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Jul30

timecard fraud

can you define for me what time card fraud is?

The more common term is *falsifying time cards* or *falsifying company documents*. In general, this covers any type of intentional lying on time cards or payroll records such as one employee clocking another one in or out (even if both employees worked exactly the same hours.) It would also cover an employee clocking out but continuing to work, or an employee clocking in but then not working. It could also cover a supervisor who unethically or unlawfully changed an employees time card. For example, a supervisor who altered a time card to show that an employee had a 30-minute unpaid lunch break when the employee had no break, would be guilty of time card fraud.

Under the FLSA or federal Fair Labor Standards Act, companies have a legal obligation to maintain accurate payroll records, including accurate records of time worked. Any action that falsified payroll documents could be considered time card fraud.

If this does not address your issue, please post a more detailed question.

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30 Responses to “timecard fraud”

  1. Sharon Reichert Says:

    We have several non-exempt “salaried” employees. Are we required to have these employees fill out a time card every week, even if there are no adjustments for the pay period? (Adjustments would include deductions for unpaid time off or additions for overtime hours)

    Thanks for your help.

  2. Caitlin Says:

    Hi Sharon! The best practice would be for you to require that these employees complete a time sheet, or sign off on a time sheet that shows their hours each week.
    Under the FLSA, the employer is required to keep accurate payroll records including hours worked on all non-exempt employees. If the employees always work exactly 40 hours per week, then you might be able to get by without written records. However, if you have no written payroll records, it is going to be difficult for you to prove that the employee always works exactly 40 hours each week.

    Also be aware that if an employee works 40.5 hours one week, he or she is entitled to overtime. HTH, and thanks for reading the blogs!~ Caitlin

  3. aurelia alonzo Says:

    This is not a joking matter…I know of seven people who just got fired from their ( safe) city jobs..for clocking each other in !and out ! these are not the times…actually it was never the right time..to do this but especially now with these hard economic times…people have work ethic,,,just because everyone else is doing it doesnt mean you have to do it.

  4. Caitlin Says:

    Hi aurelia! You are right! Most employers would fire an employee who clocked someone else in or out, regardless of the circumstances. HTH, and thanks for reading the blogs!~ Caitlin

  5. rebecca graham Says:

    Can only the person who uses the time card write their name on the card, or can an assistant do that without breaking the law?

    The assistant would not clock the person in or out – just write their name on the card.

  6. Caitlin Says:

    Hi rebecca! It depends upon whether you mean “write the employees name on the top of the time card” or “sign the time card.” Anyone — a manager, assistant manager or employee can write the workers name at the top of the time card. This does not have to be done by the employee, and in many places of employment it is done by a manager.

    It is definitely time card fraud for anyone else to sign the employees name to the time card. Suppose Sarah Smith is an employee who uses a time card to punch in and out. Here manager is Tom Truett and his assistant is Hannah Hughes. If anyone except Sarah clocks her in or out, that is falsification of payroll records and time card fraud. If anyone besides Sarah signs her name to the time card, that is also falsification of payroll records and time card fraud.
    Part of the purpose of signing the time card is for Sarah to verify that the hours worked are correct. No one can do that for her. Even if Tom were to ask Hannah to sign Sarahs name to the time card, that would be unlawful. HTH, and thanks for reading the blogs!~ Caitlin

  7. Steve Says:

    My work wants me to estimate my hours on Friday and turn my time card in for the week by 10:00 AM. I sometimes work on many different job numbers and also work overtime. Is this OK even if I need to have my timecard changed on Monday to actually match the hours I worked and the jobs I worked on?
    (Here is there direct instructions)
    • Month-end Close week:
    o Submit timesheets for hours worked and to be worked through the last day of the month on the last day of the month (i.e. For September 2011 – a timesheet will be completed for hours worked Sunday, 9/25/11 through Friday, 9/30/11. For your time recorded on 9/30/11 or the last day of any other month, you will need to estimate your hours worked for that day due to the fact that the timesheet will now need to be submitted no later than 10 AM on 9/30/11).

  8. Caitlin Says:

    Hi Steve! Whether or not this is legal depends upon several factors, including the state you are in and whether you are an exempt or non-exempt employee. It also matters whether this is being done strictly for accounting purposes, or whether your actual paycheck is issued based upon these estimates.

    If you are a salaried exempt employee, the time sheet is is irrelevant. It does not affect your paycheck and the employer is not under any obligation to accurately track time worked.

    If you are an hourly (non-exempt) employee, in most states, it is lawful for the employer to require you to estimate your hours for the last day of the month — as long as the record is eventually corrected and you are later paid for all time worked. Suppose you estimate working 8 hours on Friday, but end up working 10 hours instead. As long as the extra 2 hours are added to the next pay period, and paid as overtime, this is lawful in many states. It would not be lawful for the employer to pay those 2 extra hours as straight time in the next payroll period.

