Time theft is common among employees in the workplace and comes in many forms, most of which can be difficult to catch. One of the most common types of time theft, called “buddy punching,” occurs when one worker punches the clock on behalf of a late or missing co-worker. Most managers agree that dealing with attendance problems is hard enough but can be even harder with dishonest employees. With 3 out of 4 companies experiencing time theft from buddy punching, the practice is a serious problem facing most businesses at one time or another leading to poor productivity and lost profits.
What is buddy punching?
Buddy punching is the process of an employee recording a timestamp for another worker who is not present. This typically happens when the employee is running late or when an employee wants to accrue extra hours for overtime. For example, an employee might send a short text message to another employee (their “buddy” who is already at work) asking to be clocked in because he does not want to be marked tardy. Regardless of the reason, buddy punching is something that will have a negative effect on your business, and not just on your bottom line. Often other employees are aware of buddy punching and are forced by peer pressure to become complicit which can lead to morale and other problems.
What does it do to my business?
Your employees may not realize that adding fake time to their timesheets will make a big difference to your profitability, but depending on the size of your company, it could make payroll much more expensive than expected. According to the American Payroll Association (APA), time theft costs businesses 1.5 to 5 percent of gross payroll, amounting to hundreds of billions of dollars every year. Conducting surveys, they found that employees were stealing an average of 4.5 hours each week, equivalent to an extra six-weeks of paid vacation per year.
Let’s do the math
Imagine an employee adding an average of 10 extra minutes each day for an entire year.
- 10 minutes x 5 days = 50 extra minutes of time each week.
- 50 minutes x 52 weeks = 2600 minutes, or more than 43 hours a year.
Now let’s assume that this employee makes $15/hour.
- $15/hr x 43 extra hours each year= $645.
If you had 10 employees, you’d be looking at an extra annual expense of $6500 or so before payroll taxes.
How can I prevent buddy punching?
There are many things you can do to stop buddy punching, most of which are low or zero-budget items that can be started right away. Here are a few of them:
Capture punches in real-time
One of the easiest ways to fall prey to buddy punching is to allow employees to manually fill in their time sheets instead of punching the clock. When time stamps are handwritten you lose accountability. It’s an easy way for employees to falsify records.
Stop estimating time for payroll
Many companies estimate work time in order to close the payroll period before the period ends. For example, suppose you wanted to pay employees on the 15th of the month for the pay period of the 1st through the 15th. You would need to estimate their time worked for the last few days of the period because your payroll company requires 2 days for processing. You would need to send your payroll hours in for processing on the 13th, with estimated hours for the 14th and 15th. Now imagine that your employee is late for work on one or both of the days for which you estimated hours. In this example, your are effectively the “buddy puncher” because you would be paying your employees for time that was not worked.
Update your company policy
Updating your time clock system is the best way to prevent buddy punching, but having a written zero tolerance policy in place is also a must. Most employees don’t realize that buddy punching is the same as stealing. When it comes to severity and consequences, spelling things out in a formal policy is a great way to discourage the practice. Document your policy and go over it with your employees. Then make sure it’s posted in a central place.
Update your time keeping system
A service like Timesheets.com has all the tools that you needs to track employee time with built-in features that can curb buddy punching. A web based time keeping service will
- Make employees use a password to punch the clock
- Allow employers to set punch locations or track GPS
- Take a photo of the employee at the time of each punch
- Make employees to provide a reason for any requests
- Allow employees to electronically sign their time sheets
- Keep an audit trail for every punch
- Control hours an employee is allowed to punch in
These and other features will save your sanity.
Return on Investment
Let’s face it: Paying for a new time tracking system means cutting a check to a new vendor that you didn’t have to cut last month. Is it worth it? The answer is yes, and it doesn’t take a lot of math to understand why. In the example above, 10 employees padding an average of 10 extra minutes per day would cost you $6500 per year (more when you include payroll taxes). But tracking those same 10 people for a year with Timesheets.com costs less than $500. In the example above, $15 per hour was used as the average wage rate. If you pay more than that, you will likewise save more.