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 can also review to make sure they are accurate and approve time cards before submitting them for payroll.

a thought From Geoffrey Elder on 2/17/2021 ...
But what about employers not paying for time worked? Every website I've found goes on and on about employees committing fraud, but my employer is shaving hours off my time card and I have the evidence (video) of it happening.
reply from OTC - Hi Geoffrey, employers are required to pay employees for hours they worked. This is the law! We are not legal experts, so we cannot provide legal advice, but we do know employers must pay employees for hours they work. We hope this helps.
a thought From Lora on 9/4/2020 ...
What if my manager asked me to fix my missed punches because they were lazy? As the assistant manager, my 30 minute lunches were always interrupted when the other manager was not working and most times even when they were working and I would miss my in lunch punch. My manager warned me not to get No/OT hours for not taking a full 30 minutes and would encourage an electronic punch and suggest I not work the extra time after that was interrupted. For example, knowing I was on lunch they would talk to me during my lunch for 10 minutes and tell me to clock in on time but have me sit and enjoy an extra 10 minutes on paid time. After HR did an audit on our time cards they found too many edits. As an assistant manager, I was never told not to alter my own punches, nor was I trained on how to do payroll or understand the laws. I also had access to my own time card so it was confusing when I was ultimately terminated for this. I explained what happened but was ignored and asked to submit proof (texts) to help start a separate investigation on my manager.
reply from OTC - Hello Lora, we are sorry to hear about your situation. Thank you for sharing your story with us. In the future it may be wise to have additional documentation of your breaks and hours worked. You can always use our time clock system as a means to track your hours worked and breaks. Have a great day and thanks again for commenting on our employee time clock blog.
a thought From Tina Jenkins on 8/18/2020 ...
What if an employer is fixing hours so they don't have to pay overtime?
reply from OTC - Hello Tina, thank you for the question. Let us start off with saying we are not attorneys or legal experts. With that being said, it is illegal for an employer to change employee hours worked in order to avoid paying overtime. Please reference our blog Does an Employer Have to Pay if an Employee Forgets to Clock In/Out. This will provide additional information. We recommend speaking to your local Licensing and Regulatory Affairs department for further guidance. We hope this information is helpful.
a thought From Ren on 2/24/2020 ...
We have an employee that is constantly altering his punch in times to reflect that he came in 2 hours or more earlier than he actually did (1-2 times a week). It's very blatant to the point that it is predictable when it will happen. In addition to this, he also takes 2 hour long lunches and we only deduct for the allotted half hour. We have since installed a camera but he continues. I do the payroll and when I notice he does not clock in when he walks in, I have begun doing it for him so he can't lie later when I do payroll. We are a very small business and it hurts us (financially) when money is being stolen, is there anything we can do that will protect us as the employer just trying to keep him honest?
reply from OTC - Hell Ren and thank you for reaching out. Our recommendation for your situation is to implement a time tracking solution like OnTheClock that allows GPS and location control. This will provide you with the ability to prevent time punching from a location other than what is assigned for your employees. Also, an employer must pay hourly employees for the time they work - it's that simple. If an employee is logging hours that he or she did not work, then employers are not obligated to pay for that time. Our modern time clock also prevents time card editing. This prevents employees from making any changes to their time cards and reflects their actual punch in/out times. If an employee is stealing time from you, they are considered a thief. You have to ask yourself if this is someone you want working for the company. With this being said, we are not legal experts and we recommend consulting with an attorney to learn your options. We hope this information has been helpful.
a thought From Kody on 2/21/2020 ...
If an employee related to the manager is stealing time from an owner that seems to want to look the other way is there really anything legally that can be done or is it just unfair? I am finishing out my two weeks anyways but truth be told I would love to find a way to take down this deceptive duo. This employee is allowed to clock in and then go home for the rest of the day while the rest pick up the slack. After bringing it up once this employees time card was taken away and hidden so it could not be checked. It just seems to be a small case of discrimination. Why cant everyone do that to be fair?
reply from OTC - Hello Kody. It seems like the company owner is okay with this situation based on your information. It is our opinion there is nothing much you can do other than express your feelings in a positive and professional manner to HR or the company owner. Sorry we are not able to provide further advice.
a thought From Dylan on 2/3/2020 ...
What if I accidentally messed up my timesheet and put in hours that I worked when I didn't? And then got approved and am getting paid for them before they could fix my timesheet.
reply from OTC - Hi Dylan. Thanks for the question. We recommend taking the honest route. By you bringing up this error to your supervisor, it could prevent possible issues down the road. We hope this helps.
a thought From Marvus on 12/2/2019 ...
What happen if the person changes hours on time card but he works for temp agency??
reply from OTC - Hi Marvus, thank you for reaching out. It does not matter if an employee works for a temp agency or is directly hired, their time card should never be altered to reflect hours in which that employee did not work. This could come with heavy consequences including termination. We recommend all employees to be honest with their hours worked and to sign up with an employee time clock system like ours to start accurately tracking time. We hope this helps.
a thought From Heather on 11/11/2019 ...
What if its the manager them selves and it was reported and nothing was done .
reply from OTC - Hi Heather, thank you for reaching out to our time clock company. We would recommend bringing this topic up to your HR department. Unfortunately there are times when individuals abuse the power they are given. We hope this is helpful as this is the only advice that we are specialized to give. Have a great day.
a thought From Kay on 6/28/2019 ...
What if I as a salary employee is being a victim of another employee or person with payroll access reporting clocked in and out times for a full time position and hours, and being accused and terminated for consistent no call no shows?
reply from OTC - Hi Kay, thanks for reaching out. In this particular instance, we always recommend that you speak with your HR department. Provide facts and evidence if possible while explaining your situation. We are strong believers that Human Resources is their to help the employees, not the other way around. We hope this helps and have a great day!
a thought From Bird on 4/18/2019 ...
There’s an employee that takes an hour lunch does not punch out. Comes back after an hour clocks out for 30min and clocks back in. There are no cameras and everything is done on our computers with hardly any monitoring. How do I report them?
reply from OTC - Thank you for the comment. Unfortunately time theft is a very serious issue and costs U.S. employers more than $400 billion in lost productivity every year. If you have an HR Department that you feel comfortable speaking with regarding this situation then it would be a good idea to explain your feelings to them. Recommending a better time clock system that has GPS and Geo-fencing features is a great idea as well. Here is an article you can read and also recommend your management department or HR department to read: https://www.ontheclock.com/Blog/Its-Time-to-Stop-Time-Theft.aspx This will give some additional information on how to handle this situation. We hope this helps :)

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