5 Ways Time Theft Is Costing Your Business (and How To Stop It)

Do you have the sneaking suspicion that your employees aren’t being as productive or engaged as they could be? Are you concerned this deficiency may be impacting revenue?

Even if everyone at your company is well-compensated, productivity is still a major concern for managers and HR leaders — even more so with remote/hybrid teams. In fact, 85% of leaders report that it’s hard to believe employees are still being productive in hybrid working structures.

And sometimes, they’re right.

If you’ve examined other factors that could contribute to poor revenue or productivity and still can’t solve the problem, you might be dealing with time theft. In fact, almost half of America’s employees admit to some form of time theft, and it costs businesses an estimated 4.5 hours per week, per employee.

Time theft happens in every industry, with both remote and in-office employees — and it comes in many forms. To prevent time theft from impacting your revenue, it’s crucial to stay informed about how it happens and how to handle it. Here’s what you need to know.

What Is Time Theft?

Time theft is the unauthorized use of company time for personal activities unrelated to work responsibilities. It can take various forms, such as extended breaks, excessive personal phone calls, surfing the internet for non-work-related purposes, or even falsifying time records.

Essentially, time theft occurs when employees are paid for time they have not actually worked, leading to financial losses and decreased productivity for the organization.

Occasional breaks are necessary for mental health, and you don’t want to deny anyone their morning coffee or bathroom breaks. That said, excessive use of work time for personal tasks can have a significant impact on productivity and your bottom line. A recent survey by AOL and salary.com found that the average American employee wastes 2.09 hours of non-break paid time, every day.

That 2.09 hours translates to an average of $39.98, per employee, per day. Multiply it by the 260 workdays in a year, and you’re paying every single (average) employee a tidy $10,394 to check their Facebook, shop on Amazon, chat with coworkers, or nap on the job. Note that these figures don’t even take into account more systematic types of time theft, like clocking in significantly before arriving at work or clocking out after getting home.

Time theft does more than take a big chunk out of your financial resources. It also undermines employee morale and trust within the workplace. If you want a productive organization, you have to fight time theft.

5 Examples of Time Theft

There are various types of time theft, some easier to stop than others. Being aware of the different forms it takes is the first step toward creating an environment where it isn’t the norm. Here are five of the most common ways employees tend to game the system.

1. Clocking in Early or Late

Electronic systems are much more convenient for most users than manual punch-cards, but sometimes they’re too easy to abuse.Your employees may be tempted to clock in while they’re still drinking coffee at Starbucks on the way to work — or well after they’ve gone home.

This type of timecard abuse can either be systematic or sporadic:

• Systematic time theft may mean logging in fifteen minutes before arriving, every single day.
• Sporadic time theft may be clocking out at the normal end of the work day in spite of leaving the office a few hours early for a once-a-month event (e.g. a child’s school program).

In either case, your employees may feel it's not a big deal, or have justified it to themselves a thousand ways. They might be thinking, “Driving to work is part of my workday, anyway. The boss should pay for it!”

However, despite these excuses, this is a big deal. To maintain the integrity of your policies, have a discussion with your employees and let them know how you feel about timecard misuse. You’ll also want to implement measures that prevent this outright, like using time-tracking software that allows for geofencing.

2. Long Lunches and Extended Breaks

Break times are mandated by law, and they contribute to an efficient workplace. Hungry employees tend to be less productive and engaged, which is just as bad for your bottom line as time theft, if not worse. However, some employees may take advantage of the freedom to leave their workplace for breaks and stay away much longer than is acceptable.

One way to combat this particular type of time theft is to ask your employees to log their breaks. Often, this means reporting a start and end time for every single break. You’ll want to be clear when making this request that this is still paid time (if that’s your policy). In other words, you’re not asking them to log out of the system entirely, just to note the amount of time they’re using for lunch. If their logged break times add up to more than your specified limit for breaks, the employee can be penalized for time theft accordingly.

3. An Overly Relaxed Workplace

Stress can hurt productivity — but the opposite is also true. An overly relaxed workplace (where everyone is laid back and no one prioritizes efficiency), can easily create a culture where time theft is normal.

Spending a few minutes here and there to chat with coworkers isn’t time theft. In fact, doing so can contribute to morale and company culture. But if your employees are chatting, sitting back, or even napping to the point where it affects productivity, it’s time to take charge.

First off, ensure everyone understands how their workplace behavior affects the bottom line. To illustrate this, you might generate some informative, easy-to-understand reports that connect what happens in the team or office to what is happening in the company as a whole.

Ensure everyone knows the company’s mission and why their work matters.  Share not only your long-term goals and vision, but also your vision for the short term: attainable goals your employees can see themselves meeting. You’ll be connecting the larger vision of the company to what is expected of each individual employee in terms of KPIs. At this point, provide clear, easy-to-understand metrics that define what the company considers ‘good performance’.

Each team may need different types of metrics, and you’ll want to be wise in how you choose. But for many companies, metrics around time tracking, schedule adherence, and productivity are a good place to start. You may need to be strict at first to curb existing issues. Once company culture and engagement has improved, you can relax things a bit more, if you choose.

4. Internet-Based Time Theft

Internet-based time theft means taking advantage of the internet to focus on non-work matters during work time. You want your employees to be able to receive messages from home or loved ones, and a quick glance or two at stock trends isn’t hurting anyone. But when your employees are using work time to pay bills, log into social media, or watch YouTube videos, they’re not getting their work done.

You can limit internet-based time theft by blocking the most problematic domains— social media sites, Amazon, and YouTube, for example. But your employees could easily find workarounds like using their phones or their private cellular connection.

