March 18, 2015

Timekeeping is essential to avoid unneccessary overtime

Timekeeping is Essential to Running Your Practice

In the process of providing HR guidance, our Solution Center advisors frequently make the discovery that a practice is not recording employees’ time. When we ask the reason, we generally hear one of the following:

“Everyone is on salary.”

“We pay everyone a fixed daily rate.”

“We pay everyone on commission.”

There are (at least) two major problems with this. First, as an employer, it’s in your best interest to have records of all employees’ time worked. Not only will this help in your day to day management, but timekeeping records are critical to your defense in any wage and hour audit or claim.

The second and more specific problem is that there are strict laws that require you to record employee hours and keep those records on site. There’s almost no chance that your employees all meet the qualifications to be classified as “exempt,” and if you’ve got any non-exempt employees, or anyone you later find out you’ve misclassified, then you must maintain records of their time. More than 90% (and often 100%) of all employees in any type of medical practice must be recording their time.

Non-Exempt Employee Timekeeping: It’s the Law

The federal Fair Labor Standards Act (FLSA), along with other federal and state wage laws, requires employers to record hours worked, wages paid, and other conditions of employment. Time records must show the date and time a workweek starts, the number of hours worked each day, and the total hours worked during the week. Include the starting and quitting times for each employee.

Exempt Employee Timekeeping: Should You? (Yes.)

For exempt employees, timekeeping is not required but is strongly recommended. Failing to keep track can cause very expensive problems if it is later determined that any employee was misclassified and is actually non-exempt. In this all-too-common scenario, such an employee can later make a claim that overtime pay is owed, and if there are no timekeeping records to consult, you will have great difficulty countering any claim as to the number of hours worked. The risk of paying for hours that might never have been worked is not worth it – just track their time!

(Think you’ll never have a timekeeping dispute with an employee or an angry ex-employee? The DOL even provides a secret tool for employees to track their OWN time, to compare with your records…so your records had better be up to snuff! Check out our article on this topic, which contains a link to the DOL secret timekeeping app)

Your Timekeeping Policy

All practices should include a detailed, written timekeeping policy in their employee handbook, and all employees should sign a statement acknowledging receipt of this and all your other policies.

  • Include the procedures for dealing with any discrepancy
  • Specify what disciplinary actions may result from intentional violation (e.g., falsifying time records, “padding the clock,” etc.)
  • Ensure that employees clock on schedule
  • Require prior approval for overtime (although you can’t refuse to pay it once it’s worked)
  • Perform regular self-audits of your practice to ensure employee compliance
  • Enforce your policies consistently – don’t let bad clocking habits become an unofficial “policy”

Once your policy is in place, document any issues, as your records are crucial in any dispute or claim. Remember, any time an employer cannot prove otherwise, the court generally rules in favor of the employee.

Use an Automated, Cloud-based Timekeeping System

If you haven’t done so already, you may want to switch to an automated, cloud-based timekeeping system. Handwritten records take longer to work with and increase the potential for errors due to illegibility, mistakes, or falsification of hours. Electronic records eliminate these problems, save time and money, and increase accuracy, consistency, and manager control.

Here are some benefits of such a system:

  • Increased Productivity: Businesses using computerized timekeeping report increased productivity. Data is recorded, tracked, and transferred to payroll electronically, reducing errors without wasting management time.
  • Greater Employee Engagement and Management Control: Timekeeping systems provide a way for managers, HR and business owners to measure aspects of employee performance.
  • Automated Alerts: Some systems can let you know if an employee clocks in or out before or after hours, so you can pinpoint the issue and get the problem under control.
  • Access from Anywhere, Any Time, on Any Computer: Whether or not you’re in the office, you can view employee clocking and access management functions. (You can set permissions for where, when, and on which devices employees can clock, too.)
  • Better Overtime Avoidance: Automated systems can warn employees when they’re getting close to overtime, helping them self-regulate. They can also warn managers when overtime is imminent.
  • Stronger Compliance: Computerized timekeeping makes it easier to comply with labor regulations. Accurate documentation is readily available in the event of any employee claims or external audit. Internal audits are also easier, ensuring that employees remain in compliance with policies.
  • Money Saved: Increased productivity, reduced management time, earlier awareness of employee problems, overtime avoidance, and better compliance add up to money saved across the board.

In Your Best Interest

In the long run, timekeeping is not only something you must do by law, it can help you make more money when turned into data. You’ve probably realized by now that the right timekeeping policies help you demonstrate your legal compliance and protect your practice. What’s more, they help you hold employees accountable for correct timekeeping and let you manage with greater ease and efficiency.

Friendly Disclaimer: Tips presented here are general in nature, and are not intended to replace good counsel about a specific issue with either your attorney or your favorite HR expert.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.