    Some states such as Texas or Illinois have payday laws, which require the employer to pay you on payday for all wages earned during that payroll period. In those states, this system would be unlawful, even if you were later paid for the extra time.

    Alternatively, if the time sheet submitted on the last day of the month is for accounting purposes only, and does not affect the amount on your paycheck, this would be lawful in every state. It is simply the employer trying to complete the end-of-month financial statements as quickly as possible, and sacrificing some accuracy in the process. If it makes you feel better, keep your own written record of hours worked on the last day of the month, perhaps on a pocket calendar. HTH, and thanks for reading the blogs!~ Caitlin

  9. Jo Says:

    My boss told us not to put down 8 hours in one day, even though we worked them. She said “if you put down 8 hours for 3 days a month you are considered full time and we would have to supply you with insurance.” So she changes our times and breaks the hours up 4 on the day we worked and 4 on the day we did not work. Is this legal?

  10. Caitlin Says:

    Hi Jo! No, this is not legal. The federal FLSA requires employers to keep accurate records of all hours worked by employees, including the dates and times the employee works.
    There is no federal law that requires the employer to give insurance to workers who put in 8-hour days. Apparently this is a company policy. Your boss is trying to avoid this, but in the process she is falsifying timecards — a major offense at most companies.
    You should keep your own written record of the dates and hours you work. Ideally, you should continue to clock in and out, and let the boss change your time card.
    If your company has an HR department, you should speak to them about this. If not, you should approach your supervisors boss about it. HTH, and thanks for reading the blogs!~ Caitlin

  11. John K Says:

    At my job, if you are scheduled at say 6, the computer allows you to clock in up to 7 mins early at 5:53. My employer will always shave these minutes off at the end of each night and round it back up to 6 regardless if you worked during those 7 mins. Is that legal?

  12. Caitlin Says:

    Hi John! It is legal for an employer to round the time on an employees time card, as long as a fair system is used. The most common system is the one apparently used by your employer, where any time 7 minutes before the hour is rounded to the hour, and any time up to 7 minutes after the hour is rounded to the hour.
    Using this system, often called the “7 Minute Rule” time is rounded to the nearest quarter-hour. When an employee clocks in at 5:53, his time is rounded to 6 am. When an employee clocks in at 6:07, his time is also rounded to 6 am for the purpose of figuring hours worked. If your employer uses this system, it is legal in every state.
    Even if the employer uses the “7 Minute Rule,” an employee who clocks in late can still be disciplined for being tardy. The rounding applies only to figuring the hours worked by employees.
    However, the rounding system has to be fair, to be legal. The employer cannot have a system where employees who clock in at 5:53 are paid beginning at 6 am but employees who clock in at 6:07 are paid beginning at 6:07. Under federal and state minimum wage laws, employees must be paid for all time worked. HTH, and thanks for reading the blogs!~ Caitlin

  13. Kris Says:

    Hi, i work for a company and my regular work day is 7:45-6. sometimes we are here late because patients run late or behind and sometimes i clock in at 7:42 or 7:43 but i am noticing my clock-in time is being changed by my supervisor to 7:45 almost every time this happens. Is this legal in illinois? The only reason i noticed is because i keep track of my hour, she never once told me she was doing this. Is there anything i can do about this, do i have any rights?

  14. hrlady Says:

    Hi Kris,
    The U.S. Department of Labor allows for employers to track employee hours worked in 15 minute increments. The FLSA (Fair Labor Standards Act) allows an employer to round employee time to the nearest quarter hour. An employer may violate the FLSA minimum wage and overtime pay requirements if they always round down. Typically, employee time from 1 to 7 minutes may be rounded down and not counted as hours worked. An employee’s time from 8 to 14 minutes must be rounded up and counted as a quarter hour of work time.

    Hopefully the above clarification will help with the rounding issue.

    Thank you for reading the Humanresourceblog.com.

  15. Glen Says:

    Hi, I worked the 3pm to 11pm shift as a courier. On the last Friday of the year i was finished early so i decide to go back to the office on my way back i decided to drop by my house as i forgot to take my medication. My house is maybe 5 miles from the office if that. I feel asleep and woke up the next morning with my manager/supervisor knocking at my door. Got back to the office and was about to clock out but instructed by my my manager/supervisor to fill out a time card adjustment form and just to write down what my time i am suppose to clock out. On Monday was call to the office and explained to my supervisor/manager and Director of logistics area supervisor of the incident that occurred on Friday the week before. I was tod to not clock out (they would fix it) and go home as i was suspended with pay till further notice. On Friday of that week i was called in to work, i was about ot clock in when i was approached by my manager/supervisor no to clock in, again talked to both manager/supervisor, Director of logistics and rep from HR. Was told i was being terminated for misconduct. when reaching home, I look at the reason for termination was for falsification of time sheet. I have been thinking of this for a while, im not sure if it is what to do, or if my termination was vaild or is there any thing i can do? Thank you

  16. hrlady Says:

    Hi Glen,

    There is probably nothing you can do about that situation. Your employer did not know when you arrived at your house ending your day. In addition, you probably did not have permission to finish your day early and stop at your home, policies were probably broken.