So it’s important to approach this issue from an employee engagement standpoint. Ensure everyone knows their job is important, and that it matters how much progress they make during the day. It can be difficult to fight the attention-grabbing machine of social media, but every dollar you invest in making work more engaging for your employees is sure to pay off. You may even consider rewarding employees for higher productivity.

Of course, it also won’t hurt to put a few ground rules in place. No one should have to guess at what is (and what isn’t) an appropriate use of company time. A blanket policy against using social media during paid time will make it easier to give employees consequences for being on their phones when they should be working.

5. Buddy Punching

Buddy punching is a specific variation of the first example of time theft (logging in early or late), but with another layer of complexity. For many large workforces that work on-premise, this has long been one of the most pervasive forms of time theft.

Buddy punching happens when one employee logs time (falsely) for both themselves and a buddy long before that coworker has shown up to work (or after the coworker has gone home). Maybe Jim has to leave early Friday to get to his daughter’s piano recital, but he’d rather be paid for the whole day. So, he asks Frank to sign him out when the workday is finished. That’s buddy punching.

This is one case of time theft best addressed by a change in timecard management. Geofencing, personal accounts, and password-protected time cards can ensure that no one has the power to sign another person in or out. It’s also important to establish clear policies around participation in this kind of time theft. The attempt by either party is a form of dishonesty that should not be tolerated at work.

The True Cost of Time Theft

In addition to the pure monetary costs, time theft can damage your company in several other ways, including:

• Poor Productivity: When employees engage in time theft by wasting company time on personal activities or failing to fulfill their work responsibilities, it directly affects the organization's ability to meet deadlines. Employees may also fail to deliver quality work, while the organization fails to achieve business objectives.

• Loss Over Time: When employees steal time, employers are essentially paying them for time they have not truly worked. This results in unplanned financial losses that can accumulate over time. In turn, this can strain the organization's budget and resources, ultimately impacting its profitability and sustainability.
• Reporting and Legal Issues: Legal and compliance problems may also arise from time theft, particularly if it includes the falsification of time records or the violation of labor regulations. While this may seem like more of a problem for the employee, this can affect organizations that need to report their use of funds — like nonprofits that need to allocate labor against grant money. Especially when dealing with the federal government, any claims found to be false may result in loss of funding or even legal penalties.

Is Time Theft Illegal?

If you uncover a particularly bad case of time theft, can you sue your employee for lost revenue? Under most circumstances, no.

The legality of time theft can vary depending on the jurisdiction and the specific circumstances involved. But in general, time theft is considered a violation of company policies and ethical standards rather than a criminal offense.

Employers also have a responsibility to ensure compliance with labor laws and to address any instances of time theft or wage theft promptly and appropriately. If the situation is out of hand, the law may see it as the employer’s fault for failing to address the problem before it escalated.

Time theft can have legal implications if it involves breaches of confidentiality, misuse of company resources, or other forms of misconduct that violate employment contracts or legal obligations. If this is the case, you may want to consult a lawyer experienced in employment law.

How Criterion Helps Prevent Time Theft

Improving employee morale and creating a culture of productivity is the best way to tackle incidental time theft, such as on-the-job napping, social media surfing, and excessively long breaks. But how can you engineer this kind of shift in your company’s culture?

Improve Communication and Engagement

When everyone feels connected to the organization in a meaningful way, there is less temptation to slack off or waste time. Your employees should have a holistic view of your organization, so  they can feel engaged with something bigger than themselves.

Criterion HCM can help you achieve that. Our configurable platform facilitates communication across departments, providing a single source of truth for HR data, company news, announcements, notifications, rewards, training, documents, and much more. HR leaders can also streamline onboarding, training, and the administration of benefits more effectively with Criterion, ensuring employees are nurtured and engaged from day one.

Geofencing and Time Tracking

Criterion also helps your organization set the boundaries that fight time theft. With geofenced time tracking, you can ensure employees are only clocking in at the time and place they are supposed to. This even applies to teams working in remote locations, such as construction workers that clock in at the job site instead of at the office. Employees can clock in and out with the Criterion app, while administrators can set boundaries on locations and times and review logs at their discretion.

Advanced Custom Reporting

Criterion’s reporting functionality also makes it easier to track, enforce, and report on metrics — both individually and company-wide. Custom reports can be built around any field in the system. With unlimited integration capabilities, Criterion HCM gives you visibility into other areas of your business as well, connecting your HR data to your ERP, project management systems, and more.

Final Thoughts

Time theft can be debilitating to both small organizations and big enterprises. Unfortunately, it has reached massive proportions, and there’s one primary cause at the center: disengagement in the workplace.

According to Gallup’s 2023 State of the Global Workplace Report, six in ten employees are ‘quietly quitting’: keeping their jobs, but psychologically disengaging. Many employees are thinking, “If you don’t feel part of something bigger than yourself, why even try?”

But you don’t have to settle for the status quo. Addressing the problem can mean improving your company culture and boosting employee morale. This isn’t a “simple” process — but it’s a lot easier when you have great software and a team of professionals at your back to help you improve your workplace culture at scale.

With Criterion HCM, you can improve engagement, track time effectively, and generate reports that help you solve time theft and other HR-related problems. With features that help you safeguard against time theft and a dedicated support team to help you make the best use of the software, Criterion can improve your organization in virtually every area.

Don’t let time theft or other productivity issues harm your company. Book a Criterion demo to learn how a configurable HCM solution can transform your operations.