Time Theft Take Down: Preventing Time Theft for the Hourly Workforce
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It’s been estimated that U.S. employers lose more than $400 billion in productivity every year from workforce time theft. However, the rise of powerful biometric and workforce management technology, reporting analytics, and HR policies, has allowed employers to start winning the fight. Michelle Lanter Smith and a panel of experts representing HR, operations, and technology discuss all things time theft in this 60-min. presentation, including: - Time theft overview: forms, costs, and why it matters - How to identify and address time theft - Solutions for time theft - Pros of Biometric Technology - Live audience Q&A Link to live webinar recording: http://offers.epaysystems.com/recorded-webinar-time-theft-take-down
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Time Theft Take Down: Preventing Time Theft for the Hourly Workforce
- 1. Time Theft Take Down Preventing Time Theft for the Hourly Workforce
- 2. 2 Michelle Lanter Smith Chief Marketing Officer Webinar Moderator: Panel Speakers: John Gaudiuso Sales Engineer Anna Pajor, SPHR Senior HR Consulting Partner Jay Kalantar, Chief Technology Officer
- 3. 3 Agenda • Introduction to Time Theft • Common Types, Statistics, and Why It Matters • Time Theft Prevention • Ways to Identify Time Theft and Operational Problem Sites • Time and Attendance Policies • Pros of Biometric Technology • Question and Answer Session
- 4. Who is EPAY Systems? CHICAGO BASED TECH COMPANY PROVIDER OF COMPLETELY UNIFIED, FULL SERVICE HCM SOLUTIONS SERVING HOURLY WORKFORCE ENVIRONMENTS INDUSTRY LEADER FREE PREMIUM CUSTOMER SUPPORT CUSTOMER RETENTION FOUNDED 2001 UNIQUELY FLEXIBLE CLOUD BASED TIME & LABOR MANAGEMENT TECHNOLOGY 24 HOURS/DAY 7 DAYS/WEEK, 365 DAYS/YEAR 170,000+ WORKSITES 97%
- 5. Time Theft WHAT IS IT? WHY DOES IT MATTER? WWW.EPAYSYSTEMS.COM 5
- 6. Time Theft: Employees getting paid for time in which they did not work 6 Time Theft Top 3 Forms of Time Theft 1. Long Breaks 2. Early/Late Arrivals 3. Buddy Punching
- 7. $98B Types of Time Theft Buddy punching Early/Late arrivals Long breaks These 3 forms of time theft account for 98 billion in losses for U.S. employers.
- 8. Types of Time Theft of your gross payroll Buddy Punching alone can account for 2.2%
- 9. WWW.EPAYSYSTEMS.COM 9 Other Forms of Time Theft Internet Time Theft Time Card FraudGhost EmployeesTime Rounding Excessive Personal TimeMessing Around
- 10. The Big Cost of Time Theft Time Theft was estimated to cost U.S. Companies BILLION $in lost productivity $400
- 11. 4 lost hours per week = 16 lost hours per month = 2 lost work days per month! 2 lost work days per month = 24 lost work days per year = nearly 5 weeks of lost work time per year . . . PER EMPLOYEE Do the Math
- 12. 12 Employee Time Theft Calculator A Free Manual Timekeeping Solution Isn’t Free. 250 Total Minutes per Day in Time Theft Total Hours per Day in Time Theft Average Daily Employee Time Theft in Dollars Weekly Human Time Theft Payroll Expense* Annual Human Time Theft Payroll Expense* Average Hourly Wage of Hourly Employee $19 $237$79 $12,3504.17 *APA States employees without an automated time system steal 6 minutes per day. We’ve based our calculation at just 1 minute.
- 13. 13 WAGE THEFT VS. TIME THEFT Employers stealing from employees Heavy compliance risk Employees stealing from employers Financial risk
- 14. Why Wage Theft Matters $18 billion Between civil lawsuits with state and federal cases OVER 5,000 cases have been brought against large employers generating in penalties and civil fines.
