Episode 96: Don’t Get Caught Clock Watching: Timekeeping Compliance for Medical Practices

Paul: We have a practice that does clinical days inside of a jail facility.

Tiana: Okay.

Paul: So, this is a medical practice. And they go in and I guess they must go into the local jail. And they and I’ve seen this contract dentistry, I’ve seen some other things. Not so much medi spa though. We don’t see medi spa people going to the jail facilities and doing people’s nails and stuff.

Tiana: I haven’t seen that yet, but who knows?

Paul: But medical and, you know, people who are incarcerated need services. And so in this case, they do clinical days inside of a jail facility. They go on to say that they do it twice per month and that on those weeks they tend to have a couple of very long days there. And that means that their employees, they have to take their employee, a couple of employees in with them. They, those employees tend to get way more than 40 hours, 44 or 45, 46. I think somewhere around there was like some employees get as many as 50 hours. But the other two weeks in the month, they don’t do any of these clinical days there, and they work an average of 30 to 35 hours. And so the question is Tiana, drumroll, can I take those hours that they worked during those clinical weeks and spread them into the other hours in the pay period? Can I make the 30 can I take 44, can I take four away and put it in the period that only has 36 and is 40 and I don’t have any overtime.

Tiana: No, common misconception here. Well somebody says ‘My pay period covers two weeks’ bi weekly or so. Or twice a month, you know. So as long as my employee doesn’t go over 80 hours and the pay period, then we’re good on overtime. And this is a common misconception. So overtime is measured by a workweek.

Paul: And that is seven consecutive 24 hour days.

Tiana: Exactly. So even though you only work Monday through Friday, you still have to define those full seven days. Monday to Sunday. Monday through Saturday is common set up. So you’re looking at one work week to determine if somebody went over 40 hours in that week. So in this example, let’s say it’s 50 hours one week and only 20 hours the other week, you know, if they only worked a total of 70 hours, but they still have 10 hours of overtime on that paycheck. No averaging.

Paul: Yeah. No averaging that back.

Tiana: Yeah. That’s a great question.

Paul: That was a very good question. It’s a very common question. I got to tell you, in my early days, and I’ve said this on the podcast of violating everything that I could violate because I didn’t know. There was nobody like CEDR for me to call. And so I was averaging left and right. I mean, it was the pay period not the, you know, not the pay week that has been established.

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Paul: Alright everybody, want to welcome you to this edition of What the Hell Just Happened. Tiana Stark joins me today. Tiana, this is really awesome. Can I tell people who you are and what you do? You can expand on it if I mess it up.

Tiana: Okay, you got this down.

Paul: Okay, So Tiana came to us as an HR expert. She works in the Solutions Center at CEDR. She came to us with a lot of expertise. She’s gained all this expertise, as you’ve been with us for how many years now?

Tiana: More than six.

Paul: I was going to say, yeah, aren’t you like 27 years now or something? So, yeah more than 6 years. Yeah, in dog years, which by the way, applies here because we’re very dog friendly. She’s been here for about six years. Tiana, you have been an HR expert. You’ve heard it all, you’ve answered it. You were here during the pandemic. You were part of that team that answered, like we answered like 10,000 questions in a month. We figured out along the way for everybody who’s listening, most of you know this. Some of you may not. If you’re a member of CEDR, we have some great software that we’ve designed and built for you. We maintain it. We love that it’s HR soft wear built by HR nerds for our members. You know, we didn’t just go out and get somebody else’s system. We click into it a timekeeping system, which is part of that. That comes with all kinds of obligations and twists and turns, just like everything in HR. And we just realized we needed somebody with a lot more expertise focused on our timekeeping application and most importantly, the set up. So that’s who Tiana is. She’s on the compliance team now. So she moved. She moved from the solution center team, over to the compliance team, and she’s become a part of the compliance team in that she is implementing all of our timekeeping. I have the right person to talk about what we’re going to talk about today, which isn’t just timekeeping, but I’d like to talk about this case that just happened, a settlement that just occurred at a rather large hospital. However, same rules that apply to them apply to everybody who’s listening right now, who has an employee who has to track time. Tell them what happened to this hospital.

Tiana: So really large hospital system out in Washington, they actually were charged with having to pay almost $100 million Paul. So this was a really large amount.

Paul: In back pay.

