How Much are You Paying the Ghost Employee on Your Payroll?

Ghost employees can siphon mandatory resources from otherwise productive businesses. Unfortunately, trusted employees using sophisticated payroll systems are the culprits of the most costly frauds.

The ghost employee is an individual on the company payroll who does not work for the company. This “ghost” may be real (and may even work for another company) or fictitious. The perpetrator of the scheme may add a friend or relative to the payroll or invent a “new” employee.

Here is How the Fraud Occurs:

  1. The fraudster adds the ghost or facilitates the addition of the ghost to the payroll.
  2. Timesheets and wage rate documents are created and submitted by the fraudster.
  3. A paycheck is issued to the ghost.
  4. The check or electronic deposit is received by the fraudster or an accomplice and converted for their use.


This is a type of payroll scheme can be costly. One business learned the hard way after their book keeper falsely created payroll checks for a ghost employee for five years resulting in a fraud loss of more than $300,000.  For more helpful tips about keeping ghost employees off your payroll contact ARA at 636-346-9273.