Avoiding Buddy Punching

Close to 75 percent of small businesses in the U.S. are affected by what is known as “time theft” each year. Put simply, time theft occurs when an employee accepts pay for time they didn’t actually work. Staying clocked in during breaks, not clocking out to run errands, or checking social media during work are all examples of time theft.

However, the biggest cause of employee time theft doesn’t happen solo. It’s called “buddy punching.”

So, what is buddy punching?

Buddy punching is when a coworker punches your timecard (aka clocks in) in your absence.

Say you’re running late for work and you won’t be able to clock in on time. You send a quick text to a coworker asking them to clock in for you. Or you need to duck out a few minutes early and don’t want the boss to know, and you ask your coworker to clock you out at the actual end of your shift. Maybe you can’t show up for your shift at all. So your buddy does you a favor and punches your timecard by clocking in/out for you—thus the name, buddy punching.

Life happens to all of us. However, a few minutes here and there of coworker buddy punching can certainly add up on your payroll. According to the American Payroll Association, three-fourths of employers lose money to buddy punching, with employees getting 4.5 hours worth of un-worked wages each week.

In the U.S., the federal minimum wage is $7.25 an hour. If your workers are part-time and earn minimum wage, 4.5 hours of buddy punching equals a little over $30 per worker in stolen wages each week. That may not sound like much, but over a year, the average cost of buddy punching could equal close to $1,560 per employee. Since the majority of small businesses employ less than 20 people, multiple employees using buddy punching could cost your payroll upwards of $30,000 annually.

No small business owner wants to give away $30,000 in stolen time. Here’s how you can prevent buddy punching and get a handle on your payroll.

How to prevent buddy punching at work

Create a zero tolerance policy

The cheapest and quickest solution to buddy punching is addressing it head-on. If you don’t already have a formal buddy punching policy in place, now’s the time to put one together. Make it clear that there’ll be zero tolerance for anyone touching another worker’s timecard or using your timekeeping system under a different name—for any reason.

You don’t need to call out specific employees, but announce the buddy punching policy to your team as a group so everyone’s aware. Then print out a copy of the new buddy punching policy and post it where all staff can see it. If you catch an employee buddy punching, it’ll be grounds for termination.

Use passwords

Simple, but effective. Using passwords for employee timekeeping can be a low-cost obstacle to buddy punching. Set specific standards for passwords—including long sequences, numbers, symbols, and capitalization—that make them harder to share or input by another coworker.

Next, educate. In a time when personal data hacks are becoming more common, make sure your employees understand that sharing their timekeeping login could also mean sharing their personal data. If they give a coworker their password, they might be giving them access to personal information.

Get technology on your side

Outside of creating new workplace policies, new tech also provides business owners and managers more resources to prevent buddy punching. Most options are available with little added effort or cost. Instead of using their phone to ask their buddy to clock in for them, built-in features on employees’ devices can keep them clocking in when and where they should be.

1. GPS tracking

With today’s timekeeping software and mobile GPS, you can track an employee’s location as well as their hours. Similar to other smartphone apps, many timekeeping solutions come with GPS tracking and/or geo-fencing, which GPS-stamps an employee’s location on their timesheet when they clock in or only allows them to clock in when they’re within a certain radius of your business.

Depending on the software, employees are typically able to clock in once their GPS is activated or their mobile. Some timekeeping apps even continue to log employees’ locations and send updates to you throughout their shifts. That means you’ll see where employees are when they clock in, and in the case of geo-fencing, make it impossible for them to buddy punch when they’re off the premises.

2. Geo-fencing

Geo-fencing relies on GPS, WiFi, and cellular data to create an invisible “barrier” around your business. You decide how close employees need to be to clock in, whether it’s the parking lot or the front door. Once the barrier is set, an employee can only clock in after their device signals that they’re inside the perimeter.

And like GPS tracking, different mobile timekeeping apps provide different geo-fencing options. Employees either have to be within a certain distance to manually clock in on the app, or they’re automatically clocked in once inside the barrier. They can’t clock in at all away from work or be clocked in by someone else, thus eliminating buddy punching.

