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Why Buddy Punching is No Friend to Employers

Why Buddy Punching is No Friend to Employers

The American Payroll Association (APA) estimates that 75 percent of employers suffer time theft losses from their employees, accounting for about 2.2 percent of gross payroll.

So how does someone steal time?

Time theft or time fraud occurs when an employer is paying an employee for work, but that employee is intentionally not available or unable to perform the designated tasks. I’ll clarify more in a minute, but first I want to make it clear that time theft is not excused paid absences such as vacation time or even unexcused absences where the employee is not receiving remuneration. Time theft happens when an employee is getting paid with an expectation that they are working when in reality they are not.

For example:

Joe wants to leave work early today because he feels he needs to get to the music store to pick up strings for his guitar. The store closes at 5:00 pm and is on the other side of the town. However, Joe’s shift ends at 5:30 pm. Joe really needs those strings for a gig tonight with his band “In Debt – No Talent.” Joe does not want to take time off as unpaid or vacation. Instead, he asks his buddy Ivan if he will swipe him out at the end of the shift. Joe had done this for Ivan and others before and they were never caught. Joe sneaks out the back door unnoticed by his supervisor. Ivan agrees. After all, he owes him.

Joe leaves at 3:30 pm.

Joe makes $22.75 an hour plus vacation pay. By sneaking out at 3:30 pm and yet getting paid for working until 5:30 pm, he has received $45.50 from his employer for work he did not perform.

Despite how it is seen by most, buddy punching is no different from stealing out of petty cash.

Buddy punching is just one-way time theft occurs; there are many others and employees have become quite creative with how they execute such behavior.

  • Arriving late/leaving early
  • Taking long lunches and extra meal breaks
  • Padding time sheets by adding time not worked or just guessing at hours worked
  • “Forgetting” to clock on/off
  • “Sleeping” on the clock

When evaluating time theft, I don’t usually consider employees who are engaging in personal activities at work such as browsing the internet or making personal calls as guilty of this behavior. While these employees are receiving payment for actions that are not work-related, in most cases it is not a deliberate action to steal pay from their employer. These actions may result in a drop in productivity as technically the employee is still available to do work. I see this as a supervision, or lack thereof, issue.

The immediate costs associated with time theft are the payroll costs. Take an organization with 2,500 hourly employees. On average the hourly wage is $22.65, and each employee works 261 days per year. If half engage in time theft of 15 minutes per day, it means approximately $1,847,390.60 is “stolen” from the employer every year.

Unfortunately for employers, the costs don’t stop there. There is a multitude of other expenses and issues that can arise when time theft is rife in an organization:

  • Reduced productivity as the shift or team is running short-staffed. This can lead to overtime to complete the required tasks.
  • Employee morale issues can arise as employees that don’t engage in time theft resent those that do – especially if they have to pick up their workload!
  • Not keeping time theft in check creates a culture of entitlement which can result in additional abuses by employees.

How employers can fight time theft

Additional supervision can control time theft, but the real key is the implementation of a modern workforce management (WFM) solution such as SumTotal Workforce Management. An automated solution tackles time theft at the point where it occurs – during clock on and off processes by employees. Start by upgrading from outdated punch card time clocks or even card swipe time clocks to biometric clocks. With biometric time clocks, an employee must physically clock on or off using a finger. As the time clock stores an image, not a fingerprint, of the employee’s finger, it becomes the only way to identify and validate an employee.

If your organization can not use biometric timeclocks, some vendors, including SumTotal, can enable a camera on the timeclocks to capture an image of the employee performing the clock on or off transaction. Audits can be used to validate that the employee who conducted this operation is the actual employee and not a “buddy punch.”

Beyond eliminating buddy punching, an automated WFM solution can also establish rules and then track employee clock on and off times to ensure that they are adhering to these and getting paid accordingly. This can also ensure the accurate capture of late arrivals, early departures and long lunches or breaks. Not only can the employee’s pay be reduced accordingly but also this behavior can be monitored and corrective actions taken by supervisors and HR.

Controlling time theft is just one benefit of a modern workforce management solution. The benefits go well beyond into reduced processing costs, accurate time collection for payroll, improved scheduling and visibility into gaps in the schedule, up to the minute accruals and comprehensive absence management, to name just a few.

Discover how SumTotal Workforce Management can help your business.

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