Time Theft: A Company's Secret Payroll Expense2018 MITC

Time Theft: A Contractor’s Hidden Payroll Expense

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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 company? 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 proliferous form of time theft.

Factors that Encourage Time Theft

Contractors 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 company 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 company, 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 company.

Effective scheduling

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

New Hires

Tips for Competing with Walmart for New Hires

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Walmart and other retailers or fast food outlets use aggressive marketing tactics to attract, hire, and retain employees. This makes them tough competition for employees, especially in a tight labor market. Businesses must compete with these industries in order to build and retain the best workforce they can.

One way to make your organization stand out among competing employers is to compile a checklist of advantages your company offers. Communicate these benefits to all prospective new hires through your job listings. Feel free to also share them with existing employees!

Here is a sample list you can use to market your company for new hires and existing employees:

  • The average weekly pay for an employee is ____
  • Minimum 40-hours a week
  • Overtime available
  • Any qualified employee can request extra hours online
  • Never miss a shift! We remind you by text of your next shift
  • 150% to 200% extra pay for working on any of the ___ holidays per year
  • Fixed schedule with the option to pick up more hours
  • View your schedule anytime, anywhere
  • See who you are working with
  • Earn paid time off
  • Receive unpaid time off with no penalties
  • Get 6-month reviews
  • Structured career path

Speed Up the Process with myApplicants

In times like this, we know that applicant tracking and onboarding are more important now than ever. That’s why MITC is pleased to announce the addition of myApplicants to Contractor Workforce Management!

myApplicants is a robust, web-based, end-to-end hiring solution complete with applicant tracking, pre-employment assessments, background checks, and drug screens. It even has the ability to push your new hire data right into MITC Time & Attendance with just a click.

To learn more, contact info@mitcsoftware.com or read this free fact sheet for more information on myApplicants.

Making Decisions at Your Company

Does Your Company Have a System for Making Decisions?

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An organization can miss wonderful opportunities if it struggles to make decisions. And yet, many businesses do not have the tools or policies to make decisions effectively.

A few influential business owners have surprising ways to foster a culture of healthy decision making. In an interview with The Wall Street Journal, the new CEO of Coca-Cola Co. said that he is hoping to “shake off a culture of cautiousness” within the company and encourage his team to “make mistakes.” Amazon founder Jeff Bezos once noted that when making decisions with his team, he relies on one philosophy: “disagree and commit.” This means that if the leadership team does not reach a consensus, it still makes a decision. Then, Bezos asks each member of the leadership team to make his or her objections known. After that, everyone commits to the chosen plan, whether they like it or not. This allows the organization to move ahead without consensus, and it allows everyone to have a voice.

Both of these leadership philosophies revolve around the idea that failure is a necessary piece of any business. Think about it: in a competitive market, sustainable businesses are always developing new services and diversifying revenue streams. However, not every new idea works — and that means that failure is an inevitable part of market-driven strategy. Therefore, businesses that embrace failure are more likely to foster a healthy atmosphere for decision-making.

Why businesses fail to make decisions

Some organizations fail to act in the face of new challenges or opportunities. This causes their market position to erode and their cash reserves to dwindle. They either fail to decide on a plan or they do not implement their plan in a timely manner. Why does this happen?

This is where it gets complicated. Often it is because the contractor doesn’t have the workforce management tools to accurately analyze the business’s posture and to manage new projects well.

  1. The CEO doesn’t have the right environmental or financial information to make market-oriented strategy decisions.
  2. The company does not understand either the degree of downside risk or the return-on-investment. Doing nothing can be more risky than embracing change.
  3. The organization is risk adverse because of past failures and will not approve a proposal with downside risk.
  4. The management team lacks the tools (metrics-based performance analysis, real-time project management control, and service reporting) to go from idea to service.

Tips for making decisions

Here are some rules of for effective decision making:

  • Don’t allow looming decisions to paralyze your team. Launching a new service line, agreeing to a value-based contract, investing in new technology, initiating a new merger or acquisition, creating a partnership — these are big decisions that require decisive action. Decide yes or decide no, but do not decide nothing. As Mr. Bezos said, that doesn’t mean everyone has to agree with every decision you make; but it does mean you need to actually make a decision.
  • Once you’ve made your decision, find a way to help your internal stakeholders embrace it. This includes telling your team reasons for the change, building a culture that embraces change, and developing the talent to manage change.
  • Use metrics to manage the change. Effective workforce management technology can provide these metrics. If managers do not have real-time information on time and attendance, schedules, orders, inspections, and other critical metrics in good time, problems may go undetected.
U.S. Department of Labor - Managing FMLA

Avoid These FMLA Pitfalls

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Employers should never take a leave from dealing with the Family and Medical Leave Act’s (FMLA) requirements. The FMLA entitles eligible employees of covered employers to take up to 12 weeks unpaid, job-protected leave in a 12-month period for specified family and medical reasons. It guarantees continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Read about these common FMLA pitfalls.

