Financial Fraud ConceptPayroll fraud is a very serious issue and business leaders should have a system for detecting and preventing it from happening. The most common form of payroll fraud is when an employee gains access to funds that they are not entitled to.

For salary employees, this could mean adding an additional, fake employee to the payroll and collecting their wages. Hourly employees may also commit payroll fraud by altering the hours that they work or by clocking in or out of work at inappropriate times.

Detecting Payroll Fraud

Luckily, payroll fraud is fairly uncommon, but it is still important for businesses to understand the best methods of detecting it. Leaders should look for signs that their employees are living above their means or if more than one employee has the same address. Payroll audits and payroll system checks are also a great way to find anomalies with payroll.

Preventing Payroll Fraud

The best way to ensure that employees are not tempted to commit payroll fraud is to ensure that they are fully aware of the consequences that they face. They should understand that along with workplace consequences, there are also legal consequences of payroll fraud. Also, it’s probably in the best interest of the business to have an outside person or a staff member, not related to the payroll department, to perform regular audits on the entire system.

Payroll fraud is an issue that companies of all sizes face, that’s why it’s important to have a detection and prevention plan in place to protect your business from major losses.

For more information on detecting and preventing payroll fraud, please reach out Genesis HR Solutions at or 800-367-8367.

Genesis HR Solutions is the premier PEO provider for Massachusetts based businesses.