An employee forgets to properly log his sick time for when he was out on Monday. Because he’s in a rush on Friday he submits a timesheet that incorrectly says he worked on Monday. His supervisor is busy and signs the time card without checking. The time card information goes to payroll and gets processed. The employee gets a paycheck the next week showing a vacation balance that's 8 hours too high, and 8 hours of regular time he did not work. 

Companies Lose Money, Time and Productivity

Employee timesheet errors are rampant in some organizations. They can happen when employees take time off but code it as jury rather than vacation. They might receive a pay differential when they work in another cost center but fail to code their hours with the right cost center number. Employees can accidentally under report work hours, or when their supervisors are not paying attention, over-report work time. Once you process these errant hours and pay employees, you now must correct these mistakes and any additional errors they create.

How much does it cost to correct pay data errors? A lot.

First, all of these errors will create the need for FICA corrections, and in some cases you will need to file IRS Form F941x which requires detailed explanations of every correction. If your FICA underpayment is greater than or equal to 2% of your total FICA obligation, you will owe penalties and interest if you do not correct errors and make these adjustment payments with your next quarterly return. 

Another area where time card errors uncorrected will hurt is for hourly worker defined contribution amounts.  These are calculated based upon hours worked.  Any errors not fixed by year end will be even more expensive to correct. 

All of these errors cause even more damage to your business, not only rippling through an employee's entire paycheck, but infecting your accounting systems, accounting costs, billable hours and invoices. All of these errors need to fixed.

The Occupational Safety & Health Administration (OSHA) classifies construction as a “high-risk” industry. Compared to other industries, construction workers are more vulnerable to serious injury. Because of this, it’s imperative that each and every worker understand the importance of construction safety checks.

Walk-Around Inspections

Each employee should have a walk-around inspection checklist. This checklist should be completed at the beginning of an employee’s shift, to ensure that their tasks are completed in the safest environments.

Everyone’s walk-around inspection will the different. For instance, a forklift operator will need to walk around and inspect his vehicle, while a construction manager will be responsible for doing an overall jobsite safety inspection.

Here are some examples of what could be on an inspection checklist:

• Ensure everyone is wearing the right safety gear: goggles, helmets, etc.
• Determine that all work areas are clean
• Determine that all exits are properly labeled, and that all emergency exit plans are hung in highly visible areas
• Flammable liquids, and other hazardous materials, should be properly stored

A supervisor, or foremen, is the crew leader on a construction jobsite. It’s up to him to plan, organize, and direct work in a safe, and timely, manner. All supervisors will experience conflict at some point, as well as safety violations and workplace injuries. By keeping a daily record of all activities, your construction site supervisor can protect your business from arbitration and/or litigation.

What is a Daily Log?

The daily log is a book, or software program, into which a supervisor records the day’s activities. Record keeping helps ensure project organization, as well as keeps tabs on day-to-day employee happenings. The daily log is essential because it keeps a consistent record, which could be useful if you’re ever sued, and need to prove that your workers performed a safety inspection, or conflict was handled immediately and efficiently.

Daily log sections include:

• Date
• Times of incidents
• Work performed
• Safety topics
• Problems and delays
• Employee conflict  
• Equipment usage
• Materials purchased
• General management

A new year has begun, and it's time to look at some of your business practices. Are you still using paper timesheets? If yes, then you are probably experiencing some of these problems:

Problem #1: Clerical errors

You spend a lot of time correcting errors.

Using paper timesheets means someone has to read everyone's handwriting, and has to enter numbers from a piece of paper to a computer, or hopefully not a paper ledger. Those errors can cost you time and money in reconciling with employees. Those errors can also cause you legal problems. There is a way to take care of all those errors.

Despite laws against the practice, many employees still attempt to cheat their time-sheets, collecting wages for hours they didn’t actually work. This practice can cripple a business, so diligence is needed to prevent it. Reducing fraud and errors in time tracking is payroll and management’s job, so encourage them to familiarize themselves with red flags, as well as institute practices designed to eliminate the opportunity to commit fraud.   

How is Time-Sheet Fraud Committed?

Unauthorized Hours –

Fraudulent employees will increase their time-sheets with extra hours they didn’t actually work. On a long enough timeline, this practice can end up costing a business thousands of dollars, as was the case in Vermont, where a police patrol commander was found to have padded his time-sheet from 2006 – 2012, defrauding taxpayers to the tune of $213,000.

Buddy Punching –

People build friendships at work, but those friendships can become toxic when employees start to punch in for each other. A “friend” may ask her fellow employee to punch her hours into the company clock, even though she’s not working that day.

Ghost Employees –

Unfortunately, many companies have been crippled by the actions of their payroll staff. Payroll is supposed to prevent time-sheet fraud, but sometimes they could be the department behind the fraud. In large companies, where the fraud is less likely to be noticed, payroll staff will create a fake employee and collect their wages. Ghost employees may also be employees that have left the company, but to whom payroll still continues to cut a check.

Pay Rate Alteration –

Sometimes, an employee and a member of the payroll staff will join forces to defraud the company. The payroll staff member will alter the employee’s pay, increasing it to an amount that is desirable to both of them. The amount will then be split when the check is cashed.

Employee absences and tardiness are costly to the business and can have a detrimental effect on overall productivity. Additionally, employee absenteeism can often be viewed as a gauge in determining employee morale. A survey conducted by CCH found that over half of the time an employee calls in sick, they're faking. With so much risk involved, many employers are turning to employee incentive programs, but do they really work? The answer is yes, as long as the incentives are tailored to your company and its employees. While these programs carry some disadvantages, such as time and expense, the overall advantages resulting from a successful attendance incentive program can easily outweigh them. 

There are many ways employee hours can be paid wrong. When you're calculating everything manually, mistakes can be made. For the Southeast Kansas Regional Correctional Center, they saw big problems when the latest paychecks came out for their employees, and they ended up much bigger than had been anticipated. In short, it was a massive trainwreck.