The True Cost of Time Theft

Just like most moral or political issues, time theft among U.S. businesses generates strong opinions on both sides. Employers see lost productivity and decreased revenue, costing them billions in losses annually. From workers’ perspective, time theft robs them of deserved income and devalues their contributions. Whichever opinion you gravitate toward tends to depend on your role in the workplace.

As with so many of today’s business dilemmas, technology can offer the solution. Mobile applications, location-based capabilities and a host of other advancements can now take the place of active supervision and antiquated time cards. But how can an employer be certain that technological solutions will be accepted and embraced by workers? The answer rests in the fact that time theft creates a host of problems for both employers and employees. It’s in everyone’s best interest to solve the problem.

According to a June 2018 report from Good Jobs First and the Jobs With Justice Education Fund, many leading U.S. employers have “fattened their profits” by engaging in time theft practices. Similarly, the American Society of Employers estimates that 20 percent of every dollar earned by a U.S. company is lost to time theft. On the employee side, the American Payroll Association reports a whopping 75 percent of companies lose money from "buddy punching," the most common type of employee time theft. Other common forms include late starts, early finishes, extended breaks, unauthorized overtime and conducting personal activities at work.

If the direct economic costs of time theft aren’t enough to worry you, consider the ancillary costs. Employer time theft typically impacts the most vulnerable workers, affecting local economies when lower-wage employees have fewer dollars to spend. Time theft can lower the morale of an entire workforce when co-workers see their colleagues “getting away” with infractions. Decreased productivity, slower growth, greater turnover and increased customer dissatisfaction result. A more certain recipe for business stagnation is hard to imagine.

Where Do We Begin to Solve the Problem?

As business leaders, it’s inherent upon us to identify ways to discourage and decrease employee time theft, while ensuring that we're not contributing to the problem by engaging in unfair (and sometimes illegal) wage theft practices. Any solution must be both human behavior- and process-oriented.

In order to create a sustained, successful effort to reduce or eliminate time theft, a full cultural shift must occur. This means re-imagining the ways managers set schedules, how workers engage with employers (and each other), and how communication between both parties can become more accessible, more reliable and more empowering.

Technology will play a key role in creating the time theft-free workplace of the future. Today, nearly every modern worker is intimately comfortable with using technology to monitor or manage some aspect of their lives. People routinely use technology to make major purchases, monitor their health, interact with friends and schedule their appointments. There’s no reason this easy familiarity with technology can’t translate to the workplace.

For example, using a simple time and attendance app will accurately track time worked when your employees clock in and out (including breaks), and includes geo-tracking and photo facial detection settings to eliminate early clock-ins and buddy punching. Time sheets can then be instantly synced to a payroll provider to save on administration time and costs. In addition, employee scheduling software is available that can provide labor forecasting where you can integrate your point of sale historic sales data or enter your own parameters (e.g., employee availability, PTO, overtime stress profiles, training, and shift costs) to forecast the correct amount of labor needed (and by function) down to the minute. These tools create the most optimized schedule that meets your profit targets.

The opportunity to end wasteful time theft — and create improved conditions (and fewer losses) for everyone — is at hand.

Derek Jones is the vice president of enterprise solutions at Deputy, a workforce management software company.