Who Are Ghost Employees and How to Handle Them

Any business with ghost employees is likely to have payroll fraud. In the long-term, this inflates the company’s payroll budgets and fades the profits. 

One can meet ghost employees almost in all industries, especially in companies with a very large workforce. 

According to the Association of Certified Fraud Examiners (ACFE), 29% of companies internationally experience payroll fraud. For instance, construction businesses lose millions of dollars because of ghost workers annually. 

Whether you are a construction company owner or a construction project manager, we will show you how to prevent ghost employees and no longer struggle with this issue. 

Ghost employee fraud is a serious concern that can significantly impact your company’s bottom line.

Who Are Ghost Employees Exactly? 

But let’s first define who these employees are and how they can harm your company. 

The word “ghost” says it all. Those are the employees who don’t exist, but you can find their names on the payroll system. 

Usually, ghost employees appear in the following three forms: 

1. Fictional Worker  

A fictitious employee may be created by dishonest employees who just wanted to earn more at the company’s expense.  

They would make up fake credentials of a non-existent worker, such as the first name and last name, address, assigned jobsite, salary amount and other relevant details. 

Later fictitious employees would add this fictional worker’s information to the payroll files and eventually get paid for him. 

What happens is that companies don’t check on every accounting employee who stands in the line to receive the paycheck several times. 

2. Real Workers Who No Longer Work For The Company 

Ghost workers can also be real people. When one leaves the company or dies but stays on the company’s payroll. 

Though the person doesn’t physically come to the jobsite, the payroll and accounting systems still issue a paycheck for him. 

This, of course, results from labor mismanagement by the managers, who don’t check and update payroll records regularly.

3. Buddy Puncher Scammer 

Buddy punching itself is another type of labor fraud when someone clocks in for another co-worker (his “buddy”) who is not present at the jobsite. 

Buddy punching happens more often than you think. Managers are easily cheated and don’t notice how someone else clocks in or out for another employee. 

Handling Ghost Employees 

Believe it or not, it is possible to reduce the risk for ghost employee scam in the business. 

Your company should conduct ghost employee audits a few times a year. An accounting employee from your team can take a look at and compare the payroll, time card reports, and employee files regularly. 

You should pay attention to finding information discrepancies, duplicate employee bank accounts, or social security numbers. 

Tracking payroll budgets is also a vital step to avoid these problems. If you want to get rid of paper timesheets or spreadsheets completely, you should start relying on advanced technology to enhance your payroll and accounting activities. Currently, the market offers various time and attendance software to detect ghost employees more effectively and faster.

MobiClocks has proven its effectiveness by saving time and money to many companies monthly. 

The latest technologies used by MobiClocks, such as face recognition, geo-fence, GPS tracking, have helped many construction companies detect and prevent ghost employees quickly.