The Increasing Problem of Timecard Fraud

The old saying that time is money couldn’t be more true when it comes to dealing with timecard fraud. Employees committing this type of fraud are literally stealing time and money from companies.

From claiming false overtime to being consistently late, all those extra minutes add up over the course of a year. Companies can lose thousands from a single employee. While most tend to be honest, it hurts the company and everyone else when a few employees take advantage of the system.

Types Of Timecard Fraud

The reason it’s difficult to catch up with employees committing timecard fraud is it’s not always obvious. In fact, it could be as simple as buddy punching. An employee who is always late asks an employee to clock in for them. This is especially true for traditional punch clocks. However, they can also pass their ID to another employee or give them their username and password to log in via a computer system. It may only be 15 minutes a day, but you’re losing 75 minutes a week or five hours a month for that one employee.

Buddy punching is a common type of timecard fraud, but far from the only one. Some of the other types include:

· Manual data entry changes – While honest mistakes do happen when manually keying in employee times, some employees may ask the person in charge of entering times into the system to fudge the numbers to avoid being caught coming in late or leaving early or ask them to inflate numbers to get paid for overtime.

· Honor system fraud – With an honor system, employees write down their times each day and send it in to their manager at the end of the week or month. If managers aren’t paying attention, employees can easily edit their times to earn more money.

· Favoritism – When managers and employees play favorites, timecard fraud is always a possibility. For instance, one employee may constantly be given overtime while another is asked to leave early. Your business is suddenly paying overtime when another employee had plenty of time available to take on a task.

· Fraudulent billing – Employees within a company might not be the only ones committing timecard fraud. Contractors and third-parties may bill for excess time, which is difficult to disprove.

Spotting Timecard Fraud

Diligence is required to spot timecard fraud. For instance, managers may secretly monitor one or two employees each week randomly and compare their timecards to the times they observed. Employees should also pay close attention to each other. For example, if someone comes in late consistently even though the company has a policy against this, the employee may report this to HR or through a whistleblower hotline.

For managers committing timecard fraud, encourage employees to report this. Surveillance systems and/or an investigative team can easily check this claim without the whistleblower being outed.

Timecard fraud costs companies thousands every year. Have a fraud prevention policy in place along with an effective reporting system to reduce this threat.