3. Biometrics

Turns out, there’s nothing quite like the real thing. Just like thumbprints and facial recognition ensure it’s actually us using our smartphones, the same biometric requirements can be used to confirm it’s the right employee clocking in.

Only 3 percent of employees who commit time theft are able to do so using biometric clocks. Biometric timekeeping eliminates buddy punching by using a unique fingerprint, handprint, or even retina scan. It can be an (almost) foolproof way of keeping employees from abusing your timekeeping system.

However, biometric time clocks can come with higher upfront costs and legal responsibilities. Several states have passed laws protecting employees’ biometric information and stipulating how their information can be used. In some cases, you must have employees’ written consent to collect and store their biometric data. Additionally, there are legal procedures for destroying data once employees leave and their biometric data is no longer necessary. You might also be responsible for notifying employees in case of a hack or data breach.

4. Selfies/Location Pictures

The latest version of Agency Workforce Management includes an all-new Web Clock system designed for smartphones that can require the employee to take a selfie or a picture of the location.

When the employee clocks-in, they will be prompted to take a picture to verify attendance. This picture will then attach to the attendance record and can be used for review. If a picture is missed, managers will be notified and can look into the missing attendance log. Not only does this option confirm that buddy punching is not taking place, but it is also EVV and HIPAA compliant.

Which came first, buddy punching or poor attendance?

Remember: in many cases, buddy punching is a side effect of larger attendance issues, not the problem itself. While you’re already having these conversations with your team, take the opportunity to have a closer look at your overall attendance policy. There may be a deeper problem if employees are regularly taking advantage of the timekeeping system, punching in for each other, and not able to make it to work on time.

In addition to updating your policies and timekeeping system, try out a few of these other low-cost attendance tips:

  • Test drive the quarter-shift method
  • Enforce your attendance policy consistently
  • Hold return-to-work interviews after unscheduled absences
  • Put together an employee attendance performance plan
  • Provide rewards and recognition for good attendance

To learn more about biometric fingerprint readers and how they can help prevent buddy punching at your agency, download our fact sheet.

Provider Loses $920,004 in Timesheet Fraud, 41 Employees Arrested

Provider Loses $920,004 in Timesheet Fraud, 41 Employees Arrested

In January 2019, 41 individuals were charged in a nearly $1 million overtime kickback scheme that carried on for 21 months before external accountants spotted a potential massive payroll leak. Four supervisors were detained in prison on bail. 

The supervisors manually altered timesheets to inflate hours at group homes that were not worked, resulting in overtime payments to employees, who in return, provided kickbacks to the supervisors (including a used BMW). Individual employees received overpayments up to $22,117 during the period of the scam. 

The problems appear to result from lack of attention or ability to track hours worked vs. budget on a pay-period-to-pay-period basis by group home or other cost center and the percentage of edits.

The provider was using a general purpose time and attendance system from its payroll provider. Typically these systems do not provide the controls and ease of auditing features Agency Workforce Management provides to agencies. 

For more information on key metrics providers should check download this eBook, 9 Operational Metrics Agencies Should Monitor.

Time Theft: An Agency’s Secret Payroll Expense

When most people hear about company theft, they picture an employee smuggling monitors home or padding expense reports. Most people do not think about the often subtle act of time theft. Perpetrators may consider it a harmless way to maximize time off the clock, but it can severely hurt an organization in the long run.

What is Time Theft?

An employee commits time theft by accepting pay for time not worked. They can do this either by working the payroll rounding rules or by fudging timesheets. For example, if Elise is paid in 15-minute increments, she could clock in 7 minutes late and clock out 7 minutes early without receiving a penalty. Employees who fill out paper timesheets have even more opportunities to record false hours.

A little stolen time, which is not a big deal, turns into a big deal over time. If Elise continues her habit of stealing 7 minutes on both ends of the day for 5 days, she will have over an hour of stolen time. In the course of a year (assuming she works 5 days a week), that adds up to about 60 hours. With a $15/hour pay rate, the total value of her stolen time will hit approximately $900. If Elise is not the only employee to do this – if perhaps 30 employees do the same thing – the stolen time value skyrockets to $27,000.

