Small Business Help

Employee Time Theft: How Much Is It Costing Your Business?

Myranda Mondry | September 27, 2016

By Rieva Lesonsky, CEO GrowBiz Media & 

With holiday retail sales projected to grow by just 1.3 percent this year, the holiday shopping season will be more competitive than ever for small retailers. When every penny counts, can you afford to lose money to employee time theft?
For the latest information on time theft, read our updated post:
What is Time Theft? Prevent Employee Time Theft in the Workplace.
Time theft—that is, employees getting paid for time they didn’t actually work—can happen in several ways. In addition to the obvious (actually lying on a written time sheet), these include:

Buddy punching:

Employees have a friend clock them in or out when they aren’t actually there. For instance, an employee running late might have a friend clock her in so she doesn’t get in trouble.

Abusing break time:

Employees take longer breaks or lunch times than allowed. This can easily happen if you don’t require clocking in and out for breaks.

Personal business:

Employees spend time on personal texts, phone calls, internet or social media use during work hours, effectively getting paid for personal activities.

Excessive socializing:

Retail employees who spend their time chatting are less efficient than they could be. For example, two workers might fold sweaters at the front of the store so they can keep talking, when one could easily do it just as quickly. You may not think of time theft as a major issue for your retail store, especially if you’re more focused on preventing employee theft or customer shoplifting. But time theft is more common than you think. In a recent study by Software Advice, one-fourth of workers admitted they exaggerate their time worked more than 75 percent of the time. Of those, 21 percent steal 30 to 60 minutes or more per shift. Even if your retail employees aren’t being quite that blatant about time theft, padding time by 5 or 10 minutes here and there can quickly add up. Worse, employees leaving early or clocking in late can leave your store short-handed at the most important time of year. How can you prevent time theft?

1. Explain the problem.

Many employees, especially in the retail industry where workers are often young part-timers, aren’t even aware that time theft is a “thing.” Explain what time theft is, why it hurts your business and how that affects all employees. For instance, if customers are getting poor service because the sales clerks are playing around on their smartphones, fewer customers will buy, which could eventually lead to layoffs.

2. Create a written time tracking policy.

Develop rules for employee time tracking that lays out specific steps workers should take, as well as consequences for not complying. You can look at the Society for Human Resources Management’s sample time tracking policy for ideas.

3. Institute checks and balances.

Have managers or supervisors review and approve all time records before submission. Question anything that looks suspicious. Employees will be less tempted to cheat if they know someone is double-checking on them and that they’ll be called on it.

4. Put technology to work for you.

The majority of small businesses still use paper time tracking systems. Unfortunately, those are the easiest type of system to defraud. Instead, implement time tracking software that makes it easy to set permissions and restrictions, then review and approve employee timesheets.By taking these four steps and showing your employees you are serious about stopping time theft, you’ll gain more focused employees and boost your store’s chances of success during the competitive holiday shopping season.
RievaRieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at, follow her on Google+  and, and visit her website,, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.
A little about Myranda Mondry

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