Combating Time Card Fraud

Time card fraud accounts for major losses for companies each year. Think time theft doesn’t affect your company? A study by Software Advice found that 1 in every 4 workers admitted to exaggerating their time at least some of the time. Combating time card fraud before it happens and taking appropriate steps when it does can save you from paying out fraudulent payroll dollars and help boost your company’s production at the same time. Here are a few tips to help you recognize and address time card fraud.

What to look for

Do you have an employee who consistently reports being at their workstation at 8am every morning, but no one seems to see or hear from them until 8:15? Or what about an employee that always reports going to lunch from 12:30 to 1:30pm without fail? Unless your workforce is running like a machine, it’s highly unlikely that they always arrive, take lunch, and leave for the day at the exact same time every day of the work week.

When employees are manually tracking their time worked for the week, it can be easy to just enter the approximate time they arrived or left the workplace. That time shaving, whether it’s in their favor or yours, technically constitutes time fraud and leaves you open to risk.

The most common method of time theft is called buddy punching. This occurs when one employee records time for another employee. Whether it’s punching a coworker’s time card to keep them from getting into trouble for being late for a shift or clocking out a coworker who ditched work early, buddy punching can be extremely costly for companies.

Simple steps to help curb fraud

If you start all of your employees out with a clear understanding of what you consider time card fraud and specify that it will not be tolerated, you will set your employees and yourself up for success in combating time theft. Your employee handbook should clearly state the consequences for time card infractions and should include a progressive discipline policy for rule-breaking.

If you have manual time punch stations set up throughout the workplace, be sure to post signs reminding employees of the importance of reporting accurate working hours and of not committing time card fraud. Cameras in these locations can also help catch buddy punching and allow you to address the incident with both parties involved.

For employees who manually record their time on a spreadsheet and email it to a supervisor, send a Monday morning email reminding employees of the importance of recording their time each day, as the clock in and out occurs. Follow this up with a quick email in the early afternoon on Friday before employees submit their timecards. If employees know or believe that you are paying attention to their time, they’ll be more likely to be honest in their reporting.

Addressing suspected fraud

As soon as you become aware of a discrepancy, address it with the employee. It can be very difficult and time-consuming to correct overpayments due to time card theft after the fact, so catching the error quickly is important.

If you suspect that a large group of employees isn’t correctly reporting or recording their time, a departmental or company-wide meeting to remind everyone of the rules and procedures is a good first step. You don’t want to accuse individual employees of committing fraud without proof, but a refresher meeting may be enough to scare them straight.

For those employees caught committing time card fraud, you should have a progressive disciplinary policy in place to handle these situations. Typically, first-time offenses can be addressed with a verbal warning (documented in their file, of course), with further action for each additional infraction – up to and including dismissal from the company.

Automate your timesheets

The single most reliable means of preventing time card fraud is to institute an automated timesheet processing system. Timesheet processing can be time-consuming for your HR team. By automating time entry, your human resources staff will be able to more quickly and efficiently complete payroll related tasks, while maintaining a more reliable log of time entries for employees.

Payroll has traditionally entailed spending time manually entering data from paper time sheets to complete payroll. With automated timesheets and payroll processing, your HR staff can easily complete payroll in a matter of hours rather than days.

Sheakley’s easy to use Human Capital Management (HCM) application allows your HR department to begin automating these tasks. Complete with Payroll Processing Services, Time and Labor Management, Employee Onboarding tools, ACA Management, and online Benefits Enrollment, your HR staff will be able to accomplish more tasks more quickly thanks to the time-saving benefits of the Sheakley HCM application. The program also allows employers and employees to access and update employee information at any time from anywhere. W-2s are automatically available to employees at the end of the year and employees can access up-to-date PTO accruals at any time. This fast and easy to install complete payroll administration solution offers everything from payroll processing to electronic tax filing while helping you manage costs and automate basic HR functions.

Schedule your free consultation to discuss Sheakley’s HCM application today. You can also learn more about how Sheakley’s Human Resources Outsourcing Solutions can help you begin to automate many of your HR functions. Stay up-to-date on all things Sheakley by subscribing to our blog and following us on social media. Join in the discussion by commenting below.