What Is Time Card Fraud and How to Combat It?

Time card fraud, also known as timesheet fraud, is a serious problem that can have significant consequences for companies. Not only can it lead to financial losses, but it can also damage the integrity of the organization and erode trust among employees. It is important for companies to have policies in place to detect and prevent time card fraud, and to be aware of the potential consequences of this type of misconduct. 

In this article, we will delve into the topic of time card fraud, examining its implications and consequences, as well as addressing questions such as, is stealing time at work a crime and can you go to jail for falsifying a timecard.

What is time card fraud?

Falsification of time card and employee cheating time clock are forms of time theft, where an employee alters their time card or manipulates the time clock to show they worked morehours than they actually did. This results in them receiving payment for hours they did not work, which is a violation of rules and laws against time and attendance fraud.

Is time theft illegal? Crucial theft of time laws you should know

Is time card fraud a felony? Time theft, often referred to as time card fraud, is not a specific crime listed in federal laws, meaning there is no specific theft of time law. However, it can fall under various criminal statutes such as 18 U.S.C. § 641 and 18 U.S.C. § 1343. Time theft consequences can be severe, as it is considered a form of embezzlement or fraud.

• Under 18 U.S.C. § 641, a conviction requires the government to prove that the accused 1) intentionally, 2) embezzled, stole, or converted 3) a record, voucher, money, or something of value, 4) that the government owned or was having made under contract.

• Wire Fraud, which is under 18 U.S.C. § 1343,requires the government to prove 1) a scheme or artifice to defraud or obtain property by means of false or fraudulent pretenses, representations or promises, 2) an intent to defraud, and 3) use of interstate wire or radio communications to execute the scheme.

While these are the most common statutes used for time theft prosecution, there may be other federal statutes that apply in specific cases. Regardless, it is important to note that time theft is a serious offense that can result in severe consequences such as a time card fraud-investigation.

5 most common forms of time card manipulation

1. Buddy Punching 

Buddy punching, also known as "punch card fraud," is a form of time card fraud felony that is a prevalent issue in companies that rely on machine-stamped time cards. This practice occurs when an employee enlists the assistance of a colleague to punch their time card for them, in instances where they are running late. This behavior can go unnoticed and can result in significant financial loss for the company.

2. Inflating work hours 

Inflating work hours is another common form of time card fraud. With paper-based time recording systems, it is relatively easy for employees to falsify their arrival and departure times. This can occur when employees record that they started working at an earlier time as opposed to when they actually started, or by recording that they left work at a later time than they actually did. Such practices can result in the company paying employees for hours they did not work.

3. Dishonest data entry

Unscrupulous data entry can also result in inaccuracies in attendance data and payroll. If attendance data has to be retyped from time sheets or time cards into a payroll system, a less-than-principled typist can easily change the numbers. In addition, handwritten time records are also prone to legibility issues, leading to errors in data entry.

4. Favoritism

Favoritism may also result in financial loss for the company. For example, if a project comes in that must be done in a hurry, an employee who is already into overtime may be given the task instead of one who has time to finish the job within their 40-hour workweek. This could result in the company paying overtime pay unnecessarily.

5. Human error

Human error, while not necessarily fraud, can also contribute to inaccuracies in attendance data and payroll. Some employees may not know how to fill out a time card or they may fill in time sheets at the end of their work period, which can result in inaccuracies as they may not accurately remember how long they took for lunch or other activities. This highlights the importance of real-time tracking of hours worked to ensure accurate data.

What to do when you catch your employee falsifying time cards?

When suspecting or identifying an employee falsifyng time cards, it is important to handle the situation sensitively and logically, while gathering all evidence to support the final decision made on the actions that are to be taken.

1. Be discrete

Practice discretion when addressing employee time theft by notifying the worker privately and avoiding discussing details with others:

• It is important to handle the situation discreetly and professionally, to prevent any embarrassment or damage to the employee's reputation.

• Notify the employee through a discrete method such as email or a private conversation, informing them that you would like to speak with them privately in your office.

• Avoid discussing the issue openly with anyone who it does not concern, this will also help to protect the company's reputation.

2. Ask general questions

Start the conversation with general questions about the employee's daily routine to provide context for the issue:

• Before getting into the specifics of the issue, it is important to take a minute to lead into the conversation.

• Ask relevant but leading questions about the employee's typical daily routine to provide context to the issue and make it easier to transition the conversation into a discussion on the issue at hand.

• This will also help to create an honest and open conversation, and reduce the chances of the employee appearing guilty even if they are not.

3. Reinstate company policy

Ensure the employee understands company attendance policies and ask for their explanation of any discrepancies in their time card data:

• It is important to have written policies in place for moments like these.

• Before getting into the specifics of the issue, confirm that the employee understands the company's attendance policies.

• deally, you should have their signature on file, either with you or with Human Resources, showing that they read and understood the employment agreement at the time that they were hired.

4. Ask specific questions

Ask for their explanation of any discrepancies in their time card data, and if they feel that falsifying time card data is acceptable for hourly employees. Consider their explanation and take appropriate disciplinary action in accordance with company policy:

• Try to keep an open mind when it comes to the confrontation.

• Consider any possible mix-ups or honest mistakes that may have occurred.

• Give your employee a chance to explain themselves before you determine a course of action.

• After gathering the facts, take disciplinary action in accordance with company policy and decide whether a time card fraud investigation is reasonable.

• If you don’t have any systems in place, it’s important to ensure that the disciplinary action that you take is commensurate the level of fraud they have committed.

