According to the American Payroll Association, nearly 75 percent of small businesses in the United States feel the impact of buddy punching. In the construction and field service industries, workers are often out in the field or at different job sites where they’re not being monitored and rarely have a central time clock for them to use.
Due to the nature of these industries, buddy punching can become a common issue that’s challenging to notice and address. But there are solutions to reduce and prevent buddy punching in the workplace!
What is Buddy Punching?
Say an employee is running a little late. 10, 15 minutes. More to call it in later, but enough that it will be evident on their timesheet and affect their pay. So they ask their coworker who’s already on time to get their timecard and punch it for them. They’re already on the way, so what’s 15 minutes?
As a business owner, you know that time counts!
Buddy punching is a form of time theft that occurs when an employee clocks in or out for another employee, causing them to receive more hours than they worked.
It could be to avoid getting into trouble with an employer for being late to arrive or early to leave, to receive pay they did not earn, or
to get paid despite taking longer breaks than they’re supposed to.
Whether for a few minutes or hours, these buddy punches add up over time and can cost your business.
Is Buddy Punching Illegal?
According to Fit Small Business, employee time theft is not technically a crime but a form of fraud that can be both criminal and civil.
However, unless your employee(s) have stolen a significant amount of time and pay from your company, most of the time, it’s not worth the litigation to recover your losses, and you would have to provide clear evidence that they falsified their timesheets.
Time fraud and theft are challenging to prosecute, even with robust evidence. Labor laws are strict regarding timesheets and clocking in and out. Former employees may be tempted to retaliate with unfair dismissal claims. Noticing patterns of buddy punching or time fraud should work hand-in-hand with documentation, from timesheets to supervisor reports.
As an employer, you have more liability and responsibility to your employees to provide reasonable wages and cover all hours the employee has claimed to work. Withholding pay due to suspicions of time theft can expose your business to legal issues and challenges.
State-specific laws and regulations
Exposing your business to wage theft allegations can be challenging, and different states have laws regarding wage and hour violations.
In California, if a company is suspected of wage violations, employees can sue their direct manager rather than the company itself for unpaid wages. This is to prevent companies from hiring, working, folding, and taking the money. What this means for your business is that employees you suspect of buddy punching still need to be paid, and your business should utilize other consequences.
Florida requires workers to first communicate with their employer for unpaid wages, which could allow your business to outline suspected wage theft and attempt to reach a settlement. A company has 15 days from the complaint to resolve the issue by paying the employee or reaching a settlement amount. If the complaint isn’t settled, employees can file a suit.
What are the costs for buddy punching?
Want to know how much buddy punching can cost for your business?
A 2017 buddy punching study found that 16% of employees surveyed said they had clocked in for a colleague. With these sample results, the study expanded the estimated costs to all 78 million hourly employees working in the United States. The most commonly found form of buddy punching was for employees running around 15 minutes late.
So, applying just 15 minutes per hourly employee, you end up with over $373 million in unworked annual pay.
For small businesses, in particular, buddy punching can significantly impact your bottom line. For part-time hourly workers making the federal minimum wage of $7.25, buddy punching can add up to $30,000 annually.
The costs of buddy punching aren’t restricted to the direct loss of pay; the actual costs cover financial, production and long-term consequences.
Financial implications for businesses
As mentioned above, direct payroll losses are the first significant loss for your business. Each timesheet loses minutes and hours, and that adds up.
Worse, your bottom line is affected, as the absent employee can’t exactly do the work they’re being paid to do. Jobs take longer and cost your business more, cutting into profit margins. It’s tricky to get a clear picture of the exact costs for your business, as it’s hidden by nature.
Surprise costs could include employees claiming overtime pay when they’ve had to work excess hours because they weren’t present to complete the work in the timeframe.
Productivity and operational efficiency
Aside from direct financial costs, buddy punching has other effects. If an employee isn’t present when they’re supposed to be, this will affect their and the team's productivity. Less is getting done, but the timesheets claim that everyone is present.