1. Untimely FMLA Requests

When an employee takes extended leave, managers sometimes fail to tell HR right away. This can be disastrous, because an employer cannot retroactively implement FMLA leave. If a manager waits a week to inform HR, it could delay the start of the 12-week FMLA period. This means an employee could end up taking more than 12 weeks of leave, which would impact staffing and productivity. To effectively manage FMLA, an employer must take proactive measures to properly enter and account for leave time.

Contractor Workforce Management allows employees to request FMLA like any other benefit time. If the manager fails to act on the request, Contractor Workforce Management reminds the manager and notifies HR. Employees do not receive pay for these hours, but the hours are tracked.

2. Failing to Keep Track

Another common mistake employers make when managing FMLA is failing to keep track of an employee’s use of FMLA leave, particularly when it is intermittent. As a result, an employer might give the employee more FMLA leave than he or she is entitled to. Employees can take FMLA leave in as little as 15 minute increments, so a robust, accurate system is crucial. Contractor Workforce Management allows organizations to record each employee’s FMLA leave. It tracks total hours allowed (480), hours taken, and hours remaining.

3. Missing Required Notices

Employers sometimes fail to provide required notices to employees. FMLA requires employers to provide four notices to employees seeking FMLA leave:

  • A general notice. This is a permanent notice that employees are always able to access, such as a poster on the wall or in an online employee portal.
  • An eligibility notice. When an employee requests FMLA leave, the employer must give the employee a written acceptance/denial letter within five days of the request.
  • A rights and responsibilities notice. Every time an employer gives an eligibility notice, the employer must also provide a notice detailing the employee’s rights and responsibilities.
  • A designation notice. This is a written notice that an employee’s leave is approved/unapproved under FMLA.

Employers must stay on top of these notices to comply with the law.

4. Providing Overly Broad Coverage

Sometimes employers provide FMLA leave in situations that are not covered. For example, if an employee has not worked an appropriate amount of hours in the past 12 months, he or she is not eligible for FMLA leave. An employer can easily lose track of this if employees use a paper-based time & attendance system. If an employer allows unauthorized FMLA leave by mistake, and the employee later experiences a qualifying event, the employer may deny additional leave. In this case, the employer would be violating the law unintentionally. If the employee realizes this, the employer could face legal ramifications.

5. Accepting Incomplete Certifications

In some cases, like when an employee is suffering from a severe health condition, employers require a certification to prove an employee needs to take leave. However, employers sometimes accept incomplete certifications that are incomplete. For example, an incomplete certification may not state the frequency and duration of the intermittent leave.

6. Enabling FMLA Abuse

The FMLA is ripe for employee abuse. Some employers find themselves with large numbers of employees with certified intermittent leave. Those employers need a plan to keep all employees honest with respect to their use of FMLA.

7. Overlooking the ADA

Employers sometimes fail to realize that a serious health condition that requires 12 weeks of FMLA leave may also constitute a disability under the Americans with Disabilities Act (ADA). Even after 12 weeks of FMLA leave, the ADA or state law may require more leave as a reasonable accommodation.

8. Not Having FMLA Policy

Employers can choose to implement FMLA leave on a rolling 12-month period or within a calendar year. Every organization should have a written FMLA policy that addresses this choice. This way, the employer can choose whichever option is most advantageous rather than leaving the choice up to the employee. Typically, the 12-month rolling option is best for organizations. If using the calendar period, employees can stack leave during the last 12 weeks of one year and the first 12 weeks of the new year.

9. Failing to Train Supervisors about Managing FMLA

Untrained supervisors might not handle FMLA requests appropriately, and may actually violate the law. To avoid legal ramifications, organizations should train all supervisors about managing FMLA — even those ones who do not typically administer leave.

Contractor Workforce Management FMLA Solutions

Contractor Workforce Management solutions help organizations manage FMLA requirements in every situation.

  • Employees can request FMLA from any location using any internet-enabled device. FMLA requests go to the employee’s manager for approval. On approval, non-payable records go through to the employee’s time and attendance records. If the employee is scheduled to work, their shifts are automatically re-opened.
  • Thereafter, either the manager or HR can document any additional leave the employee takes. If a manager fails to respond to the employee’s request promptly, the manager receives an automated reminder. The employee does not receive pay for these hours but the hours are tracked. Contractor Workforce Management also maintains a complete history of FMLA requests.
  • Employers can establish a balance of the allowable hours, and Contractor Workforce Management automatically updates these hours by FMLA transactions. For example, if the employee has taken 200 hours the remaining balance would be 280 hours. Contractor Workforce Management keeps a detailed record of all transactions.
  • If the employee requests more than 480 hours of FMLA, the request will be blocked.
  • HR can enter the 480 hours into the employee record when the FMLA time commences.