Tiana: Yeah. And this was for time clock rounding violations and also meal period violations. In a nutshell. But the time clock they were rounding everybody’s punches to the nearest 15 minutes instead of paying them exactly for what they worked. So problem there, if you do have a rounding practice the DOL says that it has to have a neutral impact. You know, come out even for the employee.

Paul: So can I explain that if you are rounding, say they’re rounding time. So what we mean by rounding is that they’re supposed to be in at 8:00 and they clock in at 8:10. Sometimes you can round them back to 8:00 and other times you’re allowed to by law, you round them to 8:15. But as you said, it just has to work out in the wash. Right, it can’t always be to the employer’s advantage. So in their case, it was always to their advantage.

Tiana: Exactly. So basically, they’re missing second dinner.

Paul: They’re missing second dinner. Yeah. Everybody. There are some rules in place in this particular state. California has some rules about it, and some other states do. If you work over, I think it’s 10 hours? If you work over 10 hours, you’ve got to offer the employee another lunch break and you may also have to offer them another break. Now, these are state rules.

Tiana: Yeah. So this is state-specific. There’s a lot of states that won’t have something similar. But you can kind of think about it, if your state even has one lunch period requirement, think about employees missing that lunch or not being able to show that they took that in the timekeeping system. There was the potential to mutually waive that lunch period if they wanted to.

Paul: But it requires work.

Tiana: It requires work and documentation. And documentation they did not have, at least not consistently.

Paul: Nor did they do the work. And weren’t they also auto-clocking them? So in order to maintain their hours and save hours, they were like, ‘This person’s coming in for 8 hours. They’re going to have these two breaks.’ And they were supposed to clock out for lunch. And so they were auto-clocking the lunches. So they were like, ‘Everybody gets a 30-minute lunch.’ And so they were just every single day, 30 minutes came off. But the problem with that is, is that if you’re auto-clocking someone, it has to meet the following qualifications. So here’s our chance to segue. We’ll come right back to this, everybody. The Federal Labor Standard Act, Department of Labor wage an hour, they have some regulations about recording time. Can you break it down for everybody listening in the simplest terms?

Tiana: Employees have to be paid for their hours worked, accurately paid.

Paul: Okay, who’s responsible for accurate pay?

Tiana: The employer.

Paul: The employer?

Tiana: Yes.

Paul: And how would one do that?

Tiana: They would track their time.

Paul: So you have to have some kind of timekeeping mechanism. And it could be a notebook sitting… I worked for a law firm one time and there was a notebook sitting on a credenza. And you just wrote in the time you came in, you wrote in the time and whatever you were doing. Could be a punch clock, you know, the old-style punch clock, they’re still out there. Could be electronic, it could be software. Oddly enough, they don’t require you to record the time, but the only way to accurately pay people and to defend your decisions and what you’ve been doing is through records.

Tiana: Exactly.

Paul: Of which these people at the hospital were missing part of their records, which was the agreement to waive the meal period. Yeah. Okay. So the FLSA basically says you’ve got to pay people accurately. You’ve got to track their time accurately for the purposes of paying them. And also for computing overtime at the federal level. Everybody, when I say at the federal level, I mean the feds across all 50 states say anybody who works more than 40 hours is due time and a half for all hours over 40 hours.

Tiana: For any nonexempt employee.

Paul: Yeah, any nonexempt employee. Thank you. See, that’s what the expert comes in. She said, ‘Paul that’s wrong.’ Okay. So that’s what the FLSA says. Now we need to go back to these guys because everything they were doing was not accurately recording, reporting, and paying in accordance with the actual hours that have been worked.

Tiana: Exactly the rounding.

Paul: So if I log someone out, the rounding was part of it. If I log someone out automatically for their 30-minute or their one-hour lunch or whatever it is, and it’s unpaid and they work through that time…

Tiana: We got a problem.

Paul: We’ve got a problem. If I won’t allow people to clock in until 8:00…

Tiana: And they start working at 7:45 in the morning…

Paul: And they start working at 7:55, 7:45, then again, we have proof that there’s an inaccuracy there if they’re supposed to be done at five…

Tiana: Not okay.

Paul: It’s not okay. What can we do?

Tiana: Okay, here’s number one. And actually, can I talk a little bit about CEDR’s timekeeping software? Our timekeeping system. And if you’re a member, we hope you’re using it. If you’re not using it yet, let us know. Yeah, we can definitely activate this for you.

Paul: It’s included, yeah.

Tiana: But it’s a simple web clock, so somebody just clicks ‘clock in’ when they’re ready to clock in, ‘clock out’ when they’re done for the day. And this is down to the minute. You know, it’s the exact time that they were working.