Less work for the same hours means decreased productivity and efficiency. Others have to pick up the slack, and jobs allotted for specific time frames could quickly run over. Field service businesses know how even minor delays can affect the rest of their jobs, especially if teams jump from job to job during the day. These disruptions could be small or large, but the key is that they were preventable.
Buddy punching can only occur if at least two employees are involved, which means noticed buddy punching patterns and employee attendance violations lead to penalties for at least two employees. This can lead to labor shortages in an already labor-burdened industry like construction or field services.
Long-term consequences
Buddy punching is already an issue for your business in the short term, and it’s important not to underestimate the long-term consequences of ongoing time fraud. It’s demoralizing when team members, workers who follow the rules, adhere to their responsibilities and do the right thing, see other coworkers flaunting the rules. It means they’re doing their duties and often covering for others.
It erodes trust in their coworkers and the business. What’s the point of following the rules if no one follows up? Why are they paid the same as someone who’s always late and takes excessive breaks? It encourages others to be dishonest because they can get away with it.
In addition, if you have a supervisor or someone with tenure asking coworkers to clock them in, it creates a sense of dread and possibly resentment for your other employees, creating a hostile and uncomfortable work environment. Employee attendance policies that aren’t applied consistently across roles can harm your business environment immensely.
This kind of negative, dishonest culture hurts everyone on the team. Employees take on additional work, leading to faster burnout. This can lead to problems retaining employees and the loss of honest staff.
How to Prevent Buddy Punching?
As you can see, buddy punching impacts all levels of your business and company culture. Preventing buddy punching is an essential factor for effective employee time management.
The first thing to do is create an employee absenteeism policy that outlines authorized and unauthorized leaves, tardiness, clocking in/out early, and no-shows.
Your absenteeism policy should clearly explain your expectations, result in penalties for time-tracking issues and rewards or recognition for present employees. It’s a place to start and refer to when addressing attendance violations.
Time-Tracking Software
Paper timesheets and outdated punch cards make buddy punching particularly easy. For a long time, manual clocks and timesheets were the only options for tracking employee time. Now, businesses have many more options to implement an efficient and accurate time-tracking system for their company, preventing buddy punching and producing honest timesheets.
Time-tracking software is an excellent option for digitizing manual processes. Some software can be as simple as mobile timesheets for employees to clock in and out or feature-rich time management that everyone can access anytime, anywhere.
These days, almost everyone has a phone, so utilize them and keep your team honest!
GPS Tracking
GPS tracking is another efficient tool for providing your field service business with transparency regarding your employees’ times. Each time your employees clock in or out, a GPS stamp is attached to their timesheet so you know where they were when the event happened.
Want to get robust insights without tracking micromanagement? Pull up a map in the app to see a breadcrumb trail of where your employees were throughout the day.
Geofencing
GPS tools can go even further now with geofencing options. Geofencing is an unseen virtual boundary line that defines a specific area that you determine based on job locations. Geofencing automatically reminds employees to clock in when they enter the designated areas and clock out as they leave. You can even keep up when your employees are offline on the job.
Geofencing tools are beneficial when you have multiple job sites to manage as a field service business and teams constantly moving.
GPS Tracking
GPS tracking is another tool to provide you with transparency with your employees’ times. Each time your employees clock in or out, a GPS stamp is attached to their timesheet so you know where they were when the event happened.
You can also pull up a map to see a breadcrumb trail of where your employees were throughout the day.
Biometrics
A Kiosk time clock provides you with the option of using biometrics so, when someone clocks in from a designated device, a snapshot is taken of their face to verify it’s the right person.
If someone tries to clock in or out for them, their clock-in/out will be flagged with unusual activity for you to review on their timesheet. This tool makes buddy punching impossible.
Timesheet Approvals
Most managers and/or admins know the schedules and jobs their employees are doing. When you track time using time-tracking software, you can pull up those schedules - as well as timesheets - to review the times they were clocked in.