5. Carry out disciplinary actions

Send a clear message that time fraud will not be tolerated and is a serious concern for the company:

• Falsifying time card data is a serious concern for companies today, and one that, in extreme cases, can even be considered a form of larceny.

• It is important to ensure that you send the message to your team that you take time fraud seriously, and that the company will impose a penalty for falsifying time sheets – no matter how insignificant it may seem.

• This will set the standard for other employees as well and prevent similar incidents from happening in the future.

Sample write up for stealing company time

The sample letter can be used as a formal warning to an employee who is suspected of committing time card fraud. The letter would inform the employee that they are being issued a written warning for time theft and that failure to correct their behavior could result in further disciplinary action.

Dear [Employee],

We have recently discovered discrepancies between the hours reported on your time card and the hours recorded through our GPS tracking system. This has led us to suspect that you may have committed time card fraud. As a reminder, all employees are expected to accurately record their hours worked and any falsification of time cards is a serious violation of company policy. The consequences for committing time card fraud can include disciplinary action up to and including termination of employment. We urge you to take responsibility for time card inaccuracies and to correct them immediately.

We will be conducting an investigation and will keep you informed of the outcome.

If you have any questions or concerns, please don't hesitate to speak with your supervisor or HR representative. 

Sincerely,

[Your Name] - Human Resources

 Can you fire an employee for time theft?

Yes, an employee can be terminated for committing time card fraud, also known as time card fraud termination. It is a violation of company policy and can be considered theft. However, the company should have clear policies and procedures in place and follow due process before taking such action.

How to combat time fraud at work in 5 simple steps

1. Have written policies in place:

• Develop clear and concise policies outlining the company's expectations for timekeeping, and the time clock fraud consequences for violating these policies.

• Make sure that these policies are easily accessible to all employees and that they understand the expectations and consequences.

• Examples of policies include expectations for timekeeping, procedures for reporting time, and disciplinary action for violations.

2. Make sure employees understand the time card fraud policy and the consequences:

• Ensure that employees have read and understood the policies by having them sign a document or agreement.

• Provide regular training or reminders to employees about the policies and expectations.

• Make sure that employees are aware of the consequences for violating the policies, such as written or verbal warnings, suspension, or termination.

3. Use attendance software:

• Implement an attendance tracking system that automatically records and tracks employee time, such as a time clock, biometric scanner, or mobile app.

• This can help to prevent and detect time fraud, as it provides accurate and objective data about employee attendance.

• Monitor the data regularly to identify any discrepancies or patterns that may indicate fraud.

4. Regularly review and audit time records:

• Review and audit employee time records regularly to detect any discrepancies or irregularities.

• Compare employee time records to other data sources, such as payroll records, to ensure accuracy.

• Take appropriate action if any discrepancies or irregularities are found.

5. Communicate and enforce the policies:

• Communicate the policies and expectations to employees regularly and enforce them consistently.

• Encourage employees to report any suspected time fraud.

• Take appropriate disciplinary action when necessary and make sure that employees understand what constitutes time card fraud punishment.

Use time card software and avoid time card fraud

Using time card software is an effective way to prevent and detect time card fraud in the workplace. The software provides accurate and objective data about employee attendance, making it easy for managers to monitor and review employee time records. It also automates the process of tracking employee time, saving managers time and effort. 

Additionally, the use of a time card app allows employees to clock in and out digitally, making the process more efficient and convenient. By using a time card software, companies can ensure that they have accurate and reliable data, which can help to protect the company's bottom line and improve the overall productivity and performance of the company.

Key takeaways on employee time card fraud

In conclusion, employee time card fraud is a serious issue that can have significant financial and reputational consequences for companies. It is essential for organizations to have policies and procedures in place to detect and prevent time card fraud, such as implementing a reliable time card software.

 Additionally, when dealing with situations of time card fraud, it is crucial to approach the matter delicately and with a focus on finding the truth and determining the appropriate course of action. By staying vigilant and taking the necessary steps to prevent time card fraud, companies can safeguard their financial stability and promote a healthy and trustworthy work culture

FAQs

Is time theft a crime?

Time theft is not a criminal offense, but can be considered a form of employee dishonesty and result in disciplinary action. Employers may need to provide clear evidence of time sheet falsification and overpayment to sue for recovery of losses.

How do you prove timecard fraud?

Proving time card fraud typically involves a combination of surveillance techniques, including video and photographic evidence, stationary camera footage, recorded witness statements, financial and expense documents, GPS tracking, and time sheets or documented working-hour statements.

What to say to an employee who falsified their time card?

When confronting an employee who has falsified their time card, it is important to remain calm and professional. Clearly state the evidence and ask for their explanation, then inform them of the consequences of their actions and company's policy on time card fraud.

Can you go to jail for stealing time at work?

Time card fraud, can be considered theft and may be a criminal offense. Depending on the circumstances and the jurisdiction, an individual may face penalties including fines and/or jail time.

What is time card fraud punishment in California?

The commission of time card fraud in California is considered a criminal offense and is punishable by a maximum term of imprisonment of up to three years, as per the state laws.

What are the time theft laws in Michigan?

In Michigan, time theft laws fall under the purview of embezzlement and larceny, which are criminal offenses that can carry penalties such as fines, imprisonment, or both depending on the severity of the crime and the discretion of the court.

Where to report time card fraud?

Time card fraud should be reported to the appropriate person or department within the organization, such as the supervisor, human resources or the management team. If the fraud is severe, it should also be reported to the legal authorities and/or the company's legal counsel.