That’s how many employees commit time theft, according to a recent survey.
Pair that with wage and hour litigation on the rise, and accurate employee time tracking has become more important than ever.
In this article, we will highlight some of the more common practices that could result in Department of Labor (DOL) intervention, or a wage and hour lawsuit.
1. Improper rounding of employee time worked.
In today’s workplace, it is a common practice to round an employee’s hours for the day. This can be done by rounding the total hours worked, or by rounding in and out punches on an employee’s time card.
If an employee records on their handwritten time sheet that they started their day at 8:05 a.m., took an hour lunch, and worked until 5:06 p.m. – it would be a common practice to round these times to the nearest 15 minutes, resulting in a full 8-hour day. Automated time and attendance software can perform this process as well.
When the employee clocks in at 7:55 a.m. and out at 4:55 p.m., the system can immediately round the actual punches to the required eight hours from 8-5. This is considered a neutral rounding system and both the employer and the employee benefit equally from the rounding rule.
In this case the employer benefited since the employee could have picked an extra five minutes by clocking early but was rounding up to the 8:00 a.m. start time. The employee benefited by leaving five minutes early, and still got credit for working a full day. This scenario is acceptable, per the DOL.
Business owners can face issues when rounding these same punches when it’s only in favor of themselves (ex. recording a day of only seven hours 55 minutes or less).
As long as the rounding benefits both the employer and employee equally, the DOL considers it to be neutral.
A court in California recently ruled on a case that said a neutral system that automatically rounded an employee’s time was OK. Today’s automated time and attendance systems can make sure that only neutral rounding rules are applied (so that you don’t have to take it to court).
2. Auto lunch deductions.
“There are strict laws regarding how much lunch you are required to give your employees based on the amount of time they work. In California, they even have the rule that forces the employer to make sure the employee takes every minute of what they are allowed or the employer has to pay them additional overtime,” explained Jim Martin, VP of Time and Labor Management at PrimePay.
Many small businesses automatically deduct time from an employee’s hours worked – typically 30 minutes to one hour.
However, issues can arise when employees don’t take a lunch break or work through their lunch break. Well, what happens when the employee has 30 minutes subtracted from their pay, but they actually worked through lunch? In the eyes of the DOL and the employee, they should be paid for that time.
The solution? With automated time and attendance systems, the employer can accurately track when an employee works through lunch.
3. Employees working off the clock.
Off the clock work occurs when an employee comes in early or stays late to perform work on their employer’s behalf. In addition, employees who are not exempt from overtime often take work home and complete projects while not on the clock.
The federal government and the Fair Labor Standards Act (FLSA) sets overtime rules by which all businesses must comply.
Either circumstance can result in legal action for unpaid hours that employees work and are not compensated for.
These issues can be avoided by having a clear time and attendance policy requiring employees to clock in, or accurately report those hours to their employer. With the addition of Mobile Time Clock systems, employees can take work home and clock in to ensure that they are compensated for that time.
4. Improper time card editing.
Today’s workforce is stretched in many different directions in hopes to maintain a solid work/ life balance. Even with the most sophisticated time and attendance programs in place, employees forget to clock in and out. This results in the necessity of a supervisor to edit the employee’s time card.
This is a normal part of daily business life, and perfectly legal. In our litigious society, it is the employee’s word against that of the employer in wage and hour disputes, and the deck is typically stacked in the employee’s favor. A disgruntled employee can claim that the employer was editing their time card to reduce their hours worked, or negate any overtime pay.
By actively documenting all time card edits, the employer can recall why they made an edit to an employee’s timecard to prove that it was justified. With current time and labor management systems, these notes can be recalled and compiled in reports in a matter of seconds.
5. Time card retrieval.
If the DOL wants to audit your business, they usually won’t give you a lot of time to gather your records. Employers – make sure your records date back a minimum of three to four years and are readily accessible. Not being able to collect your records in time is the same as having no records at all.
As Martin further explains, “The government sets how long you must keep time cards. Most businesses do not keep more than a year. They take up a lot of room and it is very hard to find a single time card if an employee dispute ever arises. Time Clock systems not only keep virtually unlimited history, they make that history available within seconds. In addition, they keep an audit trail of any changes that were made, who made them and the date/time they were made.”
This daunting task can be simplified with an automated time and attendance system. Records can be gathered in minutes, and an unpleasant trip to the storage unit can be avoided.
By following these guidelines, unpleasant, unproductive, and costly wage and hour disputes can be avoided.
Stay compliant with PrimePay’s Time Clock system.
PrimePay’s Time Clock system (integrated with Online Payroll) cuts time spent manually managing time cards in half.
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