Are you running a construction company and want to prevent ghosts from appearing on your paycheck? here are 20 foolproof tips on how to stop ghost workers from working.
What is a ghost worker?
Ghost workers are simply employees who regularly receive their salary in the company, but do not work for the company.
Ghost employee programs are run by payroll employees who create fake credentials that contain fake SSNs, address, phone number, etc., or who continue to provide benefits to employees who have left the company and redirect their salary to themselves. Whatever form the ghost employee takes, it is just a big ploy to steal money from the company.
The ghost worker can also be a real person, such as a family member, who does not work for the company but collects the payment and shares it with the scammer or keeps all of the payment for themselves.
The phenomenon of ghost workers is real in the construction industry, where you tend to have a lot of people on your paycheck. Due to the large number of contractors, full-time and dedicated employees who constantly pay in the construction industry, it is generally difficult to keep track of their payments. It has been observed that ghost workers are more common in large organizations than in small ones, where they are easy to spot.
The phenomenon of ghost workers is one of the most common cases of wage fraud encountered in the construction industry. This fraudulent method can manifest itself in various ways, including:
- Disgruntled Payroll Manager – If a construction company has a disgruntled payroll manager who thinks he or she deserves extra pay, it would be quite easy for them to edit the payroll records to create a new employee but fictitious and collect that employee’s check for himself. This is especially true if the payroll manager has unrestricted and uncontrolled access to the payroll system.
- Multiple employee scams are another way ghost worker scams can manifest in the design of a business.With a more complex payroll process, or if an employee does not have direct access to the payroll system. , several employees can conspire to cheat the system. then divide the money they spend. Typically, an employee plays a role in verifying and authorizing payroll so they can sign forged timesheets.
- Compensation from family / friends . An employee can create an entry in the payroll system for a family member or friend to receive a salary from the company. In this case, the actual employee may or may not receive a share of this salary.
Phantom employee schemes can range from simple data entry (especially if the bogus employee is paid) to complex manipulation of bogus schedules and redirecting payments. If you don’t keep a close watch on the wages in your construction business, this type of scam can often go unnoticed for a while, enough to waste millions of business dollars.
Red flags that might hint at ghost workers in your construction business
and. Anomalies of employee information. There are several anomalies that you may notice in your construction business and they will notify you that you have a ghost issue. If an employee’s Social Security Number (SSN) is not listed, or if multiple employees have the same SSN, that indicates one thing. and it is a scam. Again, if multiple address changes occur in the year, you should be wary.
b. Anomalies in the payroll register for direct deposits. This happens when the same bank account number is used for multiple employees, which could indicate that the shadow employee’s paycheck is being credited to the same account another employee is using. This is another red flag to mark. Multiple bank accounts for a single employee’s salary could indicate that a ghost employee’s salary is shared among the associates.
in. Check for payment anomalies. If, during a payment at a construction company, an employee receives multiple checks during the same billing period, or if the image of the check invoice shows that it has been verified by a person whose name is different from that of the recipient, you may have some hand problem.
re. Salary increase bonus or anomalies. If you notice at any time that an employee receives a different bonus than the typical corporate bonus distribution, or that an employee receives multiple pay increases in a year, this is a cause for investigation. …
e. Employee leisure trends. The employee has not received paid leave or sick leave for the entire year, or the payroll person never takes any time off. Forced leave or job rotation is effective control, Wilder said.
20 foolproof tips to avoid ghosts in your construction business
Due to the large number of variables that affect how fraudulent employees are scammed, there is no reliable way to stop it or trick employees into taking action. However, there are several things you can do to reduce your risk:
- Performing an audit of ghost employees
In most cases, ghost employees are discovered through a thorough check of your payroll records. You should have someone in your construction company who regularly compares payroll records against temporary card reports and employee files to spot discrepancies such as bogus employees, duplicate social security numbers, unsuccessful addresses. duplicate or duplicate bank accounts. “2”>
- Separate obligations to pay wages
Another thing you need to do in your construction business to prevent ghost workers from happening again is to make sure that different parts of your payment process are handled by different people. If someone is responsible for authorizing checks, make sure someone else is responsible for distributing those checks. If someone has permission to create / delete employees in the payroll system, make sure someone else checks the changes.
- Evaluate the HR policy
Make sure your HR and payroll staff fully update your HR policy, especially when it comes to adding and removing employees from your employee roster. This will help prevent the information of former employees from being used for fraudulent fraud.
- Make your payroll harder to tamper with
If you have workers who are paid for their time, make sure you have processes that make it difficult to tamper with time records. Ideally, use automatic time tracking when employees come and go. For added protection, use a time tracking system with built-in identity verification.