- 15. How does Wage Theft Happen? Meal or Rest Break Violations Off-the-clock work Employee Misclassification Overtime Violations Minimum Wage Violations
- 16. Monitor frequency and types of pay rate changes Auditing and tracking on administrative and manager actions Preventing Wage Theft Using dashboards and reports to track key compliance points and key performance indicators that look at system usage and operation versus just employee usage. Review system usage and make sure all employees are properly trained so that mistakes are less likely to happen
- 17. Create clear, specific time and attendance policies Create procedures for enforcing your policies Use time collection devices equipped with biometrics Utilize good reporting and analytic tools Battle Tactics 1. 2. 3. 4.
- 18. Communicate Oral and Written Time & Attendance Policies Use employee manual to outline consequences of: Tardiness Cell phone use Unauthorized breaks Have employees sign manual as acknowledgement of understanding Update policies as new challenges arise Clear Communication is Key
- 19. Establish time theft policies implicitly or within the contexts of other time and attendance rules. Attendance & Punctuality, Theft, Overtime, and Timekeeping Policies, standards of conduct, etc. Include examples of time theft and consequences to illustrate prohibited behaviors. Ex: “Nonexempt employees must accurately record the time they begin and end their work, as well as the beginning and ending time of each meal period. They should also record the beginning and ending time of any split shift or departure from work for personal reasons. Overtime work must always be approved before it is performed. Altering, falsifying, tampering with time records, or recording time on another employee’s time record may result in disciplinary action, up to and including termination of employment.” Time and Attendance Policies
- 20. Policies Examples General Inclusion: “Employees caught breaking any state or federal law, including employee theft of private or company property or falsifying timekeeping records will be terminated with no warning given. It is the nonexempt employees’ responsibility to sign their time records to certify the accuracy of all time recorded.” Standards of Conduct: “Accurately recording time worked is the responsibility of every nonexempt employee. Federal and state laws require <company> to keep an accurate record of time worked in order to calculate employee pay and benefits. Time worked is all time actually spent on the job performing assigned duties.” Timekeeping Policy: “Altering, falsifying, tampering with time records, or recording time on another employee’s time record may result in disciplinary action, up to and including termination of employment.”
- 21. Put firm procedures in place when time and attendance policies are not followed Consider implementing Employee Points system Automatically tally points for absences, late arrivals, early departures as compared to the schedule Can accumulate points positively or negatively Can customize based on your company’s policies Enforce Your Polices
- 22. Biometric Time Clocks Fingerprint recognition Facial recognition Mobile Time Tracking App Facial recognition Geo-tracking Workforce Analytics Get a quick way to identify punch exceptions across your sites including potential forms of time theft Utilize Time and Attendance Tools
- 23. A. Fingerprint biometrics B. Eye or retina biometrics C. Facial recognition biometrics D. We currently don’t use any form of biometrics What form of biometrics does your company currently use? Webinar Poll
- 26. 26 Questions?
- 27. Connect with Us on Social Media Visit Our Website www.EPAYsystems.com Take a two-minute tour Take the survey Request a demo of EPAY Systems
Editor's Notes
- Michelle: Welcome everyone, to today’s webinar: Time Theft Take Down. I am so excited to be speaking with you all this afternoon. We’re going to be taking a look at all the preventative measures modern technology and policies can afford us in the fight against time theft. I want to start our session today by introducing our experts panel.
