Most employers take a hard line on employee theft. In many cases, when an employee is caught stealing, they are reprimanded, if not terminated. Law enforcement may even be involved. So why is it that time theft is treated differently?
According to the U.S. Bureau of Labor Statistics, the average wage in America is $31.58/hour or $1095.83/week. If an employee is consistently showing up 15 minutes late, that amounts to almost $2000 in stolen time per year.
Here, we will give you a summary of all the different ways employees could be stealing company time. We’ll also discuss the impacts of time theft, how and when you should try to prevent it, and how to investigate employee time theft.
To see how Solink can help you get a handle on time theft and more, book a demo today.
What is time theft?
There are many different types of employee theft. These can range from directly taking items from inventory or office supplies to providing fraudulent discounts to friends and family. One type of theft you may not be tracking as part of an integrated strategy is time theft.
Here’s a basic definition of time theft.
Time theft definition: Accepting pay from an employer for hours not actually worked.
Time theft occurs when an employee is not working while at work, or they are not at work when they are supposed to be. This ranges from “shirking” (avoiding responsibilities) to outright fraud (for example, time clock theft).
A lot of employee theft is unintentional or a result of low morale. While it can be harder to find, prove, and prosecute than more direct forms of theft, it is still possible to stop employees from stealing time at work.
Why does theft of time happen?
This is the first question you need to ask as part of your approach to time theft. As with other forms of employee theft, stealing time generally occurs simply because it can occur.
We recently discussed the theft triangle. This theory stipulates that, while a small minority of employees will seek out opportunities to steal, some will only do so if the right conditions arise. These conditions are rationalization, motivation, and opportunity.
Essentially, an employee needs to be able to justify theft, have some reason to steal, and find the opportunity to do so. Just like in other forms of employee theft, with time theft it is easiest to mitigate the risk by eliminating the opportunities.
Here’s an example of the theft triangle leading to employees stealing time at work: An employee feels like they are underpaid (rationalization). The employee doesn’t feel like they have enough hours in the day to run all of their errands (motivation). The employee knows their supervisor doesn’t notice when they come into work twenty minutes late (opportunity).
Keeping morale high can make it harder for employees to rationalize their theft of time. It is hard to reduce the motivation to steal time from work when it is often as simple as an employee feeling the ping of a message on their phone. The best way to reduce or even eliminate time theft is to eliminate the opportunities.
Is time theft illegal?
The quick answer is that time theft is fraudulent. However, it is also difficult to prove theft of time has occurred. The Fair Labor Standards Act (FLSA) makes it clear that employees must be paid their wages (the alternative is called wage theft).
You cannot withhold wages over a time theft claim. Moreover, if you try to bring a time theft claim against an employee who accuses you of withholding wages, it could be seen as retaliatory.
While it is possible to sue an employee for stealing time, in most cases it’ll be less expensive and easier to move on. You should aim to eliminate time theft from happening. However, once theft of time has occurred, reprimanding, training, or terminating employees will be the easiest resolution.
How do you deal with employees stealing time?
Employees must be paid their wages. If you suspect an employee is committing time theft and you want to pursue restitution, then you need to first pay them their wages and then sue them after.
While this could be worthwhile if the employee has a high salary and has been stealing time at work for months or years, in most cases it will be most economical for the company to warn the employee or terminate employment and move on.
That being said, it can still be prudent to perform a thorough investigation to prove the employee is being terminated for cause. Here are three things to keep in mind when dealing with employee time theft.
1. Have an employee time theft policy in place
Before you set out to find time theft or address employees who steal time at work, you should have a written policy in place. It should explain the different types of time theft, how you monitor time theft, and the consequences for time theft.
If you have a clear employee theft policy, then you need to enforce it. Weak enforcement can cause issues in the future in two ways if you don’t.
First, employees will take their cue from management. If they know the manager doesn’t pay attention to long breaks, then they will consider this the policy.
Second, if you do find instances of employee time theft and choose to seek financial restitution and/or to reprimand the employee, it is possible that the way the policy is (or is not) enforced will be seen as the official policy.
2. Perform a thorough investigation
There are strict rules in place for how an investigation into employee theft must be performed. The investigator cannot be the person who discovered the theft. Once the evidence has been collected, the investigator should provide the employee a chance to be questioned in the presence of witnesses.
3. Consider your options
Time theft isn’t like other types of theft. It can be harder to prove, and it is not always better for the bottom line to seek compensation.
While a reprimand, training, or termination is often the result of an investigation into time theft, suing the employee for the damages caused by their fraudulent behavior isn’t. It can be hard to prove, and the publicity might damage the reputation of the company more than the value of any financial settlement.
Should you go after employees for stealing company time?
Unlike shoplifting, there is no easy “yes” answer to this question. Some time theft can, counterintuitively, improve employee productivity. Here’s an example
Your restaurant has two distinct busy periods, a lunch rush from 11:00 to 1:00 and the dinner and night crowd from 4:30 to close. The early shift and late shift overlap from 3:00 to 6:00. The staff know they need to get the place looking presentable for the dinner rush and prep everything for the evening shift. This ends up taking two hours, leaving another hour where you’d really like them to be more productive but they aren’t.
This is a situation where employees are committing time theft during the lull. However, it could be great for team building, sends the morning crew home happy, and gives the evening crew the high spirits needed to give excellent service to the customers coming in for dinner.
