You may have heard of wage theft, where an employer doesn't pay an employee what they owe—whether through an illegal withholding or inadvertently classifying an employee as exempt when they should be eligible for overtime pay. But, employee time theft is also an issue for employers.

Employee time theft occurs when an employee gets paid for work they didn't do. This can happen through deliberate fraud, like asking someone else to clock them in before they show up to work, or through laziness, like reading a book when the employee should be working.

Note: If your business is losing money due to employees not working all of the hours you pay them to work, here are four ways to stop employee time theft from damaging your business. See also the circumstances under which you can dock an employee’s pay for time theft.

Clearly Inform Employees of the Rules

It may seem obvious to you that clocking in a coworker who hasn't arrived at work yet is not appropriate, but it's not obvious to everyone. The employee may do it as a favor to a coworker to prevent that person from getting into trouble. They don’t stop to think about the real consequences to the business and the hit on their own integrity and the integrity of their coworker that their actions create.

If you have a time clock, post a sign reminding people that clocking in for someone else is not allowed. If people clock in on their computers, or by filling out a timesheet, remind people that it's against the rules to use someone else's login and that falsely filling out a time card is a fraud that could result in discipline or employment termination.

These reminders can seem overbearing, but you're not only protecting your business you're also helping them protect their jobs. Doing someone a favor can cost a person their job, and you don't want that to happen.

Set Expectations About Employee Time

If an employee is stealing time by not working when they should, it can be a result of not understanding the requirements of their job. For instance, retail employees may think it's okay to play with their smartphones as long as no customer is standing directly in front of them. But, you want them to clean, straighten, and stock the store—not commit employee time theft by checking out the messages on their phones.

tip: Make sure they clearly understand their duties so they are not wasting time. If you see someone goofing off, don't ignore it and don't just give a specific task for the minute. If you just say, “Can you clean up that aisle?” the employee might think it's a one time request. Instead say, “When you are not directly helping customers, you need to do tasks A, B, and C. Can you, please do A right now?”

Follow Disciplinary Procedures

Sometimes employers let things go, which is fine. You'd be a huge ball of stress if you couldn't let any mistake go. But, when you let employee time theft go unchecked, your employees start to think it's okay, and it's not.

So, follow your standard disciplinary proceedings. Generally, progressive discipline is the way to go: Verbal warning, written warning, suspension, and termination. Granted, you need to consider the seriousness of the offenses. Falsifying a time card is a far greater problem than goofing off on Facebook for a few minutes between customers. Clocking in 5 minutes before you start working is not nearly as bad as not clocking out for a two-hour lunch.

But, regardless of the offense, it's important that you follow up and that your employees know that you will follow up. Otherwise, it's too easy to let bad behavior slip in—permanently.

Remember to Set a Good Example

Often with time theft, employees emulate the behavior they see others doing. They may see their boss taking a two-hour lunch, but they do not understand that the boss is an exempt employee who gets paid the same amount of money regardless of the number of hours he or she works. They may not realize that the boss often puts in a great deal of time at night and on the weekends.

Note: But, sometimes, managers are serious slackers. If your supervisors are often playing on their phones instead of working, can you expect that your non-exempt workforce won't follow their example? Deal with your managers.

These are the four most significant actions you can take as an employer to minimize or stop employee time theft. Use all of them to cut down on a problem which allowed to go unchallenged will damage your business results.

What Can You Do Once Employee Time Theft Occurs?

The most important question an employer may have about employee time theft after implementing these four ideas, is can they dock the employee’s pay for the time when the employee was not working? The answer is maybe.

Pay docking is a serious business. In some cases pay docking is cut and dried: If John has Jane clock him in and he doesn't come in for another hour, you, positively, do not have to pay John for that hour. He wasn't working.

If on the other hand, John was at his workstation and goofing off for 15 minutes, you'll probably have to pay him. And in any case, when John truly had nothing to do, and you didn't want him to go home, you have to pay him for being ready, willing, and able to work, even if he is doing nothing more than waiting for an assignment.

Warning: All in all, you want to pay people for every hour they work, and you want them to work for every hour for which you pay them. As long as you keep on top of the issue of employee time theft, you shouldn’t experience time theft as a problem in your business.