- Michelle: - Self-introduction - The first expert joining today’s panel is John “God-i-you-so”. He’s been a pioneer in the high-tech industry for 10 years. Schooled and trained as an electrical engineer, John has advanced his career working in product development for some of the nation’s top thriving technical companies. His technical expertise spans a number of technologies from solar cells to RFID. He is also intimately familiar with ERP, implementing wide-scale ERP systems for large, regional tech firms. Time and labor management has been his new focus for the last two years, working closely with EPAY customers on HR and Payroll functions. Since mobile technologies have come into play, John has embraced its application within time and labor management in many new and exciting ways. Welcome, John. Michelle: Today, we also have with us, Anna Pajor. Anna is a Senior HR Consulting Partner here at EPAY Systems. She has a unique perspective from her work in business development, sales and account management AND brings over a decade of HR experience. Before joining EPAY- she directed and managed in-house human resources from small healthcare companies to larger firms. She has developed and streamlined HR processes for startup companies as for her clients through consulting services. Anna is regular speaker on HR series that we offer at EPAY Systems.com and is available to our clients for HR consulting. … Welcome, Anna! Anna: Thanks, Michelle. Happy to be here. Michelle: And last, but certainly not least, is Dr. Jay Kalantar– the Chief Technology Officer at EPAY Systems. Before becoming CTO, Jay served as our COO He has over 19 years of professional experience in Operations Management, Application Development and Deployment, Business and Product Development, and over 10 years of experience in the Building Service Management and Food Service Industries. Jay is responsible for defining EPAY’s technology roadmap to ensure that we are meeting the needs of our customers and ensuring our leadership in the workforce management space for the distributed labor industry. He also leads our highly complex time and labor implementations and integrations. We are thrilled to have you joining us, Jay. Jay: Thank you so much, Michelle.
- Michelle: Let’s take a moment to go over the agenda for the hour. An overview of time theft – including the different types of time theft, statistics associated with the frequency and cost of time theft, and a deeper dive into why this problem is still such a prevalent issue for most businesses today Preventing time theft: different ways to identify and track it, various HR policies to weaken it, and the benefits of using biometric technology We will also host a Q&A session before wrapping up the hour.
- But first– a little about EPAY. EPAY has been successful in the human capital management technology space since 2001. We are a Chicago-based business that’s always been about developing SaaS-based solutions for the employer with a hard-to-manage, hourly workforce. Not only are these employees hourly, they are often distributed across multiple worksite locations. Some of our customers’ employees are “on-the-go” or mobile, remote, OR working for multiple customers at multiple sites throughout the day or week. It’s a “hard to track” and “hard to manage” workplace– but it’s what we know and it’s the type of customers we love to serve! Since our inception, our priorities have always centered around doing things smarter, making our services affordable and going the extra mile for our customers. That’s why some of the nation’s largest building service contractors, staffing firms, venue managers, government entities and healthcare companies call us their valued partner. Today we deliver integrated human capital management technology that helps with everything from recruiting the employee to paying employees to retiring the employee. Our Time and Labor management technology at our human capital management system’s core. We deliver top-notch customer support – offering Premium 24/7 customer service for all. Our customers rave about our support and we’ve got the proof with a 97% customer retention rate.
- But without further ado, let us begin!
- Michelle QUESTION: So what is time theft? Anna, why don’t you start us off today by defining this term for us. Additional QUESTION: Why does time theft occur? Anna: Time theft is when an employee accepts pay for periods they weren’t actually working. Whether it’s altering time sheets, punching in for a friend, or being on the clock but not onsite- it’s stealing. Michelle: QUESTION: What types situations do you hear about the most frequently with your customers? Anna: A typical situation - when an employee arrives early and sits around before work- or who stays late or takes longer lunch breaks than allowed. It might seem like an innocent habit but it’s actually inflating time sheets and altering their pay significantly Story: Our customers regularly share these types of stories with us, as well as the impact they’ve had on their businesses. One employer had a situation where they had a time clock close to an entrance. One of the workers would park her car by the curb rush in and punch in, then go back out to park her car. Until they caught on, it cost them about 15 minutes every day. This doesn’t always seem that significant, but it actually costs a lot more than you might think long term.
