What Is Buddy Punching? How It Works, Impact & How to Prevent It
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Jennifer Hartman is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources.
Buddy punching happens when an employee clocks in or out of an employer’s time tracking system for a coworker. Essentially, it’s payroll fraud. The employees are attempting to game the system by making it seem like one of them is working when they’re not, leading to the employer paying money that isn’t really owed.
People usually engage in buddy punching to ensure the absent employee is paid for hours they didn’t actually work or to avoid being reprimanded for not adhering to their work schedule.
How Buddy Punching Works
Buddy punching can be done the old-fashioned way, such as one employee punching in using another employee’s paper time card. Or an employee could be persuaded by a work friend to log in to their phone, chat, or computer system so it appears they are at work.
It could also happen when an employee leaves early but has a coworker log them out of the time tracking system at the scheduled time.
In some cases, buddy punching may include falsifying hours worked on a project or as part of an agreement. Let’s say, for example, a team has a contract for 100 hours of work, but the job only requires 90 hours to complete. If the team supervisor manipulates the time sheets to make it appear that 100 hours were worked, they’re buddy punching.
Reporting accurate hours worked is a two-way agreement. Employees agree to work reported hours, and the employer agrees to process payroll for those hours. Buddy punching breaks this agreement and causes issues for everyone.
Buddy Punching Cost to Employers
Buddy punching costs employers millions of dollars each year. This is because employees who are not working are still being paid.
Employers often assume that when an employee clocks in, they are working the entire shift. However, if an employee adds a few extra minutes to their schedule each week, the cost can add up quickly. For example, if one $10 per hour employee fraudulently adds 15 minutes to their schedule once a week for a year, the cost to the employer is $130, not counting lost production. This also doesn’t take into account the cost associated with firing the employee and hiring and training a new employee.
In some cases, buddy punching can also lead to decreased morale and production in the workplace. To prevent this from happening, employers should take steps to ensure that their employees are tracking hours accurately and only clocking in for themselves.
Companies Most Affected by Buddy Punching
This time-stealing practice is most common in industries that pay an hourly wage and enforce strict attendance policies. Buddy punching does not happen as often in salaried jobs, since most salaried workers have some flexibility in their schedule, and the number of hours they work isn’t as regulated (unless they’re nonexempt salaried employees).
Typical businesses affected by buddy punching include:
- Restaurants
- Manufacturing facilities
- Medical companies
- Retail
- Call center
How to Prevent Buddy Punching
Buddy punching can be prevented by tightening your payroll security procedures. To help, you can enforce preventative policies and utilize modern time-tracking technologies.
Click through the tabs for more on preventing buddy punching.
It is up to the employer to clearly define the consequences of buddy punching. If not, they may have employees punching time for others because they don’t realize it is a big deal. Employers should create attendance policies that help avoid these potentially dangerous or expensive situations.
Make the policy part of the employee handbook, publish the policy electronically, and post it near your time clocks. Buddy punching should also be discussed during the onboarding process. You should require that employees not only understand the policy but sign a statement to that effect. Keep the original in their employee records.
Handling Time Theft
Since buddy punching is time theft and payroll fraud, it should have serious consequences. Many companies enforce strict policies by communicating that those who commit time theft violations will be written up or even fired. Most employers outline the consequences of this action in their employment agreement or workplace policies, including:
- Disciplinary write-up with more serious consequences for the second violation
- Creation of a performance improvement plan (PIP)
- Termination for any offense
Before creating an attendance policy that includes buddy punching rules and consequences, you’ll want to first check your local employment laws to avoid legal issues should your company be challenged. If your company is small, you may benefit from hiring an HR consultant to help you lawfully create your employment policies.
If you are still tracking time by paper and have more than 10 employees, it is time to upgrade. Modern time tracking tools utilize cameras, facial recognition technology, biometrics (such as fingerprints), fobs or ID cards, GPS (so you know where they’re clocking in), and more to deter buddy punching.
Online Time Tracking
The use of web-based software to clock in and out can help you manage your employee’s time. While this may not be the safest way to prevent buddy punching, some security measures can be put into place, such as unique passwords and restricting the employee to clocking in using their company computer instead of clocking in from anywhere.
Homebase offers PIN-based security for clocking in, as well as team management tools that provide control over labor costs and budget.
Biometrics Technology
Biometrics technology prevents buddy punching by utilizing facial, fingerprint, retina, and palm recognition, making it difficult for employees to clock in for others. Before implementing these technologies, review local laws regarding how employers are allowed to collect, store, or disclose this type of personal information. Some states may limit or regulate how your company can use biometric data. If you operate in multiple states, check each state’s laws.
TimeLogix offers a biometric time clock.
GPS Tracking
GPS technologies are utilized to track where your employees clock in. This tool is especially relevant to those with employees working in multiple locations or in the field. Employees can log in using an on-site device, computer, or mobile app. The mobile app is handy for those needing to track workers on the move.
You can purchase in-vehicle GPS tracking devices on Amazon.com.
Geofencing
Geofencing technologies alert employees when they enter or leave a worksite. This alert is to remind them to clock in or out. Often people get to work and get busy or leave in a rush and forget to clock in or out, which ends up causing timesheet errors and annoying corrections. Additionally, this technology can prevent employees from clocking in until they are within their work area.
Homebase offers geofencing time tracking technology.
Take a look at the time clocks and time tracking software we recommend to find a good fit for your business—some are free.
Security cameras are helpful for a variety of reasons. You can place one above the time clock to see who is clocking in and when. Cameras can also be used to monitor other HR issues such as harassment, theft, safety concerns, or vandalism. This type of monitoring technology helps protect the employee and the company.
The reason employees buddy punch isn’t always about earning more money. They often do it because they don’t want to lose their job or be reprimanded for being late or leaving early. Many businesses have strict attendance policies that allow little flexibility to accommodate for employees being late.
You don’t want to create an “us versus them” culture where the boss or company is seen as the enemy. This poor work culture results in employees feeling justified in taking action against the company.
Avoid this by creating an inclusive, supportive work culture. You can do this by establishing an attendance policy that helps promote a good work-life balance and by paying employees a competitive wage so they don’t feel the need to “stick it to the man.” Employee managers should be trained to handle attendance issues fairly and sensitively. You’ll also need to build contingency plans should an employee be late so your company doesn’t suffer from losses in production or customer care.
If you think you have a problem with buddy punching or just want to prevent it before it starts, consider using an online time tracking app like Homebase. For employers with one physical location, it offers a free plan that allows all employees to clock in via mobile app. As each employee clocks in, the software takes a picture to help you verify their identity. You can also add GPS tracking for an extra fee.
Bottom Line
Buddy punching is a serious and expensive HR issue to manage. But, you can make efforts to prevent this time theft problem by clearly communicating attendance policies, creating a good work culture, and employing modern time-tracking technologies.
If your company is large, consult with your HR team on how to best create attendance policies. If you are a startup or a small company, consider hiring a human resource consultant to help you create effective attendance policies that include strict rules about buddy punching. Payroll training can also help you find ways to insert more controls into your process.
New to managing employees? Check out our guide to employee management for practical advice.
