Compensation Administration

Buddy Punching Costs Employers $373 Million Annually, Tips to Combat This Trend

New research published in 2017 suggests that a simple payroll loophole could cost U.S. employers more than $373 million every year. The loophole is well-known and widespread. It’s called buddy punching. Recently, TSheets—a cloud-based time tracking app—released new insights into buddy punching, and ways employers can curtail this trend.punch clock

What Is Buddy Punching?

Buddy punching occurs when one employee asks another employee to clock in on their behalf. In some cases, employee #1 is running late or has not arrived to work at the scheduled time, so they ask employee #2 to clock in for them, in the hopes that the manager or supervisor on duty won’t notice the late arrival.

This is usually accomplished by sharing personal clock in information, like usernames and passwords. And if a company is still using an “old-school” punch time clock or outdated paper timesheets, it’s even easier for employee #2 to simply stamp their “buddy’s” time card.

However, there are more extreme cases of employees using buddy punching to take entire days off work or accrue extra overtime. In short, some employees use it to trick their employer into paying them for large chunks of time not actually worked.

An independent survey of 1,000 employees in 2017 found that 16% admitted to clocking in for a colleague. The same survey found that timesheets are most commonly submitted weekly and that when errors are made, the most common mistake people make is to add an extra 15 minutes.

The latest data published by the U.S. Bureau of Labor statistics indicates that there are more than 78 million hourly workers in the American workforce. If 16% of them added 15 minutes to a coworker’s timesheet by buddy punching, this would add more than $373 million to the annual payroll bill.

No matter how much or little time is being added to a time card dishonestly, buddy punching is time theft—and for small businesses with tight margins, it’s a big deal.

How Can Employers Prevent Buddy Punching?

One simple way to help prevent buddy punching is suggesting your employees to use a sensitive clock in password or longer pass-phrase (as opposed to the traditional password). As long as it’s something an employee won’t want to give away—even to their friends.

For example: Some employers suggest their employees clock in and out using the last four digits of their Social Security number. It’s not a number that employees (or anyone) want written down or handed out, so the likelihood of those numbers being passed around is low.

Of course, some businesses want even more control and safeguards to prevent buddy punching. Consequently, they invest in expensive and complicated biometric time tracking systems or geofencing. But those systems can be more of a headache than a solution, if not properly maintained.

For more information on buddy punching and ways to combat it, click here.