    When a company is not aware of their employees whereabouts or the correct hours to pay their employees it is a concern. The termination was most likely a legal termination and it is probably well documented.

    Thank you for reading the Humanresourceblog.com.

  17. SF Says:

    If you work for a goverment contractor and are paid salary,and exempt, can you work only 2 or 3 hours and still put 8 hours down as if you worked those hours? This question was asked as they heard it from someone else at another company and I did not know how to address this question. I would think the answer would be no, because you are supposed to log every hour you work and if they can do that then why are they allowed comp time and vacation time?

  18. Bill Sparks Says:

    I work a schedualed shift but there is no time within that shift to prepare for your shift time (medical). I clock in when I get to work and clock out when I leave. The secretay changes my time card to shift time and puts the other time in PTO. At 240 hours I lose any time over, but I can”t take the time because we are short handed, so all the accrued time is lost and I receive nothing.

    Bill

  19. hrlady Says:

    Hi SF,

    Federal government contractors must abide by the Fair Labor Standards Act exempt personnel rules that are included in proposals and subcontractor proposals. Exempt employees must be paid a guaranteed salary of at least $455.00 per week, without any deductions for time off. In addition, an exempt employee can be required to work as many hours or as little hours, as necessary in a week to get the job done.

    Exempt employees, must receive their guaranteed salary regardless of the hours worked in a workweek. An employee may reduce the number of hours by any vacation or sick time hours, however if no time is offered an exempt employees salary cannot be reduced.

    Falsification of a time-sheet is never a good practice and can be punishable both criminally and civilly. In addition, falsification of a time-sheet may result termination of employment. Falsification of a time-sheet when federal contracts are concerned is a serious issue and may result in prosecution.

    Thank you for reading the Humanresourceblog.com

  20. hrlady Says:

    Hi Bill,

    It appears that your PTO time off policy has a “use it or lose it” stipulation in it. It also appears that your work is busy, however companies that institute a “use it or lose it” policy typically do so because they know down time from work is important. Time off from work is needed to rest and recuperate so that an employee can come back to work recharged with energy and enthusiasm. Time off also promotes health and mental well-being.

    Before you lose any accrued PTO time, you should schedule time off. If your company is under staffed then they need to either reconsider their policies or hire staff for scheduled time off. It is your responsibility to schedule your time off; it is the company’s responsibility to allow employees to take off time, and review its staffing and policies.

    Thank You for reading the Humanresourceblog.com

  21. Denise Says:

    On Monday & Tuesday I worked a half hour over, for a total of 1 hour over. Wednesday & Thursday I was out sick.(I have 200 hours sick leave available) Friday regular 8 hour shift. Manager changed my time card to say that I only used 7 hours sick leave on Thursday so it would come out to a 40 hour work week. The hour went back into available sick leave, which I will never use. She did not inform me of this change.

  22. hrlady Says:

    Hi Denise,

    The U.S. Department of Labor (FLSA) only requires employers to pay overtime when employees actually work more than 40 hours in a week. Typically, an employee will not be paid overtime in a week that paid sick, vacation, or holiday hours paid.

    In your example, you worked Monday, Tuesday and Friday eight hours each day and it equals 24 hours of work time. Wednesday and Thursday you used 16 hours of sick time because you did not work. And you worked ½ hour of overtime on both Monday and Tuesday.

    Your employer used the 40 hour threshold rule of not paying overtime because you were off sick. Your pay should have been 25 hours of work (24 hours worked and one hour of overtime) and 15 hours of sick time (16 hours of sick time less one hour for the overtime).

    Thank you for reading the Humanresourceblog.com

  23. valdez joe Says:

    An employee came in a 1/2 hour late on two different days, one in October the other in December. Both times our supervisor wrote him in as on time and initialed his time card. The employee knew about it and said nothing and cashed his checks. Is this falsifying payroll documents? What about the employee cashing his checks? Thank you for your answer

  24. hrlady Says:

    Hi Joe,
    If the employee knew that his time was documented incorrectly then, yes, it is considered falsification. If the employee signed off on the timecard and there is proof that he came in late your evidence is clear. If the pay stub states hours worked and the employee cashed the check then you have further evidence verifying the employee knew the hours he was being paid for. Under the FLSA, non-exempt employees are required to be paid only for hours worked. Thus, if there is clear proof the employee didn’t work hours that he was paid for the employer is entitled to recoup the overpayment. The disciplinary action for this situation depends on company policy. In many companies, this would be grounds for termination; however, other companies may issue a warning for first time offenders. HTH.

