Time Clock Rules for Hourly Employees

13 minutes read

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.

Failure to comply with this law can result in significant fines, but that’s not the only reason- it’s in your best interests to comply. Obviously, you need to know how much time your hourly workers have worked in order to calculate their pay fairly and accurately, for their benefit and yours.


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 expenses that may not have been planned, 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.

Labor Laws about Clocking In and Out – Time Clock Rules

Regarding hours worked, FLSA specifies that you must keep records of the following for each employee:

  • Hours worked each day
  • Total hours worked in the work week

However, the Department of Labor does not require any specific system for collecting this information, stating that “any timekeeping plan is acceptable as long as it is complete and accurate.”

What are the best options for keeping track of your employees working hours? Finding the best solution for your company will involve consideration of several factors, from the size of your company to your tolerance for technology, to how carefully you feel you must watch over your employees on an ongoing basis.

Punch Clock

This antiquated system involved punching in and out of a clock with a paper card. This is not a high-tech option, but it is affordable and somewhat useful in many workplaces. If you have the resources you may want to consider alternatives that take advantage of the power of computing to help you organize your data. At EPAY Systems we believe that the days of paper data storage and transactions are rapidly disappearing.

Biometric Clocking

On the other end of the spectrum, biometric systems use an employee’s fingerprint or facial recognition to verify their identity and clock them in. If you are concerned that your employees might be clocking in for one another aka “buddy punching”, this system resolves the issue. Buddy punching can be a real issue: 19% of workers admit to buddy punching according to a Nucleus Research study. 

If your company is involved in technology development or other activities to which only certain employees have access, a biometric system has the added advantage of restricting access to certain parts of your facility.

For distributed workforces where it isn’t possible to have a manager in place at every site, biometirc clocking gives supervisors peace of mind that the right employees are showing up at right site on time.

Proximity Clocking

Proximity clocking systems use cards that are assigned to a specific employee. The card, known as a “proxy card” can be placed near a scanner connected to a clock and the employee’s arrival will be recorded. This is possible because the card contains a radio frequency identification (RFID) chip, a capacitor and an antenna. 

RFID cards can also be used to restrict access to certain areas, but it is easier to share (or lose) a card than a fingerprint. It’s partly a question of how much security is necessary for your enterprise.

Mobile Phone Clocking

With mobile phone clocking systems, employees clock in via an app on their mobile phone. This is an excellent option if you have a number of employees who work remotely, or who spend a significant amount of their time at appointments out of the office, out of town or at client locations where a traditional time or punch clocks cannot be installed.

Another advantage is for crew managers or other mobile managers who can use a “supervisor mode,” which allows a supervisor to clock employees in or out.

There is still some potential for abuse, but some mobile apps can be optimized with facial punches or geo-fencing to make sure that employees are clocking in on site instead of on their couch at home. 

Clocking in Via A PC

For employees with access to a desktop or laptop computer, it can be used as a tool to clock in and out. This can be accomplished in more than one way:

  • Scanning – A device can be connected to the computer that can read a fingerprint, card or key fob. No software needs to be installed for systems, but they may make the most sense for in-office use, but these additional devices can be a costly addition
  • Cloud-Based Systems – There several companies that offer web-based interfaces at which employees can check in and out, including those from companies that offer software you may already be using for payroll or other administration purposes. All that’s needed is an internet connection. It’s not uncommon for there to be an accompanying mobile phone app.

Finishing the Job

It’s not enough to have a system for collecting data, a person in your organization should be responsible for ensuring that the system you’re using is being used every day and continuously monitored for errors. This will be easier in some situations than in others.

It is also vital that someone oversees your data archive. Whether it’s a spreadsheet, a pile of timecards or a cloud-based database, the data needs to remain secure, up-to-date and, ideally, backed up – whether it involves a copy on a hard drive, in the cloud or the older method of files with photocopies of time data.

New Time Clock Rules and Regulations from the Department of Labor

While this article is focused on hourly employees, it’s worth noting a recent change in federal law that may require you to keep hourly records of the time that some of your salaried employees work.

After a review of regulations regarding employees exempt from overtime, and a public input period that yielded hundreds of thousands of comments from stakeholders, the Department of Labor updated the guidelines regarding salaried employees and overtime:

As of December 1, 2016, the following salaried employees do not need to be paid overtime: Executive, administrative and professional workers who earn $913 per week or more, or an annual salary of $47,476 or more. For details, consult the Department of Labor website.

At EPAY Systems, we provide a flexible cloud-based time and attendance tracking software capable of accommodating the most complex attendance and pay variations. EPAY System’s variety of time tracking options can simplify the process of tracking employee hours and overtime, that can be combined with our unified human capital management system covering payroll, applicant tracking, onboarding and benefits administration relieving your HR burden. Schedule a demo today to see how we can flex to fit your unique needs or take a two-minute tour.

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