How common is ghost employee fraud?

It is one of the most common types of payroll fraud, particularly in large companies with decentralized management.

How can I detect ghost employees?

Look for employees with no deductions, duplicate addresses/bank accounts, or no physical footprint (time stamps, computer logins).

Compliance

What is a Ghost Employee?

A ghost employee is a person recorded on the payroll system who does not actually work for the business. This is a form of payroll fraud where a dishonest employee or manager creates a fake profile or keeps a former employee on the books to collect their wages.

Anatomy of the Fraud

1Perpetrator adds a fake name or fails to remove a terminated employee.
2Fake time cards are submitted and approved (often by the perpetrator).
3Payments are routed to the perpetrator's bank account.

Internal Controls

Ghost employees are a significant risk in large organizations. Regular audits and separation of duties (between HR and Payroll) are key defenses.

Prevention with Biometrics

ClockIt's biometric verification features make ghost employee fraud nearly impossible, as a physical person must be present to generate the time record.

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Frequently Asked Questions

How common is ghost employee fraud?: It is one of the most common types of payroll fraud, particularly in large companies with decentralized management.
How can I detect ghost employees?: Look for employees with no deductions, duplicate addresses/bank accounts, or no physical footprint (time stamps, computer logins).

Related Terms

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