In the construction industry, labor costs have become the most expensive resource and therefore they must be managed carefully. Getting an accurate timesheet or time card that represents the true hours worked is critical to any business. Avoiding “Time Theft” can save a business hundreds to thousands of dollars each pay period.
In this blog, we’ll explore various ways you can increase the accuracy of time reporting to avoid time theft.
What is Time Theft, and Why Does it Matter?
Time theft in construction occurs when a worker accepts pay from their employer for work that they have not actually done, or for time they have not actually put into their work. Since the employee is not actually doing the necessary amount of work during their shift it is considered a theft of time from the company. In one study by the Kentucky CPA Journal estimated that over $400 billion dollars are lost to time card fraud and lost productivity each year.
This problem can be a major issue for many companies. The American Payroll Association found that the average time theft per pay period is a whopping 4.5 hrs per worker. Not every employee is stealing time but one study by Intuit found that 49% of employees admitted to committing time theft.
Examples of Time Theft and Timesheet Inaccuracy
Showing up late and leaving early
Habitual tardiness is a common way a worker can steal a few minutes of time at the start of a work day. It’s one thing to hit traffic or have some unexpected delay but there are those workers that are consistently late. If you don’t have a way of knowing when a worker is truly on the job, it’s difficult to control this lost productivity and cost.
Extended meal breaks or rest breaks
Most companies establish a standard meal break policy. In construction, this is typically 30 minutes but it can be up to 1 hour. Labor laws require that a non paid meal break be provided prior to working six hours. Time theft can occur if workers are extending this break period into the paid part of their day. Consider how much money and lost productivity you have if each worker extended their meal break by 15 min each day. If you have 20 workers making an average of $25/hr, this would cost $625 per week in time theft.
Excessive Personal Time
Employees that are dealing with personal issues can be another way time theft occurs. An example would be taking personal calls and texts throughout the day and stopping work to deal with these issues. This is difficult to manage and hopefully is not a habitual thing. Most employers are sensitive to employees having personal issues and will give them some leeway, however if you have an employee that is constantly non-productive as a result of bringing their personal life into the workplace, it may be time to address the problem.
100% Timesheet Accuracy is the Goal
Both the company and the workers should want to have an accurate timesheet that represents the actual hours worked. For the workers, if they worked 41 hours in a week, they want to make sure they get paid for 41 hours which would typically mean 1 hr of overtime. For the company, if the worker performed 37 hours of work but left early on Friday, then they want to pay for just 37 hrs.
As regulated by the Fair Labor Standards Act (FLSA), any hours worked must be paid even if approval was not received. You should protect everyone by aiming for 100% accuracy on timesheets. By allowing timesheets to not represent reality, you are opening the door to disputes and possible government inquiry if the worker files a complaint.
Did you know the National Labor Relations Board receives between 20,000 and 30,000 complaints per year from workers. Most of these complaints are about not being paid for overtime worked by the employee. This is why timesheet accuracy is so important.
4 Tips on How to increase timesheet accuracy
- Supervision
If you have trusted supervisors or foremen who manage your work crews then having them document start/end times for workers is a good way to validate timesheet accuracy. Many of our own subcontractors use this technique on a daily basis. Their supervisors/foreman will have a daily report and they write down the start/end times for each worker and total hours worked. This is turned into the office and is compared to worker timesheets. Any discrepancies are worked out before payroll is completed.
This process takes time and has many flaws. The biggest issue is that most supervisors/foreman don’t want to be the timesheet police. They are also very busy and many not always have time to record when people arrive. This process is better than nothing but it won’t solve the accuracy problem entirely.
- Vehicle GPS
Many companies that have work vehicles are installing GPS systems. These systems typically have a website where you can see history of where the vehicle is at any given time. Using this data and comparing it to timesheets submitted by the employee is a way to check for accuracy. This process is manual so it can take a lot of administrative work to perform this task. The payoff can be worth it, however to get accuracy.
- Physical Punch Clocks
Traditional punch clocks are typically only used at the office or large job sites. This system works well since the worker needs to be there and the time clock stamp is a reliable record of start and finish times. If you have your workers show up to the office before starting work, this system could work for you.
- Phone App
Phone apps like BuildCenter allow workers to clock in and out with a GPS stamp showing their location. This is quickly becoming the new standard to ensure timesheet accuracy. Smartphones are common now and workers are more comfortable than ever using new apps. Time tracking apps like BuildCenter stamps the start times and end times as well as break start/stops. The digital timesheet that is available in real time to the office provides all the location details to ensure accuracy. Overtime is also managed on the phone so that everyone is on the same page.
Fixing timesheet inaccuracies
It is legal and allowable for a timesheet to be modified or fixed to represent the actual time worked. Timesheet mistakes are common. In fact, one study found that 80% of timesheets needed to be corrected. The key to this process is to have the workers sign off the timesheet once the corrections have been made. This ensures that everyone is in agreement to the final numbers. Phone apps like BuildCenter allow for easy timesheet corrections and re-signing by workers.
Summary
As you can see, timesheets need to be accurate to keep everyone happy and out of trouble. Nobody wants to deal with payroll disputes or penalties from government agencies. Using a phone app to record and validate timesheets is a great way to to elevate your time tracking process.
Resources
- Get the Free Guide: Reduce Payroll Disputes with the 4A Timesheet Framework
- Free Trial of BuildCenter: Try the contractor’s favorite time tracking app
