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What Is Employee Time Theft? (How to Identify and Eliminate It)

Chris is a freelance writer with an MA in English Literature. He enjoys researching and writing about business topics.

Read on to learn what employee time theft is, as well as various ways to identify it and how it might be eliminated. Finally, there is an explanation of wage theft.

Read on to learn what employee time theft is, as well as various ways to identify it and how it might be eliminated. Finally, there is an explanation of wage theft.

Transition to Remote Work: Benefits and Downsides

The U.S. job landscape changed dramatically over 2020, as millions of Americans transitioned to working remotely. This trend is likely to continue into the future: a 2020 PwC survey revealed that 78% of CEOs agree that remote collaboration is here to stay. In terms of workforce management, this “new normal” comes with its own set of benefits and drawbacks.

It turns out that, on the one hand, remote work is good for many businesses. Research from Global Workplace Analytics shows that businesses lose around $600 billion annually to workplace distractions alone. Additionally, over two-thirds of employers report increased productivity among their telecommuters.

On the other hand, remote work also means reduced oversight and control, and it’s no surprise that employees have begun to realize how little their employers are monitoring their activities. While innocent (and partly unavoidable) disruptions from family members, pets, and delivery personnel are part and parcel of telecommuting culture, more calculated manipulations of reduced oversight often take place. One of the most insidious of these is known as “time theft.”

What Is Time Theft?

Time theft is a form of fraud that occurs when employees bill their employer for time they haven’t worked. According to Ivan Petrovic, founder and CEO of the workforce analytics and productivity platform Workplus, the average employee steals roughly 4.5 hours from their employer each week. Further, time theft is estimated to cost employers $400 billion per year.

This isn’t a new phenomenon—it’s existed in various forms for a very long time. Things as simple as taking a long break, socializing excessively with coworkers while on the clock, and being distracted by the internet can constitute time theft.

How to Identify Time Theft

Discovering and monitoring employee time theft is somewhat easier in traditional workforces. For one, employees taking long lunches or making their rounds socializing is highly visible in offices, retail stores, and industrial establishments. However, more subtle forms of time theft such as “buddy punching” exist in traditional workforces.

Buddy Punching

Buddy punching occurs when employees collude to take over one another’s timekeeping. For example, two employees may have an understanding where they take turns leaving early. When one leaves early, the other punches them out at their regular time, and vice versa.

Internet Time Theft

It is much more difficult to supervise time theft in remote workforces. However, there are some telltale signs employers should be aware of. For instance, late responses to emails, ignored calls or video conferences, and excessive background noise during calls can all indicate potential time theft.

Task Discrepancy

Another way to manage potential time theft in remote workforces is to track employees’ productivity in relation to one another. If employees doing the same tasks have significant discrepancies in their work output, this should raise an alarm for employers that time theft may be occurring.

How to Eliminate Time Theft

Thankfully, certain technological advancements have also been created to help combat time theft. For example, biometrical technologies are being used to help stave off this fraudulent employee activity. According to the Department of Homeland Security, biometrics are “unique physical characteristics, such as fingerprints, that can be used for automated recognition.” Biometric time clocks, equipped with fingerprint and facial recognition technology, help reduce time theft and eliminate buddy punching for good.

There is also activity-based time and attendance software available that can help keep remote workforces accountable by basing clock-ins and clock-outs on actual computer activity. Further, employers can track time based on tasks and projects and monitor website and app use. This allows employers insight into how long it takes employees to complete certain tasks, as well as how much time they may spend on non-work-related websites.

As remote work becomes increasingly commonplace in today’s world, it is important that employers have the information and technologies necessary to properly monitor and supervise their workforces. Thankfully, new software and products are being developed every day to help employers regain necessary levels of oversight and control.

Wage theft is a nefarious practice that some businesses engage in to take advantage of their workers. Learn how to protect yourself and recover your money if you've been victimized.

Wage theft is a nefarious practice that some businesses engage in to take advantage of their workers. Learn how to protect yourself and recover your money if you've been victimized.

What Is Wage Theft?

Wage theft occurs when an employee does not receive a benefit from their employer that they are legally entitled to. Examples of wage theft include inaccurate pay, no overtime pay, not giving required meal and rest breaks, failing to provide contractually agreed-upon benefits, taking employee tips, and more.

