Work time is very valuable. Employee time theft occurs when workers steal time, money, or information. Here is an overview of employee time theft and how to prevent it with a tracking system and preventative measures.

Insight into Employee Time Theft

Employee theft refers to any stealing or misuse of an employer's property for personal use and without authorization. The property encompasses work-related valuables other than just money, including-

  • Time Theft - When employee is paid for unworked hours they are stealing company time. This occurs by manipulating a time card, engaging in buddy punching, and not working while on the clock. Sometimes, workers try to steal time by forging timesheets for non work hours.
  • Supplies - Theft occurs when employees take office supplies such as notebooks or computers. Restaurant supply stealing may involve taking silverware or plates.
  • Money - Theft occurs when workers steal from the cash register, commit credit card fraud, falsify checks, or engage in any other fraudulent activity that financially harms the company are stealing from an employer.
  • Merchandise - Theft includes stealing any products or services that the business plans to sell to its customers.
  • Information - Employees commit theft when they share private company information such as designs or company data.
Because there are so many ways for one person to commit time theft or other theft, employers have to use resources effectively to protect the most valuable assets and the bottom line.

On one hand, it's less than ideal to create a culture that makes workers afraid to borrow a pencil or use a scrap piece of paper. On the other hand, business owners are obligated to protect their assets and intellectual property because theft causes severe damage. why-does-time-theft-matter
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Why Does Time Theft Matter?

Though it may be timely and costly to protect valuable assets, there are several reasons why it's important for a small business to do so. Here are some eye-opening statistics to consider-

  • According to the Better Business Bureau and law enforcement statistics, 30% of businesses fail because they experienced employee theft or embezzlement.
  • The ACFE's Global Fraud Study found that a single case of in-house employee fraud caused a median loss of $145,000.
  • The U.S. Chamber of Commerce found that 75 percent of employees steal at least one time.
  • In the United States, worker theft causes a loss of $50 billion annually.
  • A typical business loses 5% of its yearly revenue to theft.
  • 22% of worker fraud causes businesses to lose over 1 million dollars.
  • The FBI asserts that occupational fraud is the fastest growing crime in the U.S.
Small businesses are especially impacted because they have fewer resources to protect their assets and recover from a financial loss. Creating a zero tolerance policy by utilizing all of the protective mechanisms at one's disposal is essential to avoid becoming another statistic.

Here are the best practices to prevent occupational fraud and theft-

1. Use Careful Hiring Practices To Prevent Theft

Make sure to perform background checks and drug tests for all new hires before they begin working. Those who struggle with addiction are statistically more likely to steal to feed their habit.

Obviously, some circumstances warrant giving a person a second chance. A potential new hire with a misdemeanor from 20 years ago is different than an individual with a long pattern of criminal behavior.
The point is to be cautious and practice good judgment. Don't hire someone that has a higher chance of financially harming the organization.

2. Implement a Buddy System to Prevent Theft

It's more likely that theft will occur if one employee is left alone in the shop for long periods. Implement a buddy system for the opening and closing shifts to create accountability and decrease temptation.
Ensure all refunds or voided sales are witnessed by another worker or management. Avoid pairing close friends together for the opening/closing shift, or to observe the other's transaction(s). 3-utilize-a-surveillance-system-to-prevent-theft
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3. Utilize a Surveillance System to Prevent Theft

A surveillance system is one of the most effective ways to prevent theft before it happens and hold thieves accountable.
Place a camera in a section(s) of the store that captures all essential work activities. Remember to also put a surveillance system in the storage room, stock loading areas, and point of sale station(s).
Use a high-definition video or a camera that integrates with facial recognition technology. This can authenticate a worker's identity from a far distance or at an unusual angle.

4. Keep an Eye on Trash Removal to Prevent Theft

Many employees hide stolen merchandise in the trash area and retrieve it after their shift is complete. Because few want to go near the dumpster, many thieves think this is the most clever place to hide stolen merchandise.

Only allow employees to carry the trash out at certain times of their shift. Implement the buddy system or use a manager to watch those who take out the trash. Finally, reduce opportunities by utilizing see-through garbage bags and locking dumpsters.

5. Create a Report-Reward System to Prevent Theft

Implement a policy in an employee handbook to report suspicious behavior through text, email address, or phone. It is much less likely that employees will steal if they know that others will report them.
Use a reward system for those who report legitimate criminal activity. Offer a Starbucks gift card, a bonus, or some other type of incentive. 6-form-relationships-with-workers-to-prevent-theft
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6. Form Relationships with Workers to Prevent Theft

It's harder to steal when an employee knows his/her employer. There is less accountability when management isn't familiar with their workers' habits, schedules, or personalities.
Talk to workers and make sure to know all of their names. This will not only prevent stealing, it will improve morale and help employees feel valued in the workplace. Happier employees tend to be more loyal and less likely to steal.

Key Takeaways on Employee Time Theft and Other Theft

Here's what to remember about employee theft-

  • Employees can steal money, time, supplies, merchandise, or information from their employers.
  • Employee theft causes bankruptcy, financial loss, litigation, and other problems. It is one of the fastest growing crimes in the United States.
  • Preventing theft can be timely or costly, but the benefits outweigh any inconveniences or expenses.
  • To prevent occupational fraud/theft, use good hiring practices, implement a buddy system, set up a surveillance system, monitor trash removal, create a report/reward system, and form relationships with employees.