  25. Sandra Bankeroff Says:

    We have an employee that works hourly managing several staff members. We have a signed acknowledgment in her file that overtime hours must be approved in advance by a Supervisor. Unbeknownst to the company, she allegedly has been working OT for years now and has put in a claim through the DOL to be compensated for her OT hours. She submits signed time cards every two weeks and has never made mention of these OT hours. She works offsite on a government contract. Is she entitled to be paid OT for these hours worked retroactively? She admits to having “comped” the hours along the way so she would take other days off and put 8 hours on her time sheet. My second question is whether the company can sue her for time card fraud? It appears the DOL is requiring the company to pay her for the OT on hours worked based on her word of what she worked. What legal recourse does the company have? Thank you in advance for your response.

  26. hrlady Says:

    A: Hi Sandra,
    Per the Fair Labor Standards Act, all non-exempt employees are required to receive overtime compensation for hours worked over forty in a given workweek. Many employers mistakenly believe that comp time can be used in place of cash compensation for overtime. This is only true for public employees. Public employers may provide compensatory time off in lieu of cash compensation at a rate of one and one half for each hour of overtime worked. However, private employers don’t have this option. Private employers must pay their employees cash compensation for overtime. So, even if the employee admits to using comp time instead of submitting the overtime hours on his paycheck he is still entitled to the cash compensation for the overtime hours. Keep in mind, per the federal Department of Labor, generally a two year statute of limitations applies to the recovery of back pay.

    The employee clearly violated company policy by not getting the appropriate pre-approval to work overtime. Unfortunately, it’s usually the employer’s responsibility to ensure hours are documented accurately. The DOL investigator will consider if the employer could have easily found out the employee was working overtime hours and not documenting them by making reasonable inquiries.

    Your best bet is to hire a wage and hour attorney. Though the employee may claim back pay for overtime due, the employer also has a case for recovering overpayment of wages since the employee was essentially paid for time not worked when he was self-administering his comp time. An attorney can help you decide if a settlement offer from the DOL is in your best interest and whether attempting to recoup overpayment is practical. HTH!

  27. annie Says:

    I have a time card question.. I am the supervisor for 14 part time, hourly employees. I recently have the issue that many employees are not marking their lunch periods (even when they are taken) and many round their time cards up by as much as 20 minutes.
    As their supervisor what is the protocol required to make the corrections to the time cards? This becomes a huge budget problem and could cost the company up to 25 hours a week.
    Am I legally allowed to make the corrections to the time cards?

  28. hrlady Says:

    Hi Annie,
    Per the FLSA, employers are required to keep accurate payroll records including time worked. Thus, it’s appropriate for a supervisor to adjust an employee’s time card to fix a mistake. Non-exempt employees must be paid for all hours worked; so, it’s important that you’re certain an error was made and the adjustment is being in made in good faith i.e. not to avoid paying overtime. Though not required, it’s good practice to talk to employees prior to making changes to their time cards. Consider holding a mandatory staff meeting to address your concerns with your staff and clearly explain the expectation of them accurately recording time worked and lunch breaks. Explain the consequences of falsifying time cards such as suspension and up to termination, depending upon company procedures/standards. Also, consider posting company policy regarding time card accuracy next to the time clock. Some companies also post their values which often include integrity next to their time clocks as a reminder to all staff.

  29. Brandon Says:

    I have an employee who is paid salary, not sure if they are exempt or not. They are required to work an eight hour day and fill out a daily log as to all activities throughout those eight hours. The logs are required to be submitted on Friday by end of day. On Tuesday, we found out that this employee was not working but rather actively looking for another job, while supposedly working. We have emails and witnesses that can verify this accurately with time stamps. Payday was on the 15th and the employee turned in their resignation on monday the 17th, however dated it the 15th and composed on the 14th. With that said, this employee failed to turn in their log for that week of work. This person knows our policy on logs since they were the manager, who in prior circumstances, had terminated others for failing to turn in their logs.
    So, the question is, do we still have to pay this employee when we know they did not conduct any work for that week?

  30. hrlady Says:

    Hi Brandon,
    Whether the employee is exempt or non-exempt is important. Exempt employees are required to be paid their full salary regardless of how many hours they worked in a workweek. So, even if the employee worked just a few hours during the workweek he must be paid his full salary. There are few exceptions to this rule such as full day absences for personal reasons. However, none of the exceptions seem to apply based on the information provided. In contrast, non-exempt employees are only entitled to be paid for hours actually worked. If there is sufficient evidence proving the employee didn’t work certain hours then compensation for those hours is not required. However, the evidence must clearly show the hours not worked. If there is any doubt to the specific time periods not worked the employee should be paid as normal to avoid potential FLSA violations.

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