Employees Cheating Time… But What Can You Do About It?

FOT Nation – Meet Jon Hyman:

Jon Hyman is a partner at Kohrman, Jackson & Krantz. He is the author of the nationally recognized Ohio Employer’s Law Blog and tweets about employment law issues, follow him at @jonhyman. His colleagues affectionately refer to him as “Social Media Guy.” He parlayed his status as a social media early-adopter to author and edit Think Before You Click…, the first book to address the evolving intersection of human resources and social media. He also appeared on an episode of ‘Who Wants to be a Millionaire’, but lacked the fastest fingers.

This is Jon’s first run with FOT, so take read and leave some love…(or a snarky comment – we promote that sort of stuff here…)

According to a recent survey released by time-clock vendor Kronos, your employees are cheating your timekeeping systems. The survey reveals that employees routinely steal pay from their employers for time they have not worked. Such thievery includes clocking-in earlier or clocking-out later than scheduled, having someone else clock them in or out, neglecting to clock out for lunch or breaks, or adding time to timesheets.

Is anyone surprised that your employees might try to cheat your timekeeping system to steal a few extra bucks? Now that I’ve reported on what should be obvious to anyone who runs a business or works in HR, I present a more practical issue—what can you do about it?

Here’s what the law says about the use of time clocks for payroll purposes:

Time clocks are not required. In those cases where time clocks are used, employees who voluntarily come in before their regular starting time or remain after their closing time do not have to be paid for such periods provided, of course, that they do not engage in any work. Their early or late clock punching may be disregarded. Minor differences between the clock records and actual hours worked cannot ordinarily be avoided, but major discrepancies should be discouraged since they raise a doubt as to the accuracy of the records of the hours actually worked.

 

In practice, this rule, coupled with these survey results, places employers in a bad position. Because employers have to keep accurate records of the hours their employees work, routinely failing to pay employees for inaccurately recorded time might cause the Department of Labor to distrust the validity of your recordkeeping, which, in turn, could lead to a costly recordkeeping violation of the statute. Refusing to pay employees per your recording system also opens your business to a potential Department of Labor investigation or class action lawsuit for unpaid wages. The Hobson’s Choice employers face in this area—as a result of the web woven by the FLSA’s anachronistic rules and regulations—is either to grind your businesses to a halt through strict compliance, or to roll the compliance dice and hope that the Department of Labor or a plaintiffs’ class action lawyer will not come knocking on your doors.

 

As a solution, I offer a three-pronged approach: 

1.    Create a culture of honesty in your business, and train your managers and supervisors on the importance of honesty in timekeeping and the consequences that will result from dishonesty. You cannot hope to change employees’ dishonest behavior without first creating a workplace gestalt of honest behavior.

2.   Pay per your timekeeping system, which may result in some employees receiving pay for un-worked time. It is usually not a defense to a wage and hour lawsuit that you did not authorize work that the employee performed. If it’s documented as time worked, pay for it (but see number 3 below).

3.   Discipline—routinely, consistently, and with sufficient warning—those employees who are caught falsifying their time records. Just because you have to pay for recorded time does not mean that you lack recourse against employees you reasonably believe are being dishonest. Discipline or termination will reinforce your culture of honesty by creating consequences for those that breach.

Following these three steps cannot prevent dishonest employees from trying to steal pay for time not worked. But, it will create the appropriate workplace environment to encourage greater honesty in time recordation, which should pay exponential dividends by spilling over into other facets of your business. 

FOT Background Check

Kris Dunn
 Kris Dunn is Chief Human Resources Officer at Kinetix and a blogger at The HR Capitalist and the Founder and Executive Editor of Fistful of Talent. That makes him a career VP of HR, a blogger, a dad and a hoops junkie, the order of which changes based on his mood. Tweet him @kris_dunn. Oh, and in case you hadn't heard the good word, he's also jumped into the RPO game as part owner of a rising shop out of ATL, Kinetix. Not your mama's recruiting process outsourcing, that's for sure... check 'em out.

44 Comments

  1. Dave Kent says:

    So what about those employees that don’t punch a time clock and yet are always pushing the envelope and taking advantage of the company?

  2. 33_Talent says:

    Focus on paying for, and rewarding Results and not Time and no-one would be able to steel anything…

  3. Jon Hyman says:

    Dave, the same lessons hold true for any time-recording system — time clocks, hand-written notes, electronic check-ins, etc. The rules are the same.

  4. Jon Hyman says:

    33_Talent, the problem is that any pay system implicates the FLSA. Paying for performance still requires the tracking of hours for FLSA purposes, so that a company can properly pay overtime and ensure that employees are receiving the minimum wage. Once you introduce time-tracking, you also introduce the temptation for employees to work the system.

  5. David Young says:

    We use a time clock to help with this, but love the other ideas as well – thanks!

  6. Paying your employees on the basis of actual work done and not on timely basis is also a good solution for this problem. You can decide the amount at the time of handing over project.

  7. John Orr says:

    Punch validation to work schedules has been a major opportunity for many hourly working environments for many years. Employees on average bandit 8-15 minutes per shift – which is significant. Having a tracking system in place and continuing to violate hour & wage laws puts you at greater risk for penalty and litigation. However, no system can change a persons disposition to act immorally.

  8. StealthGenie says:

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  9. Jane Doe says:

    This kind of thing all comes out in the wash. Many employees also work off the clock. It’s often hard to define what “doing work” counts as, so a computer can’t accurately record it. While employees are occasionally clocked in while they aren’t working, they are often also working while they aren’t clocked in. There is certain level of fudge time on time sheets which reflects the fact that doing work isn’t easily definable. The best way to measure whether a time sheet is fair is to have a manager make a judgment call about whether the employee’s productivity is in line with their recorded hours. It’s in everyone’s best interest to let time tracking systems be approximate instead of worrying about the following the law to the letter. If you have people record every minute they spend working, and have lawyers look at each situation to decide what counts as work, you’ll spend way more money than you will by accepting time tracking systems are imprecise, and you’ll probably end up paying more in wages anyway because most people work off the clock more than they are clocked in and not working.

  10. Sylvia says:

    Sooo. We have a case here in our town of a woman & her boss having an affair. Her calling in sick (mental health) and going to see him. 5 days in 18 yrs of employment within the last 1.5 yr. Opinions please. Her actual supervisor had “an idea” of what was happening and only talked with her about being careful with her time. No reprimands, no consequences..actual good evaluations. So its in court now for trying to defraud the county. look in times news of Twin falls, id. Opinions..valued.

  11. Michael Atlas says:

    Nice article Kris,

    I agree with what’s been said here. Those tips you’ve suggested also look pretty useful especially the fourth one about discipline.

    I’d just like to add something that might come in handy or not, but I think it would also be helpful if there were some system in place to “test” the effectiveness of the training that’s been given. For instance, my friend who runs a bar hired this company called SQM ( http://goo.gl/w4QLEc) that offers such a system of testing. Employees were given surprise checks to ensure if integrity in the workplace was being maintained and so far, its working quite nicely. It might be helpful to look into something like this.

    In any case, thanks for sharing this article.

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  15. Susan dawson says:

    At least 5 people from same firm lost there jobs through time keeping.most them worked at same firm for 10-15 yrs.the people who are now directors of the firm only been there 17mnths and all of a sudden clocking in machine goes and they introduce time sheets.didnot inform work force but with in 12 wks suspened 5 on time keeping.they told them cctv not same time as clock on factory floor.un my opion they have falsified information for there own needs to get out of paying redundancy

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