The Case for the Biometric Time Clock: Unmeasured Time Theft

Time theft is a growing problem, but many small business owners don’t realize how it can impact them. Learn more about time theft, including how employees get away with it and the impact on your business, plus explore how a biometric time clock can eliminate this issue for good.

The Problem: Time Theft

For one WorkforceHub customer, the issue of time theft came up at a conference dedicated to serving small business time and attendance needs. This individual manages a company with 15 employees but immediately waved off the concerns, citing trust in the employees. But what he didn’t realize was that one of the biggest factors in the company’s struggle to grow was its own employees cheating on their timecards.

While in attendance at this conference, the customer interacted with companies that were similar to his but across a variety of industries. These industries included hospitality, food service and retail, creating an eclectic mix with one shared factor: All have a large percentage of employees paid by the hour.

What is Time Theft?

Stealing time occurs when employees get paid for hours they didn’t work. In some cases, this problem can happen by mistake. An employee who manually calculates their hours for a pay period could make an error when adding. But more often than not, time theft occurs intentionally. When workplace morale is low, employees are more likely to be dishonest about their hours or commit time theft in other ways.

How Do Employees Commit Time Theft?

Members of a workforce may be committing time theft in a variety of ways.

Buddy punching

Depending on the timekeeping method used, employees may be able to fudge their own timecards, or they may rely on others to do it for them. Buddy punching is a serious issue – according to research by the American Payroll Association, buddy punching impacts a large portion of our nation’s small businesses. On average, a business loses approximately 4.5 hours per week, per employee.

When the customer did his own calculations with 15 employees, 11 of which are hourly, he realized that the business could be losing up to 36 hours, every week. Here’s the breakdown of the math:

With a conservative estimate that roughly eight of the 11 hourly employees were committing time theft, he multiplied that by the 4.5-hour weekly estimate, reaching 36 hours. As he considered that number, he came to the recognition that he could have hired a full-time employee for that amount of money, something the company couldn’t justify due to budget constraints.

Punching in early and/or late

In addition to the risks associated with buddy punching or dishonest timekeeping, employees can also get paid for extra time through early and late punches. Most managers recognize the concerns associated with these habits but few have actually crunched the numbers.

For the customer above, here’s what it could look like:

Eleven hourly employees, each with the opportunity to punch in or out eight times per day:

1. Clock in to start their day
2. Clock out for morning break
3. Clock in after morning break
4. Clock out for lunch
5. Clock in after lunch
6. Clock out for afternoon break
7. Clock in after afternoon break
8. Clock out at the end of the day

If an employee clocked in or out five minutes early or late, eight times per day, this could add 40 minutes to every workday. Doubling that to 10 minutes early or late takes the stolen time to nearly 1.5 hours per day.

Multiplying those 11 hourly employees by a conservative potential of 40 minutes per day and dividing the number by 60 (the number of minutes in an hour) produces a shocking total of 7.3 hours each day. Seven-point-three hours each day works out to 36.5 hours per week, or the rough equivalent of (another) full-time employee.

Although most workers won’t take advantage every time, a savvy employee will absolutely jump on the opportunity to get paid for a few extra minutes, padding their paycheck. The impact can cause more than just budgetary concerns – overtime implications may come into play, as well as FLSA, ACA, and other regulatory restrictions that could have you paying even more, or possibly losing floor time at the expense of running over budget.

Shirking responsibilities

Employees who aren’t working while on the clock are also stealing time, although this instance may be harder to prove. Company leaders may be able to identify employees who fail to perform their duties by reviewing productivity and project completion reports. However, taking longer breaks or spending long periods away from a workstation can also indicate that a team member is shirking their workload.

Unfortunately, this example of time theft wreaks havoc on overall company morale. Other employees often have to pick up the slack, leaving them feeling overworked and frustrated.

Using company resources for non-work needs

An employee who uses company resources, including their computer, mobile device, and/or internet access, for non-work purposes may also be committing time theft.

Working unauthorized overtime

Overtime is one of the biggest problems when it comes to managing a business labor budget, particularly when it’s unplanned. If employees work additional hours that weren’t accounted and planned for, your company’s bottom line will likely suffer the consequences.

Industry-Specific Impacts of Time Theft

With such an impact on a small business with 11 hourly employees, it’s no surprise that larger teams can drain a budget quickly. For example, in the hospitality industry, a single mid-sized hotel can easily employ over 50 employees working hourly to perform tasks like housekeeping, laundry, room service, and security.

If each hotel employee clocks in just five minutes early each day, that can result in a budget overreach of four hours per week, or roughly 208 hours per year. If those employees are earning $12 per hour, that results in approximately $2,496 in unaccounted time per year.

Whether your company has 10, 20, or even 50 employees, you could be dealing with significant unplanned overtime. The American Payroll Associate estimates this could account for as much as 30% of your bottom line. Money walking out the door means you’ll continue your struggle to grow and succeed. Talk about an eye-opener.

An Easy Fix: A Biometric Time Clock

So, what’s the answer to this concerning question? It’s simple: Biometric time clocks for small business. If you’re under the impression that biometrics are for the big guys (with their big budgets), now is the time to change that opinion. You can get a biometric clock, with features like finger scanners or even facial recognition technology, at a price that fits your budget.

What are biometric clocks?

When it comes to solving issues like buddy punching and skimming a few minutes here and there, biometric time clocks provide answers that make solving these problems nearly as easy as plugging in a toaster.

There are several varieties of biometric time clocks. Most require an employee to confirm their identity with a finger scan or handprint. But modern biometric time clocks can recognize faces, ensuring that only the employee can record their time upon arrival.

Biometric data technology is in wide usage, is easy to install and set up, and solves problems associated with time theft. Best of all, the clock can integrate with time and attendance software, ensuring data accuracy across the entire organization.

Keeping Time: How Biometrics Will Help Your Small Business

Combining a capable workforce management solution with a biometric time clock effectively renders buddy punching impossible. This solution alone can save your company the cost of one whole full-time employee. You can make up the cost of the system in just a few weeks while holding employees accountable for their time.

Some biometric time clocks can restrict early or late punches. Additionally, when used in conjunction with the right software, your company can eliminate this issue for good. Managers can set scheduling parameters on how early or late an employee can punch in. Any violations get flagged, resulting in warnings for employees and more awareness for managers. Implementing biometric time clocks can also help with missed punches through conditional logic.

Mobile Solutions for Remote Employees

Some companies have employees working in remote locations, like construction businesses and hospitality organizations, such as those that plan and attend events. A biometric time and attendance solution works for mobile timekeeping as well, ensuring that you can manage your employees without having to question their time and attendance records.

Final caveat: Since new state and local labor laws pop up all the time, all small business owners should definitely review the regulations that affect their specific location. Some states do not allow the capture and use of finger scans, while others (like California) restrict the sharing of biometric data with third parties. Check with your local government to make sure the biometric technology you choose is approved for use in your area.

Ready to take the next step and eliminate buddy punching for good? A personal identification time clock, paired with WorkforceHub, is the ideal solution for small businesses. You’ll be amazed at how much your business can save.

Updated June 28, 2024

Originally posted on September 11, 2021