You might be able to save some money by cutting hours on the schedule in the afternoon, but a hard hand with the staff could reduce morale and hurt the bottom line elsewhere. During the current labor shortage, it could even lead to an exodus.
Uncovering employee time theft with Solink
You suspect that employees are stealing time at work during their shifts. You’ve narrowed down the focus to three key areas of interest: employees punching in late, employees taking long breaks, and employees on their phone instead of helping customers. Solink can help with all of those situations.
- Motion search allows you to be alerted when movement occurs in a certain area. If employees are coming in the employee entrance after their shift starts at 9:00, simply set up a notification when there’s movement by that door after 9:05.
- You can also use motion search to track long breaks. Match the employee entering the break time to when they exit to see how long they were on lunch.
- Different stores will have different indications of poor customer service. Often single-item transactions indicate the customer was not helped. You can use event-based reporting to find all such transactions and use the video to check whether someone helped the customer.
- The recent labor shortage might even lead to situations where some of your locations opened late or closed early. Solink can help you find this as well. If your store usually has a transaction every two minutes, set up a notification to be alerted when there hasn’t been one for ten minutes. You can then check to see what’s happening in the location.
6 different types of time theft
Employees steal time from their company in many different ways. Here are the types of time theft we’ll describe below:
- Time clock theft
- Buddy punching
- Taking long lunches and breaks
- Having fun and socializing
- Using the Internet
- Hiding from the manager
1. Time clock theft
Time clock theft is when employees adjust their time sheets to increase the number of hours they have worked. This comes in two main forms.
First, employees will often round hand-written timesheets towards more hours. For example, an employee works from 9:07 to 4:52 but writes from 9:00 to 5:00. That way they are paid for the full day.
Second, when an actual time clock is used, employees can often be seen standing around waiting for the minutes to tick by. If your time clock rounds 5:07 down to 5:00 but 5:08 up to 5:15, then an employee may stand by the clock to earn an extra fifteen minutes of pay.
2. Buddy punching
If a person is waiting to punch in and notices their friend is running late, they might be inclined to punch them in as well to “help them out.”
Even if you use swipe cards or employee codes, employees may share them. This can get out of control, with early employees scanning in their friends and employees working late reciprocating. This could lead to lots of overtime being paid out that was never worked.
3. Taking long lunches and breaks
Long breaks and unscheduled breaks are major forms of employees stealing company time. This includes smoke breaks, which can affect the productivity of employees.
4. Having fun and socializing
Work can absolutely be fun, but that’s not what we are talking about here. This is spending time chatting with coworkers, playing games, or otherwise ignoring work responsibilities. Some employees may even find time to take a nap at work.
5. Using the Internet
Having access to everything in your pocket can be amazing or aggravating, but it’s usually both. Phone notifications can lead employees to waste time at work. Once they take their phone out to check the newest message, they may find themselves pulled into other apps.
Social media, messaging, phone calls, online games and shopping, and even running a second business on their phone are all things that employees might do while working.
6. Hiding from the manager
Employees who work further away from their managers might tend to be less productive. This is especially true for employees who work on their own far away from the business.
However, even within a store or restaurant you can find employees goofing off when they work away from the customers. We recently spoke with a thrift store operator about how Solink improves the productivity of the store room employees.
How do you reduce theft of company time?
Reducing time theft is important because it is costing your company money. However, a lot of time theft is unintentional or the result of low staff morale. While it is similar to other forms of employee theft, treating it the same way can prove problematic.
A few minutes of socializing can keep employees happy and improve customer service, while a few hours will hinder productivity. During a labor shortage especially, you’ll want to be careful with how you deal with time theft. Here are some tips on dealing with employees stealing time at work.
Establish clear rules
The rules governing how your employees use their time at work need to be written down, shared with employees, and visible. These policies should explain the different forms of time theft, how the company deals with them, and why.The consequences of time theft should match the offense. For example, “buddy punching” is clearly fraudulent, while the line between chatting while working and chatting instead of working is less clear. Treating them as equivalent could reduce the legitimacy of your policies.
Follow through on disciplinary actions
As mentioned above, how you actually handle infractions could have legal consequences. Clear rules will become muddied if management ignores time theft infractions. If the rules stipulate that time clock theft will receive a single written warning and then termination, you need to follow through with this procedure when it occurs.
Employees who love their company are going to feel invested in its success. This is one of the paradoxes of dealing with time theft. If you take a hard line on time theft and it is seen as unreasonable, then you risk lowered morale and employees leaving during this competitive labor market. Finding the balance between turning a blind eye to employees taking an extra few minutes on lunch break and approaching them when they take an extra fifteen minutes is difficult.
Create productivity benchmarks
You can’t measure the impact on productivity if you do not have a good idea of how productive an employee should be. Spending the time to calculate exactly how many shirts someone can fold per hour, how many coffees they can pour, or how quickly your receiving team should be able to break down an order will give you an indication of whether time theft is hurting your bottom line.
Let’s say you know that two people should be able to straighten out your entire store over an eight hour shift. If at the end of the day they haven’t finished because they were chatting, then you have good reason to approach them to discuss how they spend their time. Conversely, if they finished early, then the chatting might have improved their mood and led to a productivity boost.
Solink can reduce time theft in your organization
Time theft comes in many different forms. It can be hard to find and even harder to deal with. Solink provides an integrated video analytics solution to help you monitor employee productivity in real time.