- Regularly check your payroll reports
Periodic review of payroll reports is an important step in mitigating and detecting fraud, and the auditor should do this more than once a year. Keeping in mind the reference number of the total number of employees in your construction company is a good starting point for this review.
From there, it can be as easy as scanning the names. It should be noted that for proper segregation, this review should be performed by someone other than those who might add new employees or fire old ones.
If your pay doesn’t change frequently, such as in cases where the number of employees changes as usual, every time you run payroll, check to see if it meets your expectations. Take a close look at abnormal results and find out what to expect when running reports.
- Use predefined shift rules
Predefined shift rules limit the length of time workers can enter and leave work. If they try to do it outside of a predefined time window, the system will not allow them. Rules can be defined for individuals, departments, or the business as a whole.
- Use user authentication
User authentication eliminates the punching of friends by requiring workers to issue a unique ID when entering and leaving a shift. Depending on the complexity of the system and its ability to integrate with any equipment, such as a scanner, this identifier can be an identification badge, a fingerprint or even a photograph of the face of a employee.
As for the payroll system itself, ask your vendor if they have any features that can automatically flag records that might be having issues with them. These characteristics are quite common.
You must also associate your software with the audio presence rules. For example, best practices require employees who ignore their approved window to manually enable or disable an entry for their manager. The manager can review the circumstances surrounding why that employee was early or late and determine whether to authorize the check-in.
- View user permissions for your system
You should be able to restrict access to each user based only on their needs so that ordinary workers cannot change their pay rates. You can also limit the possibility of changing the payout rates, for example after an efficiency analysis.
- Get rid of paper checks
Physical checks are much easier to counterfeit and steal than their digital counterparts, so consider direct deposit or a charge card if you haven’t already. Your software should allow you to easily change your payment methods.
- Generating exception reports
The accounting system should be designed with controls that set red flags on results that are outside of normal parameters. They may include:
- When added or deleted in payroll, a report should be generated automatically for the appropriate manager.
- Payment of overtime or bonuses beyond the specified parameters should generate an exception report.
- Find employees without deductions
A good way to spot ghost employees in your construction business is to find someone who has little or no deductions from their pay. The entrepreneur is rarely faced with the problem of creating a full set of benefit registrations, especially since this will lead to a decrease in the amount of money he can steal from the employer.
- Manual distribution of checks
Every now and then you should be guided by the principle of manually distributing checks in your construction business. By relying on manual check distribution, your organization will have a better opportunity to identify ghostly employees.
- Analysis of addresses or direct deposit accounts
Another thing you can do in your construction business to prevent ghost workers from appearing is to scan addresses or direct deposit accounts. As part of the account and address verification process, your organization may identify duplicate account, address, or social security numbers for multiple employees.
- Payroll Check Deductions Analysis
If you have employees on your payroll who do not withhold taxes or any other deductions, they may be ghost employees. By analyzing direct deposits, you can reduce labor costs by eliminating paper checks and the possibility of alteration, forgery and theft, although this does not prevent the diversion of deposits to unauthorized accounts. .
- Review paycheques that have double approval
While most are legitimate, two signatures can signal a false approval from a deceased employee, which the thief also backs up and deposits on their own account.
- Beware of budget changes in salary costs
Labor costs above budget can indicate unemployed employees, so you should be wary of any unforeseen changes in your budget.
- Use separation of functions
In your construction business, you need to make sure that many payroll functions are not delegated to one person. Make sure that the functions of preparing, paying and distributing salaries are separate. It should be applied as follows:
- No one should be able to add a new employee to payroll, set wages, enter hours, and pay someone.
- There should be a monthly reconciliation between payroll and the list of HR staff done by someone outside of the payroll department.
- The person authorizing the check should not be entitled to receive printed checks.
- The payroll function must be independent of the general ledger function.
- IT professionals should not have access to HR programs or payroll.
18. Periodically run the SSN of all employees through the Social Security Administration website, especially those in positions of responsibility, and verify them. Other websites for verifying employee identities include E-verify or the IRS website. This will help you know who is who.
20. Use a payment system that requires employees to identify themselves
If this involves the use of an electronic scanning system, carefully consider whether the same two people will be constantly scanning their cards at the same time. This could indicate that someone stole the badge from the second person and the second did not report the job.
- Examine the consistency of employee hours
If the clock never changes, it could be a red flag signaling the ghost employee because the scammer wants to make sure no one is looking at that person and dictating what is happening.
While the scourge of ghost workers is not going away anytime soon, applying some of the above measures can save your construction business from the threat of ghost workers.