- Michelle: Before we dig in, we need to stress the cost of this issue QUESTION: Jay, how much is time theft costing employers? Jay: Top three forms of time theft - long lunches or breaks, early or late arrivals to a worksite, and buddy-punching– associated costs are estimated at $98 billion Just a portion of the total costs associated with time theft as a whole Because of flawed time keeping, ineffective monitorization, and deliberate criminal actions violating company policy – High costs! QUESTION: Jay, what do you find people misunderstand about time theft? Jay: Harder to spot than people think It undermines companies’ function and optimization It directly affects: budgets, productivity, and morale Question: How does time theft affect productivity?
- Michelle: Acts of time theft vary greatly in both form and severity. One of the most flagrant forms is buddy punching – when one employee punches in for another employee. QUESTION: Jay, what do customers struggle with the most when it comes to buddy punching? Jay: Live Response Michelle: QUESTION: John, what sorts of examples of buddy punching have you encountered? John: Ex: Construction firm that used timesheets in the field - Two contractors were signing in for each other whenever they knew the foreman would be late. The foreman was too busy to analyze everybody’s handwriting, but when he realized the work wasn’t getting done on those particular days, he figured it out. Difficult to catch the acts themselves, but inflated payroll and lowered productivity are a lot harder to miss That lowered productivity can be your first major sign of a more significant time theft problem. Michelle: Buddy punching like the kind John just described can account for 2.2% of your entire gross payroll. QUESTION: How often do you think acts of time theft like buddy punching go under the radar? *open discussion* Michelle: Let’s talk through a few more examples.
- Michelle: Other major forms of time theft include: time rounding, ghost employees, internet time theft, time card fraud, and other improper usages of time QUESTION: Jay, what do we need to know about each of these categories? Jay: Time Rounding - similar to buddy punching - when an employee clocks in late or clocks out early from work, but rounds their time up or down Makes it seem as if they were there the full time May seem small because of the increments- sometimes just a few minutes- but over a period of weeks or months - it adds up QUESTION: Anna, can you tell us a little bit more about the federal policies addressing time rounding? Anna: US Code of Federal Regulations and FLSA Allow employers to round employee start and stop times to federally approved time rounding intervals Includes: the nearest 5-minute interval, nearest 1/10th of an hour, or 1/4th of an hour The US Code of Federal Regulations and FLSA specify that these calculations must be impartial That means that start and stop times must be rounded both up and down depending on the punch time so that rounding is never used to withhold pay from an employee Ensures clocking in a few minutes early or late doesn’t count towards early or late payroll calculations for your employees Prevents small amounts of overtime from adding up to count for daily or weekly overtime hours Ghost employees are another serious issue *employees that no longer work there are still being accounted for Creating an employee that doesn’t exist, usually by a manager. Occur when an employee actually comes to work, clocks in the for the day, but then leaves the work premises for the day before returning again to punch out Michelle: QUESTION: Have any of you encountered this with any of your customers? *open discussion* Jay: Second type of “ghost employee” theft - management creates fictitious employees, puts them on payroll, and signs them in every day to take the fake employees’ paychecks and cash them for themselves Considered a form of embezzlement as well as time theft Internet Time theft - one of the most common forms of time theft, and one of the subtlest Occurs when an employee is using the Internet in excess or for purposes that are unrelated to work Ex. include: checking personal emails, browsing topics unrelated to work, spending time on social media or social networking sites, or even playing games. Messing around and excessive personal time go hand in hand Any situation where your employees aren’t actively engaged in work-related tasks while on the clock Ex: employees talking in breakrooms, disappearing between tasks, etc. If it doesn’t correlate to the employee’s job function, it can probably wait until after hours MICHELLE Question: How about Time Card Fraud and some of these other bad habits? Do you see a lot of these? Anna: Time card fraud - manipulating hours or lying about number of hours worked in a day Cell phones = big culprit of internet time theft and excessive personal time Set limits for cell phone usage- or prohibit them during meetings, training, or when customers are present Ban them from being used in production areas or when operating machinery Define standards of behavior and address misconduct directly and efficiently Violates standard codes of policy in addition to those related directly related to time theft QUESTION: Which of these forms of time theft have your customers struggled with the most do you think? *open discussion*
- Michelle: QUESTION: John, what kind of impact does time theft have from a productivity standpoint? John: In total, time theft has been estimated to cost U.S. employers over $400 billion in lost productivity. Your bottom line really feels that cost, but it can be hard to imagine this result down the road without the right insight early on It only takes 10 and 15 minutes here and there– before your losses really start to add up. Michelle: QUESTION: What goes into that 4 billion dollars? Where do those losses stem from? John: Calculating lost productivity: employee’s annual salary and dividing it by the amount of time lost For labor, man-hours measures the inputs of a company's workers, while productivity signifies the outputs that labor produces. When productivity declines for any reason, it can lead to lower revenues and increased labor expenses.