Wondering if you need to worry about time theft in your organization? Well, time theft is more widespread than you may think. The American Society of Employers estimates 20% of every dollar earned by a US company is lost to employee time theft. Furthermore, the American Payroll Association says 75% of companies lose money from buddy punching, the most widespread form of time theft.

Factors that Encourage Time Theft

Agencies can inadvertently encourage time theft in several ways. These three factors are not the only causes of time theft, but they are the most prevalent.

Paper timesheets

Paper timesheets provide no security. It is incredibly easy for employees to write fraudulent times. Even if they do not intentionally steal time, they may not realize how much they round and how quickly it adds up.

Poor employee engagement

Unengaged employees are not interested in their work or the good of the company. If presented with the opportunity to work less without suffering wage loss, their disinterest in the company may fuel their temptation to take the opportunity.

Poor scheduling 

If an employee is overworked, has too little time between shifts to take a proper break, or is scheduled when unavailable, the employee is more likely to show up late for work or take extended breaks. This type of time theft is not always malicious – overtired employees may just have a hard time staying on schedule.

How to Prevent Time Theft

If you realize that your agency enables time theft, you can take several simple steps to reverse the error.

Biometrics

Biometric devices, such as fingerprint readers, eliminate all kinds of fraud. Buddy punching is impossible,  unless someone has detachable fingers, and so is lying since biometrics record the exact punch time. Fingerprint readers can also operate without an internet connection, so employees cannot make excuses about poor connectivity for missing an attendance record.

Management alerts

Automated alerts help managers detect time theft at the earliest signs. An effective time and attendance solution will notify managers when an employee clocks in late, clocks out early, or takes too long of a break. Since a few of these instances are permissible, an effective solution will also run reports on attendance records over time so managers can see whether certain employees have more offenses than others.

Engagement efforts

Re-engaging disinterested employees will do wonders for time and attendance compliance. If you suspect time theft in your agency, provide contexts to evaluate employee engagement. Maybe your employees don’t understand the larger purpose of their work, so they are looking for ways to get out early. Or maybe they don’t have enough paid time off, so they feel burnt out. The results of an employee engagement survey might reveal the underlying reasons for time theft at your agency.

Effective scheduling

schedules

A scheduling solution should have more functionality than pen and paper. It should filter available employees by availability, preferences, and hours so managers don’t overload one person while another begs for more work. Good scheduling software will also ensure employees have enough break time between shifts and sufficient travel time between locations.

Conclusion

Time theft is a nearly-invisible cost on your agency’s payroll that can hinder organizational growth and employee morale. But solutions do exist to help your agency spot time theft and stop it at the source. A productivity increase of 20% is worth the effort!

Contact info@mitcsoftware.com for more information on VoIP Telephone Timekeeping.

MITC Now Includes VoIP Telephone Timekeeping

Agency Workforce Management is pleased to announce we now offer VoIP telephone timekeeping as well as analog telephone timekeeping and Web Clock! VoIP (Voice over IP) enables you to use a less expensive broadband Internet connection instead of using analog telephone lines. VoIP is available with MITC Cloud or customer-hosted solutions.

Benefits of Using VoIP for Telephone Timekeeping

  • Eliminate costs of multiple analog phone lines
  • No need to use digital to analog converters
  • Automatically restarts in the event of power outage
  • No busy signals
  • No need to buy lines for “busy” periods
  • Greater stability
  • No lines down/bringing lines up
  • No need for dedicated server
  • Dialogic Voice Processor
  • Reduced costs if using MITC Cloud
  • Per employee pricing: only pay for what you use

Agency Workforce Management will continue to support analog/dialogic telephone timekeeping, but you’ll always have the choice to switch to VoIP in the future.

Contact info@mitcsoftware.com for more information on VoIP Telephone Timekeeping.