“If 15 employees each do this three times a week, those seemingly harmless seven minutes translate into more than five hours of lost productivity every week, over 20 paid hours per month for work that was never performed,” Cheng explains.
Whether intentional or careless, false time records cost employers real money. Employers pay wages for unworked hours while also absorbing lost productivity. Worse, inaccurate timekeeping can expose a business to serious wage-and-hour violations, government audits, and costly litigation.
What Is Time Theft?
Time theft occurs when an employee is paid for time they did not actually work. It can be intentional—such as falsifying timecards—or unintentional, such as failing to record extended breaks accurately.
A 2025 industry report found that nearly 24% of U.S. workers admit to exaggerating or manipulating time records, with affected employees costing employers an average of 4.5 hours per week in paid but unworked time.
Seven Common Forms of Time Theft Employers Must Watch
As workforces become more complex—hybrid, remote, hourly, salaried, exempt, and non-exempt, time theft has become harder to detect. Below are seven of the most common and costly forms employers should monitor closely.
1. Buddy Punching (Clocking In for Others)
Employees clock in or out for coworkers to conceal late arrivals or early departures. A 2024 study published in the Journal of Human Resources & Leadership found that 75% of employers experience losses from buddy punching, averaging $1,560 per employee per year.
2. Unauthorized Breaks and Extended Lunches
Employees extend lunch breaks, take unscheduled rest periods, or frequently step away for personal matters. For example, a healthcare worker returning 10 minutes late from lunch, taking two extra 15-minute breaks, and engaging in casual conversations can cost an employer 45 minutes of lost work time in a single day.
3. Personal Device Distractions During Work Hours
Social media scrolling, online shopping, and personal calls during paid time all qualify as misuse of work hours. Spending just five minutes per hour on a phone adds up to 40 minutes of lost productivity per day, or more than three hours per week.
4. Early Departures and “Ghost Shifts”
Employees leave early but record later clock-out times, alter clock-in entries after arriving late, or more seriously, report shifts or on-call time they never worked. These practices distort payroll records and can violate wage-and-hour recordkeeping laws.
5. Inflated Time Entries
Rounding hours up to the nearest half-hour, claiming overtime not actually worked, or failing to record breaks may seem minor, but over time they create significant financial exposure, especially for small and mid-sized businesses.
6. False On-Call or Off-Site Work Claims
Because on-call and overtime work often occurs outside the office, some employees report events or tasks that never happened. Without proper oversight, these claims are difficult to verify and easy to abuse.
7. Abuse of Sick Leave or Paid Time Off (PTO)
Some employees misuse sick leave to attend personal events or vacations, or regularly extend personal errands into paid work hours. Over time, this behavior erodes company resources and workplace morale.
The Legal Minefield: Why Time Theft Is Also a Compliance Risk
“Beyond increased labor costs, time theft can trigger serious compliance failures and lawsuits,” Cheng warns.
Under the Fair Labor Standards Act (FLSA) and California wage-and-hour laws, employers are legally required to maintain accurate daily and weekly time records. Inaccurate or falsified records, especially if systemic, can lead to:
- Civil penalties and fines
- Government audits
- Back-wage liability
- Class and representative actions
Three Proven Ways to Detect Time Theft
“Standing next to a time clock all day is unrealistic,” Cheng notes. Fortunately, modern workforce-management tools offer effective solutions.
1. Timecard Exception Reports
Advanced payroll systems automatically compare schedules with clock-in and clock-out data, flagging late arrivals, early departures, missed shifts, and other anomalies before payroll is processed.
2. GPS and Geofencing Time Tracking
Mobile time-tracking apps can verify an employee’s location at the time of clock-in, eliminating buddy punching. Geofencing technology creates virtual boundaries around worksites so employees can only clock in when physically present.
3. Predictive Analytics and Pattern Detection
Systems equipped with predictive analytics analyze historical data to identify unusual timekeeping patterns, forecast expected hours, and flag discrepancies that may indicate error or fraud. These tools can also uncover workflow inefficiencies.
Prevention Is the Best Defense
“Detection is important, but prevention is even more effective,” says Cheng. Employers should take a multi-layered approach:
Clear Policies and Employee Education
Timekeeping rules should be clearly defined in employee handbooks, onboarding, and training. Policies should specifically address:
- Personal activities during work hours (including remote work)
- Extended or unauthorized breaks
- Rounding practices
- Early clock-ins or late clock-outs
- Non-work phone use
Automated Alerts and Real-Time Monitoring
Use workforce-management software with automatic alerts when time entries deviate from normal patterns, allowing intervention before issues escalate.
Regular Audits and Spot Checks
Even with automation, employers should conduct periodic internal audits of time and payroll records. Proactive internal reviews are far preferable to reacting to an external investigation.
Protecting Your Business Starts With Every Minute
Time theft is not a minor issue. Minute by minute, it erodes profitability, damages morale, and exposes businesses to legal risk.
As a law firm that represents both employers and employees, the Law Offices of Paul P. Cheng understands the importance of balance in workplace rights and obligations.
“A compliant workplace starts with precise systems and consistent enforcement,” Cheng explains. “When the rules are clear and fairly applied, both employers and employees win.”
If your business is struggling with timekeeping issues, wage-and-hour compliance, or labor disputes, contact the Law Offices of Paul P. Cheng today. We bring deep litigation experience and practical legal strategies to help businesses build compliant, efficient, and legally sound workplaces.
The Law Offices of Paul P. Cheng focus on business, employment, and labor law matters. We represent both employers and employees, offering balanced, strategic counsel.
Contact the Law Offices of Paul P. Cheng today: 626-356-8880 | info@pprclaw.com
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Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Every case involves unique facts. For guidance regarding your specific situation, please consult an attorney.