- Michelle: Consider this: the average employee steals 4 hours and 5 minutes every week according to the American Payroll Association. It’s shocking but consistent with the semi-annual time theft survey conducted by Robert Half International which found that employers lose about 4.5 hours per week per employee. QUESTION: John, in your experience do you think this number is accurate or perhaps even lower? John: *live answer*
- Michelle: QUESTION: John, what does this look like over the course of a year? John: If you calculate that 4.5 hours per week per employee by the average hourly wage– that puts you at about $12,000 dollars a year. And that’s just calculating one minute of time theft a day for a company with 250 employees – where the average actually sits at 6 minutes of time theft per employee!
- Michelle: Now before we move on to how to identify and prevent time theft, I want to take a moment to talk about wage theft as well. QUESTION: What are the major differences between time theft and wage theft? Anna: Important distinction to make and an important compliance pitfall to avoid Time theft - incorrect use of time by employees- results in the stealing of paid hours from employers - significant financial risk and often difficult to catch Wage theft, on the other hand, is when employers are stealing time from employees – often not done deliberately! Study from 2018: more than 450 large firms each paid out $1 million dollars or more in wage theft settlements that year. According to U.S. Federal Courts’ records, approximately 100,000 federal lawsuits have been filed under the Fair Labor Standards Act since the year 2000, with the filings in state courts climbing even higher. Cases around unpaid overtime wages are flooding HR news stories lately so we’ve got to make you guys aware of these compliance risks!
- Michelle: There have been over 5,000 cases of wage theft reported against large firms- totaling over 18 billion in fines and penalties since the year 2000. And that’s not even counting the little guys or employers who required employees to resolve through arbitration agreements.
- Michelle: Now that you understand the cost involved, let’s look at the actual situations triggering these lawsuits. I’m going to turn this one over to Anna. Anna: Overtime Violations result from failure to pay non-exempt employees for time worked in excess of 40 hours per week Off-the-clock work incurs employers having donning and doffing periods where employees are getting ready for work. How the employer treats this time is critical and needs to be compliant with state and federal rulings Minimum wage violations – pay employees the wrong wage for the work they are performing Employee misclassification – whether an employee is exempt or non-exempt of the FLSA is critical in many of these wage theft cases
- Michelle: Question: How can employers monitor and prevent wage theft? Jay: Having a robust auditing system – knowing who made changes and what those changes were.
- Michelle: Now that we know how to avoid wage theft, let’s discuss how to prevent time theft. QUESTION: Anna, how do you combat time theft for these companies which have an hourly, distributed workforce? Anna: Start with a clear and specific time and attendance policy – you want your employees to know what is expected of them. Next, create procedures for enforcing your policies. Next you want to use biometric time collection devices so that you can really crack down on buddy punching. And finally, you need to have a good reporting structure and analytics tool.
