The Cost of a Few Extra Minutes
A few extra minutes here. A favor for a coworker there. It doesn’t seem like much—until you multiply it across dozens or hundreds of employees.
Buddy punching—when one employee clocks in or out for another—is one of the most common forms of time theft, and it costs U.S. employers an estimated $373 million every year, according to recent industry studies. But beyond payroll costs, time theft damages trust, erodes productivity, and creates compliance risks that can trigger audits or lawsuits.
The 2025 HR Benchmark Report confirms the scope of the issue: 46% of small and mid-sized businesses admit they’ve caught at least one instance of time theft or falsified timesheets in the past 12 months. Yet fewer than half have systems in place to prevent it.
If your business still relies on paper timesheets, honor systems, or outdated punch clocks, you could be losing more than time—you could be losing profitability.
What Exactly Is Buddy Punching and Time Theft?
Time theft takes many forms, but it all comes down to one thing: being paid for time not actually worked.
Common examples include:
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Buddy punching: An employee clocks in or out for a coworker who’s late, absent, or leaving early.
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Falsifying hours: Manually rounding up hours on a timesheet or adjusting digital entries.
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Extended breaks or personal time: Employees using paid time for personal errands or social media.
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Off-the-clock work: Unrecorded overtime that can violate the Fair Labor Standards Act (FLSA).
While buddy punching is often seen as “doing a friend a favor,” it’s a direct violation of company policy and federal wage and hour law. Under the FLSA, employers are required to maintain accurate time records. Failure to do so—whether intentional or not—can lead to fines, back pay, and legal exposure.
The Hidden Compliance Risks
Time theft isn’t just a payroll issue—it’s a compliance risk. When hours are inflated or untracked, it can cause:
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Inaccurate wage calculations: Overpaying employees for time not worked or underpaying for missed overtime.
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Payroll tax errors: Incorrect reporting to the IRS or state agencies.
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Audit exposure: Missing or inconsistent time records trigger Department of Labor (DOL) scrutiny.
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Wage & hour disputes: Employees who claim unpaid overtime can file claims under the FLSA, even if the original error was due to time theft.
The HR Benchmark Report found that growing companies are 38% more likely to use automated time tracking systems—reducing human error, preventing falsified punches, and protecting compliance.
How Time Theft Erodes Company Culture
While the financial impact is measurable, the cultural damage is equally dangerous. When employees see coworkers bending the rules without consequences, trust breaks down. High performers feel discouraged, and morale drops.
Over time, small acts of dishonesty create a workplace culture where “good enough” replaces accountability. For small and mid-sized businesses trying to compete for talent, that culture shift can stall growth.
Modern time tracking systems not only protect your payroll—they signal to employees that fairness, accuracy, and integrity matter.
Technology: The Front Line Against Time Theft
The good news: technology has made it easier than ever to eliminate buddy punching and time theft without adding administrative burden.
1. Biometric Time Clocks
Fingerprint, facial recognition, or hand-scan clocks make it virtually impossible for one person to clock in for another.
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No more shared badges or PINs
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Prevents “ghost employees” on the payroll
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Integrates directly with payroll software for real-time reporting
According to the Benchmark Report, companies using biometric clocks report 27% fewer payroll disputes and a 15% increase in productivity.
2. Mobile Time Tracking with Geofencing
For remote or field-based teams, mobile time tracking apps with GPS or geofencing confirm that employees are physically at the correct location when clocking in or out.
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Prevents “off-site” punching
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Automatically logs breaks and travel time
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Reduces administrative oversight
3. Role-Based Dashboards and Alerts
Timekeeping solutions offer role-based dashboards that alert managers to missed punches, duplicate clock-ins, or suspicious patterns. These features help identify potential time theft early—before it becomes a recurring issue.
4. Integration with Payroll and HR Systems
When your time tracking data flows directly into payroll, errors disappear. Integrated systems ensure that wages, tax filings, and overtime calculations remain accurate and audit-ready—protecting both your business and your employees.
Setting the Right Policies and Expectations
Technology helps, but policy matters too. A strong time and attendance policy should:
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Clearly prohibit buddy punching and falsification of time records
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Outline disciplinary actions for violations
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Require employees to verify their own hours
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Educate managers on monitoring and documenting time accurately
Regular training reinforces accountability. According to the Benchmark Report, companies that conduct annual timekeeping audits experience 45% fewer compliance violations than those that don’t.
The ROI of Accurate Time Tracking
Implementing automated time and attendance systems can deliver a measurable return on investment:
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Reduced payroll costs: Eliminating just 10 minutes of daily time theft per employee can save thousands annually.
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Audit protection: Detailed digital records meet DOL and IRS documentation standards.
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Improved productivity: Employees focus more on work when they know timekeeping is transparent.
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Better forecasting: Accurate labor data informs smarter scheduling, budgeting, and hiring.
For example, a 50-employee business saving just 10 minutes per worker per day reclaims over 2,000 hours annually—the equivalent of a full-time position regained through efficiency alone.
From Compliance Burden to Business Advantage
The HR Benchmark Report highlights a key insight: high-growth companies don’t view time tracking as a chore—they treat it as strategy. By leveraging automation and compliance-focused technology, they gain real-time visibility into labor costs, overtime, and workforce productivity.
That data enables smarter decision-making—from hiring and scheduling to compensation and forecasting. Accurate, transparent systems create trust with employees and regulators alike.
Take Control of Your Time—and Your Growth
Time theft and buddy punching aren’t just employee issues—they’re business strategy issues. Eliminating them protects your margins, strengthens culture, and ensures compliance confidence.
If your organization is still relying on outdated systems, now is the time to modernize. Cloud-based, integrated, and secure time tracking technology can transform your operations—and your bottom line.
Stop time theft before it starts. Deploy a modern Time & Attendance solution to accuracy, strengthen compliance, and reclaim lost productivity.
This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.