Rather than sifting through dirty, stained, torn, damaged, missing, or illegible paper timesheets or notepads, approving timesheets is much faster and more accurate through technology.
Buddy Punching Policy
You should be very clear with your employees that time theft - including buddy punching - is simply not allowed and is considered payroll fraud with serious consequences. You can choose to do a disciplinary write-up for first-time offenses, or opt for termination if they’re caught buddy punching.
On the other hand, you may have an employee that’s consistently late to work but are still a valuable member of the team. In such cases, they may benefit from a Performance Improvement Plan (PIP) which helps them feel valued as an employee while also helping them work towards being more punctual and reliable.
Biometrics
Many companies have begun using digital time clocks for personal verification requirements to combat and prevent buddy punching. Often, these were employee PINs and passwords tied to their names. However, while this prevents some cases of buddy punching, plenty of employees swap credentials and details to enable buddy punching to continue.
What’s the solution? Well, something workers can’t swap: biometrics.
Biometrics include facial or iris recognition or fingerprints. It’s no longer just a neat idea: time-tracking software has made it a reality for businesses to utilize as part of their time-tracking system.
A kiosk time clock allows you to use biometrics for all employees to ensure the right person is clocking in. When someone clocks in from a designated device, a snapshot of their face is taken to verify that it’s them.
If someone tries to clock in or out for them, their clock-in/out will be flagged with unusual activity for you to review on their timesheet. This tool completely prevents buddy punching!
Timesheet Approvals
Most managers and admins know their employees' schedules and jobs. When you track time using time-tracking software, you can pull up those schedules and timesheets to review the times they were clocked in.
Rather than sifting through dirty, stained, torn, damaged, missing, or illegible paper timesheets or notepads, approving timesheets is much faster and more accurate through technology. In addition, time-tracking software and tools mean that the clock in and out your employee has submitted can be compared to GPS tracking and geofencing to ensure the times line up.
Buddy Punching Policy
You should be very clear with your employees that time theft - including buddy punching - is simply not allowed and is considered payroll fraud with severe consequences. Including a section specifically for buddy punching in your employee handbook or attendance policy ensures everyone on the team is aware of the seriousness of the issue. Buddy punching isn’t being late without notice: it’s lying to your business and can’t be tolerated.
Depending on your attendance policy and how your business handles attendance violations, you can do a disciplinary write-up for first-time offenses or, in ongoing cases, opt for termination if they’re caught buddy punching. Remember to keep robust documentation that proves your case in these circumstances.
On the other hand, you may have an employee who’s consistently late to work but is still a valuable member of the team. In such cases, they may benefit from a Performance Improvement Plan (PIP), which helps them feel valued as employees while also helping them work towards being more punctual and reliable.
A buddy punching policy communicates to employees the expectations and culture of honesty your business wants to create.
Time Tracking to Combat Buddy Punching
Time-tracking software apps like ClockShark will help prevent buddy punching and time theft, thanks to the insights and data provided by GPS, geofencing, and the Who’s Working Now feature. Using cloud-based employee time clock software in combination with kiosk clock biometrics closes the loopholes needed to buddy punch.
Ditching outdated punch-in methods ensures workers show up on time, increases productivity, improves performance, and creates transparency.
Frequently asked questions about buddy punching
Can buddy punching affect my company’s insurance and worker's compensation claims?
Legal challenges due to claimed wage theft from employees could affect business insurance as your liabilities increase.
Worker’s compensation for overtime is a challenging process, as you, as an employer, need to prove why the wages shouldn’t be paid if you suspect issues or time fraud. For severe cases, legal costs may be required. Keeping a clear documentation trail and proof is essential to protect your business.
What are some common signs of buddy punching in my workplace?
Signs of buddy punching in the workplace include jobs and projects taking longer than usual, reduced productivity and efficiency, reported timesheets that don’t align with workers’ movements, GPS data, and team members/supervisors complaining about certain coworkers.
If information isn’t lining up and supervisors/managers report late arrivals that are not represented in timesheets, you might have buddy punching.
