How Time Theft Drives Overtime Liability

Time theft is rarely treated as a discipline problem during audits — it is treated as a payroll failure. When employers allow inaccurate punches to accumulate, overtime calculations become distorted, and liability follows.

Regulators do not separate “unauthorized” time from compensable time. If the work occurred and the time was recorded or allowed, it counts.

What Counts as Time Theft

Common forms include:

• Buddy punching or shared credentials
• Early clock-ins without authorization
• Late clock-outs after work has stopped
• Working through unpaid breaks

Even when policies prohibit these behaviors, failure to prevent or correct them creates compensable time.

Why Overtime Becomes the Multiplier

Small daily abuses often push weekly totals over 40 hours. Once overtime thresholds are crossed, every excess minute carries a premium rate.

During audits, investigators review patterns, not isolated incidents. If time theft is systemic, the entire payroll period may be recalculated.

Employer Defenses That Fail

Statements such as “we didn’t authorize it” or “employees knew the rules” do not eliminate liability. The standard is whether the employer knew or should have known the work was performed.

Allowing inaccurate punches to remain uncorrected signals acceptance.

Technology as Prevention

Modern time clock systems restrict early punches, enforce schedules, and flag exceptions automatically. Biometric verification further eliminates identity abuse.

At EmployeeTimeClocks.com, we routinely see overtime exposure reduced simply by tightening time capture controls — without changing pay rates.

Bottom Line

Time theft is not just lost productivity. It quietly inflates overtime and creates wage-hour liability that auditors aggressively recover.