Time and Attendance – Essential Payroll Series
I expect that there have literally thousands of songs referencing time in some form or fashion. Surely someone knows the musical group Chicago. One of the most popular groups of the 70’s and 80’s, they had a song called “Does anyone know what time it is?” The song is not related to payroll but in an effort to demonstrate the importance of tracking time worked for hourly employees I have adapted it for our use.
Let’s start with this mandate. Hourly employees must be compensated for every minute they work. There is no “grey” area in this rule. Recently several McDonalds franchisees have been found in violation of the wage and hour rules for forcing employees to clock out and continue to work, not allowing employees to clock in, but requiring them to stay on the premise and automatically adjusting time worked to a preset schedule that was not identical to actual hours worked. (http://www.lawyersandsettlements.com/articles/california_labor_law/california-labor-law-lawsuit-78-19606.html#.UzmHVMJOXIW)
While these situations are obvious violations they represent what may be a growing trend in some businesses. The pressure today to perform at a high level, be profitable and keep costs under control is enormous. In many cases these demands are in the context of doing more with less, less people in particular. While the challenge to meet all the growing demands can be daunting, the rules are very specific regarding the treatment of hourly employees.
The rule of thumb is “hourly employees are paid for every minute they work, and if that time pushes there total hours for the day or week past the overtime limit they are paid at 1 ½ time their regular rate of pay.”
We recommend that every company review these items to assure that they are in compliance with wage and hour regulations,
- Have a verifiable and tested time and attendance tracking system in place. Some businesses have resisted implementing quality systems due to the initial costs, only to be found in violation and pay three times the amount in wages, taxes and penalties.
- Educate all managers and supervisors on the regulations for your state. Most of the violations in this area are not made by those responsible for payroll, but by managers and supervisors who are making decisions “in the trenches”. While education does not promise compliance it removes the excuse “I did not know”.
- Correct mistakes quickly. If there are mistakes (and there will be) correct them quickly. If an hourly employee reports they worked while not clocked in then make a manual correction. I believe that auditors recognize sincere attempts to correct periodic mistakes.
- Develop an atmosphere of communication allowing employees to report time worked. The fear is that employees will take advantage of the company by reporting time worked that was in fact not worked. They will, however it is a discipline issue not a pay issue.
- Address issues promptly and equally. I read a report of a recent case where an employer allowed an employee to work unauthorized overtime for 2 years. When a new supervisor was hired the employee was told not to work overtime without approval. The employee continued to violate the request. Disciplinary action and a lawsuit filed by the employee. One of the factors used to find against the company was the fact the employee had “broken the rules” for over two years and no action had been taken.
Of all the issues that will result in an audit, I suspect this issue is number one. If an hourly employee reports to authorities they are being ask to work and not be compensated, it is very likely the company will get a visit and audit.
If you have questions regarding hourly compensation or how to track time and attendance please contact me, email@example.com.