KemLaw

Did you know that payroll fraud happens in 27% of all businesses in the U.S. and that it occurs twice as often in small organizations as in large ones?

Yes – payroll fraud is real and it is costly.

What forms does payroll fraud take?

• Time card theft. Two types are common. One occurs when an employee has a friend punch them in and out. The other type involves an employee lying about the amount of time worked.
• Over-extended breaks. This type of fraud involves employees taking more time for breaks than allotted or taking more breaks than permitted .
• Excessive use of personal time. This type of payroll theft occurs when employees spend excessive time dealing with personal issues (phone, email, etc.) during working time.
• Internet time theft. This type of payroll theft involves employees spending time on the internet for non-work related purposes during working time.

What can an employer do to protect themselves? Here are things to consider:

1. Develop a carefully written policy on time keeping procedures.
2. Train all supervisors on all applicable wage and hour laws and help them understand the different forms wage theft can take.
3. Have each employee sign and certify his/her timesheet and have it approved by their immediate supervisor prior to submission to payroll services.
4. Electronic time sheets should be password protected to prevent unauthorized approvals.
5. Never let an employee approve their own timesheet.
6. Talk to your employees regularly about their timesheets. When they know you care enough to watch – less fraud will occur.
7. Make it clear that no employee may submit a time card for another employee at any time.
8. Notify employees that you may use electronic monitoring and time tracking procedures for those working in the field, including by tracking employee movements through GPS devices and verifying when an employee remotely accesses the employer’s computer systems..
9. If an employee works at more than one office/site – have a supervisor at each location verify the time spent at that location.

Payroll fraud is a serious problem in Connecticut and around the country. Make sure you perform regular audits of your timekeeping procedures and consult with an attorney in any cases where over-payment may be involved or termination is being considered. If you need help, the partners at Kainen, Escalera & McHale each have over 20 years of experience representing employers in payroll theft matters and would be pleased to help you if you have questions regarding the law. Please contact us if we can help.

The information provided above is made available by Kainen, Escalera & McHale, P.C. for educational purposes only. It is not intended to provide specific legal advice to your individual circumstances or legal questions. You acknowledge that neither your reading of, nor posting on, this site establishes an attorney-client relationship between you and our law firm, or any of the attorneys in our firm. This information should not be used as a substitute for seeking competent legal advice from a licensed professional attorney in your state nor is it provided for the specific purpose of soliciting your business on any particular matter. Readers of this information should not act upon anything communicated in it without seeking professional counsel.