In this ongoing series we look at ways of preventing employee theft. In part one we looked a cash handling methods, in part two we looked at credit card theft, in part three we looked look at best practices for preventing theft from inventory, and this week we look at time theft.
In most of this series, on preventing employee theft, we have been envisioning an individual who uses subterfuge to steal from their employer. Employee time theft can be a subtler and it can lead to shift in culture which makes time theft seem almost a perk to employees. Time theft can happen with both salaried and hourly employees; but since salaried employees should either be senior management or professions such as lawyers or doctors time theft, other than unproductivity, time theft primarily affects hourly employees.
Since the ultimate result of time theft is that the company is paying for labor it is not receiving, it is still theft and the amounts involved can add up dramatically; particularly if it becomes a widespread problem and culturally acceptable.
image courtesy of ShutterStock
Clocking-In
All hourly employees should clock-in and clock-out; whether this is by using a manual time clock, a computer, or some other system. Try to have the time clock in a visible location, not hidden in a corner. This discourages employees from clocking each other in. It also discourages employees from arriving, clocking in, and then getting ready for work (putting items in their locker, taking off their jacket etc.)
All employers should have a system in place for tracking employees who call in sick or who call in saying they are going to be late. This call-in information must make its way to whomever is entering payroll so that it can be reconciled with who has been clocked in and out. If this does not happen “employee A” can call in sick but “employee B” can still clock them in and then out at the end of the day. If the report of the call-in just ends up in their employee file, “employee A” will still get paid for a day that they were not even in the building. If this happens at the beginning of a payroll period it is unlikely that anyone is going to remember the absence unless there is a protocol for recording it in the payroll system.
Be very wary of systems that allow for employees to clock in off site. They must be under strict control and ideally there should be some kind of flag in the system to ensure that the off-site clock-in system is only used when it has to be used because the employee actually is working off site.
image courtesy of Pixabay
“I Forgot To Clock-In”
Employees can, and do, forget to clock-in. However, it is a good practice to spot check the time of arrival of an employee who has “forgotten” to clock-in with another system, such as looking at video playback of them walking through the door. An employee who is late, and their lateness is not noticed by a supervisor or manager, can make up when they arrived and claim that they forgot to clock-in. Therefore, spot checks are essential.
image courtesy of Pixabay
Meal Breaks
Currently, federal law does not require employers to provide meal breaks. However, rules do vary at the state level with currently 21 out of 50 states requiring that employees get a meal break of some description. The rules vary widely from state to state; but usually work along the lines one unpaid break of half an hour, or an hour, and one or two shorter unpaid brakes per 8-hour shift. A perennial problem is employees not taking a required unpaid break, thereby going into overtime, and also potentially getting the employer in trouble with the state labor board if the state requires that breaks be observed. A time thief may take their lunch but not clock-out. If confronted at the time the thief may fall back on that they “forgot” and after the fact they may rely on “we were too busy.”
A potential resolution to both the above issues is to automatically clock employees out for their meal breaks and make them receive formal supervisor approval to work through their break and get paid for it. This is potentially fraught with legal issues and a labor law attorney should be consulted before instituting such a policy due the differences in labor laws between states. However, is it a very powerful way of ensuring that breaks are observed, but it also suffers from its own issues as employees, knowing that their break will be automatically deducted anyway, may take longer breaks than they are strictly entitled to.
Questioning employees who miss significant numbers of mandated breaks should go hand in hand with the implementation of a systems which allows employees to take their breaks at times that are both convenient for the business and the employee.
image courtesy of Pixabay
Time Clock Security
As mentioned before, placing a time clock in a readily observable space will help alleviate the worst abuses of time theft. If using a mechanical time clock, however, it is imperative that only a very senior member of staff can set the time of the clock itself. If any employee can change the time of a time clock and get paid for an additional 15 minutes that they did not work, you can be sure that it will happen. Likewise, with computer-based systems, it is important that something as simple as changing the time on the computer does not affect the time that an employee is clocked in at.
For ease of catching issues, it is important that time clocks, whether mechanical or computer based, are set to the correct time. Although, it does not affect the number of hours worked or the length of an employee’s break, having them set to the correct time engenders trust in the system and makes tracing issues using other systems, such as time stamped video, much simpler.
image courtesy of Pixabay
Employers Stealing Time from Employees
Employees, in order to get ahead of their day, or just gain extra hours, may come to work ahead of their shift and clock-in as soon as they arrive. This is a scheduling matter that should be handled as a coaching and then disciplinary issue. What should not happen is that the employer adjusts the employee’s clock-in time to match the time when their shift was scheduled to start. This is theft.
The Department of Labor takes a very dim view of such things as employees are entitled to get paid for the time that they have worked and to overtime for anything over 40-hours.
To protect themselves, employers should have employees receive copies of when they have been clocked in and out each day and ideally return them signed. Several payroll systems give employees direct access to see their hours, but not change them, at any time. Any change to an employee’s hours that is made should be made in complete transparency with the full understanding and approval of he employee.
It should also go without saying that meetings, lectures over a break which are mandatory, and travel to off-site locations, should all be paid unless your labor law attorney specifically tells you otherwise.
It is easy for employees to accuse employers of not paying them for hours worked. In these instances, it is almost always up to the employer to prove why this is not the case. Integrity of employee times and strong policies and procedures for making adjustments will provide significant protection and reduce the likelihood of any misunderstandings.
Next week, in the final part of this series, we look at overall theft prevention measures, company culture, and examples of real employee thefts.
Mike Falconer 
[…] In this ongoing series we look at ways of preventing employee theft. In part one we looked a cash handling methods, in part two we looked at credit card theft, in this part we take a look at best practices for preventing theft from inventory, and in part four we look at time theft. […]
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[…] In the fifth and final part of this series, we look at some examples of employee theft, and overall prevention measures. In part one we looked a cash handling methods, in part two we looked at credit card theft, in part three we looked look at best practices for preventing theft from inventory, and in part four we looked at employee time theft. […]