When you notice that someone is paid more than he should be or that a fictitious employee is on the payroll and you see that it is intentional, you may be witnessing payroll fraud. Reporting the suspected fraud is important so the appropriate parties may determine whether improprieties are taking place. You can report payroll fraud by knowing whom to contact and by providing the appropriate information.
Gather what information you can about the suspected fraud such as the names of those involved, the nature of the fraud, how long the fraud has been taking place, how much money is involved and how you became aware of the fraud. Write this information down. When you're reporting suspected payroll fraud, your credibility relies on how consistent your story is throughout the reporting process.
Notify a trusted manager within the company not affiliated with the suspected fraud. Sit down with the manager in a private, closed room or away from the office, provide him with as much information as possible about the fraud and answer any questions he has.
Alternately, contact the local FBI office. This agency typically investigates payroll fraud and embezzlement for criminal activity. Locate your local FBI office, call the office and provide a representative with as much information about the fraud as possible including the name, address and phone number of the company, the names of those involved and the nature of the fraud.
Another option is to report the payroll fraud to your state attorney general's office. Call your state attorney general's office, speak to a representative and provide her with as much information as you can. Answer questions honestly and accurately.
Discovering possibly criminal activity at your workplace can be potentially dangerous - if you have any suspicion at all that what's going on is somehow sanctioned by higher-ups at the company - for example, if the fraud is a no-show job that an executive arranged - you should deal only with outsiders like the FBI or the attorney general's office, and even then insist on anonymity.