As an employer, you have many responsibilities but perhaps the most important one is complying with government rules and regulations. Recently, the time clock rules for hourly employees have changed and you need to make sure that you comply with the Fair Labor Standards Act (FLSA). You need to be compliant in recording work hours, breaks, overtime and calculating wages for hourly employees.
The Department of Labor (DOL) is very strict about enforcing time clock rules. If you break these rules, your company can be penalized with substantial fines for every lapse. The best way to ensure that you fulfill federal and state time clock rules is to use a good time tracking software system. Ensure that the system tracks employees clocking in and out at the beginning and end of their workday. And lets them check in and out of specific jobs/projects.
Hourly Vs Salaried Employees
When understanding the FLSA rules, the most critical thing is the difference between salaried and hourly employees.
A salaried employee receives pay based on an annual sum or salary. As the employer, you decide the pay period – weekly, bi-weekly or monthly. A salaried employee is not obligated to complete a time sheet, though you may use one for project management or other tracking purposes. The salaried employee’s pay is based on the salary as a whole, rather than on the actual hours worked. So, if a salaried employee works a little over or under the normal 40-hour work week, the employer doesn’t need to keep track of their work hours.
An hourly employee, gets paid by the hour for the number of hours that they worked. As the employer, you decide how many hours your hourly employee must work. Some US states and cities have authorized predictive scheduling laws that mandate that hourly employees be given a specified amount of notice of the hours they need to work.
An hourly worker is obligated to record their working hours through a timesheet or timecard system that the employer must verify.
Time Clock rules for Hourly Employees
To help you with your FLSA obligations with hourly employees, we reviewed the important rules that you need to keep in mind. These rules are for your hourly employees clocking in and out and tracking their work hours. Here are the top 6:
- Time tracking system
- Reported Hours Rounding
- Maintaining time sheet records
- Clocking in and out
- Confirming hours
- Clarifying time tracking policies
Time Tracking System
The FLSA does not obligate you to use any specific kind of time tracking system.
You are free to choose any type of system to track employee time as long as it is accurate. It’s important that the system that you use tracks actual hours worked including any breaks.
dftly’s Time Tracker app is used by many businesses to track time for individual employees and teams. It works on mobile devices, on web pages and within Salesforce, with all time tracking data securely inside Salesforce, regardless of what device it was recorded on. Click here to see how your employees can record their time easily and accurately, wherever they may be working.
Rounding work hours.
The FLSA allows you to round your employees’ reported time to the nearest specified increment. You are permitted to round your employees’ time up or down. For example, if you are rounding off in 10-minute intervals and your employee finishes work at 5:16 p.m., the time should be rounded up to 5:20 p.m.
You need to round up and down fairly. If you are always rounding down (where minutes are deducted), you may be breaking overtime and minimum wage laws.
Make sure that your time tracking system automatically rounds up or down to ensure accuracy and fairness. If the rounding up has caused your employees to be entitled to overtime, then you are obligated to pay that overtime, based on the overtime laws for your state/city.
Maintaining time sheet records
Employers are required to keep time cards (or other records) that demonstrate how your hourly employees wages were calculated for a period of at least two years. The two-year period is required by the US Department of Labor and you are required to provide access to the Wage and Hour Division access to inspect your records when necessary. So make sure that your time tracking software can store timesheet records for as long as necessary. With the Time Tracker, since all records are stored securely in Salesforce, you can always maintain time records for the necessary time-frames.
Clocking in and out
As the employer, you can decide whether your hourly employees are allowed to clock in early or clock out late. However, it should only be a few minutes and not hours. With the Time Tracker, you can easily add a limit on clocking in early and clocking out late. In addition, you can configure the Time Tracker to automatically log out or check out an employee after a certain number of hours or minutes for mandatory break times.
Your hourly workers should have the opportunity to confirm their hours at the
end of every pay period. Although a good time tracking system would have recorded the work time accurately, your hourly employees should be able to review and verify their hours,
Your time tracking system should give you or a designated supervisor/manager with the functionality to approve time cards. In addition, you or the manager should receive emails notifications if there are any anomalies in the time cards.
Clarifying time tracking policies
As the employer, you must inform all hourly employees of the policies and procedures regarding your time clock rules. We suggest that you include it as part of your employee handbook and provide training on how to use the time tracking system. Policies that should be explained include:
- What happens if employees are caught tampering, or attempting to tamper with the time tracking system
- The consequences if employees are caught trying to commit time theft
- What happens if employees are caught buddy punching (trying to clock in and out for their colleagues).
Make the right choice for your business
Given the importance of adhering to time clock rules, it may be impossible to adhere to state and federal requirements, with just manual time cards. Investing in a good, accurate time tracking software system is the right choice for most businesses. It’s not just about potential legal and compliance problems, but you could be losing money on payroll, if you are not correctly calculating work hours with overtime and rounding.