You’d notice if an employee stole vast quantities of office supplies. Or the company car. But time theft is different.
It’s pernicious because it can be just few minutes here and there; but multiplied over years and across an entire workforce, it can add up to a big chunk of an employer's payroll — on which it's getting zero ROI. And it's maddeningly difficult to pin down who’s responsible and what the actual damage is. Is there a solution that curbs the problem without making your employees feel like they’re in an Orwellian monitoring nightmare?
How time theft happens
Time theft can occur in a variety of ways, especially now that employees are both highly connected and often working away from a central location. A few minutes spent checking Facebook or shopping on Amazon can easily add up to hours of unproductive time. Or perhaps an employee who’s "working from home" is doing no such thing. And then there's the old-school problems, from innocent but lengthy water cooler chit-chat sessions to deliberate "buddy punching" at the time clock.
With remote work, it’s a lot harder to control what employees are doing and know whether they’re being productive, according to attorney Michael Puma, a partner at Morgan, Lewis & Bockius, LLP. And employees themselves may not fully grasp the extent of the problem.
"Employees don’t always understand why it’s such a big deal — a few minutes here or there, we’re human," said Gretchen Van Vlymen, vice president of HR at StratEx, an HR service company. "But on a larger scale, it adds up and costs [employers] money. It seems dramatic to call it 'theft,' but it really is because we’re paying you for every single minute."
Can technology help?
Puma said he's seen clients turn to advanced time-tracking tools. "You can see what employees are doing — are they reviewing files or sending emails?"
Deputy, a workforce management software platform, still sees employers using systems like paper time cards but many are using technology alone to reduce time theft. According to the company's VP of business development, Derek Jones, Deputy sees a payroll contraction of about 4% when its solutions are implemented "probably due to a reduction in buddy clocking."
StratEx works primarily with employers in the restaurant and hospitality industry that have large nonexempt hourly workforces and uses technology that takes a photo of each employee during his or her time punch. While there are occasionally some issues, Van Vlymen said, especially if employees are moving quickly, the system generally works well: "It’s hard to fake your face."
It's hard for employers to spot time theft without some kind of technology, Van Vlymen said, but systems can be imperfect. Biometrics, for example, can be expensive and lead to backups at the time clock. "There are also compliance issues relating to biometric punch-in/punch-out procedures," she said.
A potentially greater concern
Puma said while employee time theft can be a concern for employers, class actions for off-the-clock work should be a bigger worry. For a while, he said, plaintiffs' lawyers were focusing on employee misclassification. Now, they have "moved on to a second round," shifting to suits alleging that employees aren't being paid for all hours worked. "Every single day I see class and collective actions for unpaid overtime all around the country, and that may not even include similar state actions."
Everyone is under increased time pressures, he said, and supervisors are expected to keep overtime expenses down. Employers, therefore, should be careful that time is not being underreported. "You need a good policy that reported work hours must be accurate; you don’t want over- or under-reporting."
To achieve this, it's important to be clear on what "working" means, Puma said. For example, if an employee is at home planning for the day, emailing with a supervisor and going over action items, that time may need to be compensated. Work must be compensated even if it’s outside scheduled hours or not asked for or approved. "There may be a concurrent discipline issue," he said, "but that time must be paid."
And in working to curb time theft, it's important that employers not overreach in a way that encourages employees not to report all time worked, Puma advises. "If an employee stops working for 10 minutes to take a call from their mother, plan a vacation or smoke a cigarette, they are generally still on the clock, legally," he said. "Even for exempt employees, you can lose [their exemption] if you start taking partial-day deductions."
Puma said he recommends that employers maintain an accurate policy — with an acknowledgement signed every year — and should regularly audit, train and correct any problems. If you do this, he said, "it will be hard for a large group of employees to establish the commonality needed to file a class action."
Employers as educators
That seems to be the key, according to the experts. Employers must educate front-line employees and managers alike on both employee and employer time theft.
"On the employer side, it's not the business's intent to steal time, but there is a massive problem with training," Jones said. Many small business owners are not fully clear on the complex rules for paid breaks, premium time accrual of any applicable paid sick leave and so forth, he noted.
"The employer has to assume an educational role with employees and schedulers," Jones continued, adding that training should be explicit. Employees should be told, "You need to take your full break, you need to leave the worksite." The more transparent a business can be, he said, the better. "If you are investigated, you want to be able to prove you covered this stuff with employees. This staves off 99% of the issues employees might claim and prevents them from feeling baited by a plaintiff’s attorney, because they know the employer was open with them."
Additionally, Jones said, timekeeping systems that require affirmative attestations from employees — such as "Yes, I had my meal break" — give employees a feeling of control. "Without this, resentment builds up." HR should want employees to own their stake in this, to know that they play an active role in getting paid correctly.
And on the employee side, Van Vlymen said she recommends training employees on why employers track time and why time theft is such a problem. She also said employers should hold employees accountable for infractions like buddy punching and inappropriately long breaks; "it becomes a disciplinary issue," she said
Jones agreed. Accurate timekeeping "starts with the employee manual and new-hire training, then your timekeeping system," he said. "If you don’t have the first two, tech can’t solve for this."