Paul: So you’re never going to get in rounding trouble.

Tiana: Yeah, you’re not going to get in rounding trouble. We don’t set up rounding for you either.

Paul: We don’t do rounding because there’s no reason to do it. And it could get you in trouble. But everybody who’s listening, the reason for the rounding was to make it easier to run payroll. It’s so much easier for someone who’s doing this manually to be able to work in the 15-minute increments around the clock. And that’s why they put those rules in. Yeah, but with the advent of software, there’s no reason for it.

Tiana: Exactly.

Paul: It’s already going to add everything up for you and make it very easy.

Tiana: Yeah, and especially for a large employer, the best-case scenario is always to record employees’ exact hours worked. A common question we get too, ‘I don’t want my employees to start working until 8 a.m. So can I keep them from, you know, actually physically being able to clock in prior to 8 a.m?’ That’s where we would advise instead of trying to put something in the timekeeping system to say, ‘Nope, you can’t clock in yet. You know, it’s too early.’ Instead, you have a conversation with an employee if you’re seeing that their time records are showing that they’re coming in too early. And it’s really corrective coaching for some of these issues. They’re really manager issues. They’re not software solutions. That’s where you tell an employee, ‘I need you to not start working until 8:00. If there’s a reason you need to start working earlier, let me know.’

Paul: Ask for my approval.

Tiana: Yeah.

Paul: Yeah, let me do it. So look, what happens everybody, is you put this barrier to the clocking and it may not even be a message that pops up and says you can’t clock in until 8:00. You put this barrier up and everybody knows the barrier is there. But then one of your most dedicated, best employees is just like, ‘This is BS. I get here every day at 7:30. The phones are already ringing. I need to start working as soon as I get here,’ or it’s 7:15 or 7:45 or whatever it is. It’s not very hard to prove that she’s doing that work. So what she’ll do is just say, ‘Screw it, I’m going to get this work done, because if I don’t, my life is going to be miserable until 9:00. Why wouldn’t I start a little bit early? It’s better for the patients, better for the doctors, better for the clinic, better for everybody.’ Yeah. However, while she or he’s being very conscientious, we’ve got an FLSA violation here. So, Tiana, tell us what the solution to that is. And I have a reason for giving the solution because nobody’s going to do it. You would have to lock them out of the building. Literally, you would have to make their code not work and keep them from entering the building. Therefore, they cannot get to the computer system. They cannot start working early. And you can prove to the Department of Labor, ‘I have a system in place that prevents them from working.’ You probably wouldn’t have to prove it because she or he would never make the claim because they wouldn’t have done the work.

Tiana: Exactly. They wouldn’t have gotten in the building. That’s a great solution. They’re not answering phones out in the parking lot.

Paul: Yeah. Yeah. They’re probably not going to be answering the phones. Yeah, I mean, the way it is now, they’re just like, ‘I just switched the phones over to my phone. I sat in my chair and I worked for 20 minutes.’ So it’s not a perfect solution, but probably a good one. Now, I want to take this to why features are put in place. So one reason why they put that feature we talked about—the rounding thing—is you just take the rounding. We took the rounding problem away. No one’s ever going to accuse you because you’re not paying them for all the hours.

Tiana: Exactly. It’s all recorded.

Paul: It’s all recorded. And it’s going to be to the second, actually. The reason why these things are created, these features are created, are good. They’re trying to stop people from milking the clock. I mean, we get that call all the time trying to write that corrective action that basically says, ‘We’ve noticed that you’re always here clocking in a little early and then you go into your locker, you’re going to do whatever and you’re not really starting work, or you could have just clocked in on time and done all that other stuff after that. We’ve noticed that you fail to clock out for lunch.’

Tiana: Yeah, it can add up fast.

Paul: It can. I mean, the more members, more team members you have who are doing this and participating in it, it just gets exponential. And then these clocking companies actually pitch it. They say, ‘We can help you stop the overtime by making it so they can’t clock in and out.’

Tiana: Which sounds great at face value when you don’t have the background knowledge of where this could come up in audits.

Paul: Exactly. And I mean, we’ve got a massive settlement to a hospital that has all of the resources. All of the managers, all of the middle managers, all of the HR. All the expertise, lawyers.

Tiana: Legal counsel, I am sure.

Paul: Yeah. And they have everything in place that they could have administered this and taken a different tack.

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