- Michelle: QUESTION: How can employers communicate about time theft to a workforce that is often remote and disengaged from a larger company culture? Anna: Communicate oral and written time and attendance policies for them to refer to – make sure they know where to look! However, just writing your time and attendance policy in a handbook isn’t enough. New employees - have them read the handbook and sign it - fully acknowledging all the information Holds them personally accountable Use employee manual to outline consequences for: tardiness, cell phone use, and unauthorized breaks Ex: point systems, loss of shift, or even loss of employment Share the policy verbally with new employees Regular reminders and updates for all employees – consistent and CONSTANT – help reinforce company consciousness Update policies as new challenges arise
- Michelle: QUESTION: What are some different ways that employers can address time theft within their HR policies? Anna: Within context of other time and attendance-related policies OR as its own independent section within your company rules Can be housed under: Attendance and Punctuality Theft Overtime Timekeeping Policies Standards of Conduct Michelle: QUESTION: When constructing guidelines around time theft, what should companies include to cover their bases? Anna: Consequences – be as specific as you feel is necessary Example of this policy: “Nonexempt employees must accurately record the time they begin and end their work, as well as the beginning and end time of each meal period. They should also record the beginning and ending time of any split shift or departure from work for personal reasons. Overtime work must always be approved before it is performed. Altering, falsifying, tampering with time records, or recording time on another employee’s time record may result in disciplinary action, up to and including termination of employment.” QUESTION: How does a clear policy compare to the other tools we have to combat workforce time theft?
- Michelle: QUESTION: Where are some additional places where you can put time theft policies into place Anna: General Inclusion – loosely referencing the action(s) associated with time theft Ex: “Employees caught breaking any state or federal law, including employee theft of private or company property or falsifying timekeeping records will be terminated with no warning given. It is the nonexempt employees’ responsibility to sign their time records to certify the accuracy of all time recorded.” Standards of Conduct – acknowledging it as a baseline expectation of company policy and behavior Ex: “Accurately recording time worked is the responsibility of every nonexempt employee. Federal and state laws require <company> to keep an accurate record of time worked in order to calculate employee pay and benefits. Time worked is all time actually spent on the job performing assigned duties.” Explicit Timekeeping Policy – specifically addressing behavior that is definitively time theft Michelle: QUESTION: Of these three, which do you think is the most effective policy to use against time theft? All three?
- Michelle: Anna, how do you suggest you enforce these policies? Anna: Firm procedures – no exceptions Proactively reinforce - avoid having to react with consequences No favorites! Be consistent. Consider implementing employee point system Automatically tally points for absences, late arrivals, early departures as compared to the schedule Can accumulate points positively or negatively Can customize based on your company’s policies Michelle: QUESTION: What other types of policies may be necessary when actively trying to curb time theft? Anna: Be aware of Biometric Information Privacy Act (BIPA) Biometric technology and privacy law policies should be included if relevant
- Michelle: I would now like to turn things over to John as we discuss the technology acting as the major solution to this issue. QUESTION: John, what can be done about time theft? What do we use to stay informed on this sort of activity? John: Biometric Time Clocks Fingerprint recognition Facial recognition Mobile Time Tracking App Facial recognition Geo-tracking Michelle: QUESTION: What tools and graphs should we be looking at to track and monitor how big of a problem time theft is? John: Eliminate inaccurate time tracking and time theft with cloud-based time tracking solutions Synching attendance data with payroll data Increases accountability for hours worked to ensure accurate pay-ability Workforce Analytics Quick way to identify punch exceptions across your sites including potential forms of time theft Michelle:
- Michelle: poll
- Michelle: QUESTION: John, why should employers consider biometrics in their efforts against time theft? John: Biometric information includes: Retina/Iris Scans Fingerprints Palm prints or hand scans Voice Prints Facial Scans Can be more secure than a password: Biologically immutable Unique to the user Can’t forget Can’t change Hard to duplicate
- Wrap Up - Jay – Time theft happens for a lot of different reasons- sometimes they need money, sometimes they are upset with an employer, etc.
- (Michelle) We covered a lot of information today, so lets get to some questions. *Add canned questions if necessary
- (Michelle) That's all the time that we have for today, don't forget to fill out the survey after the webinar and connect with us on social media so that you can register for our next webinar!