Highlights
- Accurate timekeeping is essential for managing hourly employees.
- Choosing the right timekeeping method and maintaining consistent, fair time clock rules are key for efficiency and compliance.
- EPAY Systems offers a cloud-based solution to simplify time and attendance management, ensuring you stay in control and compliant with labor laws. Request a demo to learn how it works.
Unless you are a private employer with sales of less than $500,000 a year, you are required by the Federal Labor Standards Act (FLSA) to keep records of the time that all your employees work. Ensuring accurate time tracking is essential for both employers and employees. But navigating complex time clock rules for hourly employees can be daunting.
This guide helps you understand the ins and outs of time clock rules, so you can stay compliant and ensure fair compensation for your hourly workers.
Let’s dive in!
FLSA Timekeeping Requirements
To comply with FLSA regulations, employers must accurately record the following for each hourly employee:
- Employee Information: Full name, Social Security number, address, birth date (if under 19), sex, occupation
- Workweek: The starting day and time of the employee’s workweek
- Hours Worked: The total number of hours worked each day and each workweek
- Overtime Pay: Any overtime hours worked and the overtime rate paid
- Wages: The hourly rate of pay, total daily or weekly earnings, and all deductions from wages
This information must be accurate and complete, and must be preserved for at least 2 years.
The Department of Labor doesn’t specify how to track time, stating that “any timekeeping plan is acceptable as long as it is complete and accurate.”
Finding the best timekeeping solution for your company requires careful consideration of several factors, including business size, technological comfort level, and the desired level of employee oversight.
Let’s explore popular methods for tracking employee work hours.
What Are the Various Methods of Timekeeping?
Punch Clock
The antiquated punch clock system involved punching in and out of a clock with a paper card. While affordable and straightforward, this analog approach is becoming outdated. As technology advances, businesses are increasingly adopting digital time and attendance solutions for more efficient data management. At EPAY Systems we believe that paper-based systems are rapidly becoming obsolete.
Biometric Clocking
At the opposite end of the spectrum, biometric time clocks use fingerprints or facial recognition to verify employees’ identity and clock them in. If you are concerned that your employees might be clocking in for one another, this system resolves the issue. This practice, known as “Buddy punching”, is a prevalent issue with 19% of employees admitting doing it, according to Nucleus Research.
Beyond time tracking, biometric systems offer enhanced security by restricting access to specific areas for authorized personnel only. This is particularly beneficial for companies in technology or other sectors with sensitive information.
For distributed workforces without on-site management, biometric clocking gives supervisors peace of mind that the correct employees are showing up at the right location and on schedule.
Proximity Clocking
Proximity clocking systems use employee-specific cards to record attendance. These cards, known as “proxy cards”, are equipped with RFID (Radio Frequency Identification) technology and scanned at a designated terminal.
While offering a convenient and relatively secure method, the potential for card sharing or loss is higher compared to biometric options. The appropriate level of security ultimately depends on your organization’s specific needs.
Mobile Phone Clocking
Mobile phone clocking systems enable employees to record their work hours through a dedicated app. This is an excellent option if you have several employees who work remotely, or those frequently out of the office, out of town, or at client locations where a traditional time or punch clock cannot be installed.
It also empowers supervisors to clock employees in or out remotely using a supervisor mode.
There is still some potential for abuse, but advanced features like facial recognition and geofencing can deter time theft by verifying employee location.
PC-Based Clocking
Desktop or laptop computers can serve as timekeeping tools. There are two primary methods:
- Scanning systems. These involve hardware devices attached to computers that read fingerprints, cards, or key fobs. While installation-free, they are often best suited for in-office environments and can incur additional costs.
- Cloud-Based Systems. Many companies offer web-based timekeeping platforms, often integrated with existing payroll or HR software. Requiring only internet access, these systems frequently include mobile app options for added convenience.
Beyond Data Collection
Effective timekeeping requires more than just collecting data. A dedicated person should oversee how the system is working daily and continuously monitor for errors.
It is also vital that someone oversees your data archive. Whether stored digitally or physically, timekeeping data must be secure, accessible, and up-to-date. Regular backups are essential to protect against data loss.
Essential Time Clock Rules for Hourly Employees
Accurate and compliant timekeeping is essential when working with hourly employees.
To ensure you’re following labor laws and maintaining fair pay practices, let’s dive into the key rules governing hourly time tracking. From recording hours worked to calculating overtime and managing breaks, these guidelines will help you navigate this crucial area of HR management:
Accurately Recording All Hours Worked
To ensure fair compensation and compliance with labor laws, meticulously track every minute of an employee’s workday. This includes regular work hours, but also overtime, meal and rest breaks, and on-call time. For employees working non-standard shifts (nights, weekends, or holidays), accurately recording hours is essential for calculating any applicable shift differentials.
Overtime Pay Calculations
Hourly employees are entitled to overtime pay if they work more than 40 hours in a week, at a rate of one and half times their usual hourly pay. You may be willing to incur overtime expenses to meet the needs of production, but there’s no reason it should be an open door to abuse of the overtime system.
It’s vital that you have records of overtime hours as well as regular hours. In addition to helping you stay informed about the true extent of unplanned expenses, your records will also protect you if an employee claims to be owed overtime compensation. Your records need to be easily accessed and detailed; otherwise, you could end up on shaky – and costly – ground.
Meal and Rest Breaks
While federal law does not mandate meals or rest breaks, they do consider breaks typically lasting 5 to 20 minutes as compensable work hours. These hours must be included in the total hours worked.
Meal periods, which last at least 30 minutes, are considered non-work time and are not compensated. Unlike shorter rest breaks, they are intended for employees to fully disengage from work duties and are not considered part of the workday.
It’s crucial to check both state and local jurisdictions for specific regulations, as requirements can vary widely. Additionally, some industries may have their own guidelines or collective bargaining agreements that dictate break policies. Always consult relevant labor laws and industry-specific standards to ensure compliance.
Time Clock Rounding Rules
To streamline payroll processing, many employers round employee time to the nearest quarter-hour, fifth, or sixth minute.
If you are using quarter-hour rounding, for example, if an employee clocks in at 8:07 AM, their time is rounded down to 8:00 AM. In a similar way, if they are clocking in at 8:08 AM, it’ll be rounded up to 8:15 AM.
While rounding is permissible, it must be fair and consistent.
Here are some rounding methods you could use:
- Seven-minute rule: If an employee works between 1-7 minutes, their time is rounded down. If they work between 8-14 minutes, their time is rounded up.
- Ensure neutrality: Over time, rounding should balance out to avoid unfairly benefiting either the employer or employees.
- Favorable rounding: Always round up employees’ time. This benefits employees but increases labor costs.
- Custom rounding: Create a specific rounding policy tailored to your business needs, ensuring fairness and compliance with labor laws.
Master Timekeeping with a Robust and Accurate Solution
Effective timekeeping is crucial for businesses with hourly employees. By adhering to federal, state, and local labor laws, you can ensure fair compensation, maintain compliance, and avoid costly legal issues.
EPAY Systems offers an easy-to-use, cloud-based time and attendance tracking solution designed to handle the challenges that come with managing an hourly workforce. Our software streamlines time tracking, overtime calculations, and compliance while integrating seamlessly with our comprehensive human capital management platform for payroll, HR, and benefits administration.
Discover how a timekeeping solution can simplify your workday. Schedule a live demo today!
