Nearly three-quarters of U.S. small businesses are affected annually by “time theft” or buddy punching—when a coworker clocks in or out for someone else. Whether it’s a quick favor or a more serious abuse of the system, buddy punching can lead to thousands of dollars in lost revenue.
What Is Buddy Punching?
Buddy punching occurs when:
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A coworker clocks you in or out when you’re not present.
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An employee stays clocked in during breaks or personal errands.
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Someone clocks in early or out late on someone else’s behalf.
It may seem harmless—just a few minutes here or there—but those minutes add up. The American Payroll Association reports that employers lose an average of 4.5 hours per week per employee to time theft, which can cost $1,560 per employee per year.
The Real Cost of Time Theft
With most small businesses employing fewer than 20 people, buddy punching can cost upwards of $30,000 annually. That kind of payroll bloat can lead to:
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Budget shortfalls
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Staff reductions
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Layoffs
Employers Can Be Unwitting Buddy Punchers
Some payroll systems require hours to be estimated at the end of a pay period. For example, if your pay period ends on the 15th but you need to submit payroll on the 13th, you might estimate time for the 14th and 15th. If an employee is late or absent those days, you’re essentially buddy punching, and paying them for time they didn’t work.
How to Prevent Buddy Punching
1. Create and Enforce a Clear Policy
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Implement a zero-tolerance policy: No one may clock in or out for another employee.
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Train employees on the seriousness of timekeeping fraud.
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Clearly communicate consequences—including termination—for violators.
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Post the policy where all employees can see it.
Tip: Don’t single out individuals. Make it a company-wide policy announcement to avoid damaging morale or trust.
2. Use Secure Login Credentials
Require employees to:
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Use unique, secure passwords to clock in
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Update passwords regularly
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Never share login credentials
Benefits:
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Harder to impersonate others
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Easier to track who logged in before and after fraudulent punches
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Protects employee personal data
3. Install a Biometric Time Clock
Biometric systems require:
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Fingerprint
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Facial recognition
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Retina or hand scans
Only 3% of employees who commit time theft use a biometric system, making it one of the most effective deterrents.
Pros:
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Difficult to fake or share
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Strong fraud prevention
Cons:
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Higher upfront cost
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May require employee consent and data protection compliance in certain states
4. Enable Geofencing
Geofencing uses:
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GPS
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Wi-Fi
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Cellular data
To ensure employees can only clock in:
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Within a defined area like your office or job site
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Using a mobile app or RFID badge
Ideal for: Office-based businesses with on-site teams
5. Use GPS Tracking
For businesses with mobile or remote workers, GPS tracking can:
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Confirm employees clock in at the correct location
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Reduce the chance of remote buddy punching
Ideal for: Field service companies, remote job sites, and businesses with mobile crews
Additional Measures to Consider
Implement Low-Cost Attendance Strategies
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Use the quarter-shift method—scheduling start times in 15-minute increments can reduce tardiness by up to 50%.
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Conduct return-to-work interviews after unscheduled absences
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Recognize and reward good attendance
Avoid the “Payroll Police” Reputation
While enforcement is important, combine it with positive reinforcement to create a more balanced workplace culture.
Invest in a Modern Time Tracking System
Web-based timekeeping systems can:
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Require password-protected logins
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Capture punch-in photos
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Collect e-signatures on timesheets
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Maintain detailed audit trails
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Restrict punch-in times
While a new system may cost around $500, the investment often pays for itself in just a few months by eliminating time theft and reducing administrative strain.
Final Thoughts
Time theft and buddy punching may seem minor, but the financial damage to small businesses is real. By combining:
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Strong policies
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Modern tech tools
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Employee education
…you can protect your payroll from fraud, maintain fair working conditions, and save thousands annually.
Ready to take back control of your time and labor tracking?
ASAP Payroll makes it simple to upgrade your timekeeping system with tools like biometric punch-ins, mobile geofencing, and real-time reporting—all backed by friendly, expert support. Contact us today to learn how we can help you stop buddy punching for good.