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Sometimes wage theft occurs innocently, due to uninformed employers making mistakes. Much wage theft, however, occurs purposefully and can sometimes be difficult for employees to identify.

Recent, High-Profile Wage Theft Cases

  • A Burger King franchise in San Francisco, CA received a citation for $1.9 million from the state labor commission in 2020. Golden Gate Restaurant Group, which operated five different Burger King locations in San Francisco, has been accused of failing to pay minimum wages and overtime, and not giving their employees state-mandated breaks.
  • In 2019 and 2020, UPS employees in New York filed a case against their employer with the aid of Teamsters Local 804, which represents employees at 14 different locations. The corporation has officially settled for $1.1 million, plus attorney fees, for diverting money from 6,000 employees' checks to the United Way—in the form of $1 to $2 deductions per pay period—as part of charitable deductions in annual fundraisers.
  • In August 2021, employees at a Sacramento, CA Jack in the Box went on strike, calling for $184,000 in backpay. They claim the franchise owner has manipulated time records, forced overtime shifts without commiserate pay, and denied necessary breaks.

What to Do If You Are a Victim of Wage Theft

  • Talk directly with your employer. If they have made an honest mistake, they will likely try to resolve the issue and make amends promptly.
  • Begin by speaking with your direct manager. If they cannot resolve the issue, speak directly with human resources and/or another manager.
  • Keep a record of times when you believe wage theft has occurred and try to record communication about these events in writing, be it via email or text. Save any relevant documentation such as pay stubs, time sheets, and receipts.
  • If you have asked multiple managers and human resources, but nothing is getting resolved, it's probably time to speak to an authority outside of your company.

File a Complaint With the Labor Department

Contact the Department of Labor’s Wage and Hour Division (WHD) at 1-866-4USWAGE (1-866-487-9243) Monday through Friday, from 8 a.m. to 8 p.m. Eastern time. You can file your complaint against a company while still employed or within two years of leaving.

When preparing to file a claim, gather as much relevant information as you can. Give your employer's name, address, corporate headquarters, contact information, your manager's information, and all the documentation you've saved related to the alleged wage theft.

The WHD will not reveal your information or the details of your complaint when it opens an investigation. This will only happen if the complaint is pursued, and then only with your permission. Your employer cannot legally fire or reprimand you for filing a complaint against them with the WHD. Sometimes, an employer may attempt to fire you for an unrelated reason, which is another reason why keeping all documentation and communication records is vital.

You can also file a complaint with your state's department of labor. Your state may investigate the claim more quickly, and sometimes your state may have stricter labor laws than the federal government.

Top Five State Labor Departments

The following five states were rated by Oxfam as having the best wage policies and worker protection in the United States:

  1. California
  2. District of Columbia
  3. New York
  4. Washington
  5. Oregon

Sources and Further Reading

Advantages of Agile Work Strategies For Companies.” Global Workplace Analytics, https://globalworkplaceanalytics.com/resources/costs-benefits. Accessed 8 May 2022.

Best and Worst States to Work in America 2020.” Oxfam, https://www.oxfamamerica.org/explore/countries/united-states/poverty-in-the-us/best-and-worst-states-work-america-2020/. Accessed 8 May 2022.

Biometrics.” Department of Homeland Security, 14 Dec. 2021, https://www.dhs.gov/biometrics. Accessed 8 May 2022.

CEOs: Post-Covid changes are permanent and there are more to come.” PricewaterhouseCoopers, 8 Nov. 2020, https://www.pwc.com/gx/en/news-room/press-releases/2020/ceo-survey-covid-update.html. Accessed 8 May 2022.

Petrovic, Ivan. “What Is Time Theft? (and How to Put a Stop to It).” Insightful, 8 Dec. 2020, https://www.insightful.io/blog/time-theft-guide. Accessed 8 May 2022.

Rowan, Lisa. “How To Spot Wage Theft And What To Do If It Happens To You.” Forbes, 2 Feb. 2022, https://www.forbes.com/advisor/personal-finance/wage-theft-what-to-do/. Accessed 8 May 2022.

Wage Theft Is a Crime. The California Department of Industrial Relations, https://wagetheftisacrime.com/. Accessed 8 May 2022.

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