Answer
Moral hazard is when a person is not perfectly monitored is likely to participate in a dishonest or otherwise undesirable behavior.
Work Step by Step
Employers could better monitor their employees with hidden video cameras. Higher wages could be paid to incentivize less shirking of work. Delaying payment of a bonus can also incentivize workers to not shirk (since shirking would cause the employee to lose a large bonus at the end of a time period).