Time tracking is incredibly important when you have employees, contractors, or even if you simply want to track your own productivity. No matter how many people you employ, having a solid time tracking system ensures that your workers are paid properly and accurately. It also gives you insight into your productivity on projects and your progress towards accomplishing company goals. Tracking time accurately also means you can bill clients properly, which avoids embarrassing and costly mistakes. Improving transparency and accuracy is key to staying compliant with labor laws while protecting you against pesky fees from the Department of Labor.
Ready to rid yourself of the stress of time tracking? Here are some tips to help you stay compliant and provide you with peace of mind:
1. Get Rid of Time Theft
When it comes to tracking time, you need to do it right. Without a reliable system, you may be more prone to time theft issues, such as time padding, buddy punching, and payroll mistakes. According to recent studies by Connecteam, time theft affects about 75% of businesses, so there is a high likelihood that your business will fall victim to it at some point. Studies have also shown us that time theft costs U.S. employers about $11 billion per year. Therefore, it’s best to try and avoid this from happening to you.
Time theft can happen in multiple forms, such as when an employee innocently forgets to clock out at the end of their shift. Or maybe something more deliberate happened — such as an employee purposely clocking in for a friend who is running late to work. This act is called “Buddy Punching”, which affects three-quarters of businesses and can be very costly over time.
These time tracking discrepancies, whether purposeful or accidental, can cost employers significant amounts of money. Therefore, many business owners invest in online time tracking systems. When you track time online on a desktop, tablet, or mobile device, you can monitor employee time and activity closely. Some online time tracking systems have GPS security options to let you know when employees are clocking in and out of an approved location. Most systems also have special login credentials for each employee, making it difficult for other employees to clock each other in. Whatever system you choose, you’ll be more protected financially when you’re tracking time online.
2. Track Their Work Time Properly
Employers must pay their employees for all hours that they work. The federal Fair Labor Standards Act (FLSA) requires employers to track employee time correctly and record their overtime properly with minimal mistakes. Payroll errors may get you in trouble with the federal government, which can create significant legal headaches for you and your business.
Currently, the federal government requires employers to pay employees 1.5X their normal pay when working over 40 hours in a workweek. This federal rule only applies if your state or city doesn’t have its own time tracking requirements. States like California, for example, require employers to pay employees daily and weekly overtime. Rules in your area may differ from the federal government, so you’ll want to check with your local labor board to ensure you’re calculating employee hours properly. Using an online time tracking system that accurately records both regular and overtime hours will save you from having to backpay employees in the future due to payroll errors.
Household employers also need to track employee hours. Some families prefer to pay for their child or elder care services in cash, or “under the table”. Although this may seem like the easier option, you cannot avoid taxes, interest, and penalties. So, if you have a household employee, you’re going to want to track their time for payroll. This will protect you from penalties resulting from potential audits in the future.
Overall, you must accurately track your employees’ hours. Get them to regularly use a time tracking system that you trust so you can improve transparency and accuracy. With a time management system, you will see when the employee clocked in, when they clocked out, and when they earned overtime. When you have a system that helps you stay accurate and compliant, it will give you peace of mind.
3. Track Billable Time Accurately
Just like payroll time tracking, you need to ensure that you’re tracking billable time correctly too. If you bill clients, ensure that employees are recording the time they’re spending on projects and tasks. If possible, employees should use timers when they’re working on projects. Timesheets.com, for example, is a time and expense tracking system that allows employees to enter billable and non-billable time using manual forms and timers. Employees can start, stop, and pause timers when they’re switching from project to project. Workers find it easy to track their time and feel confident knowing that their time is accurate.
Clients also like it when you’re transparent with them about the time spent on their projects. Invoices must be correct and exact. If time isn’t recorded properly and you bill a client without being able to show them perfect time stamps, you could be in legal trouble and potentially lose a client. Therefore, it’s best to keep time as accurate as possible.
4. Ensure Employees Take Their Breaks
Almost half the states and two territories in the U.S. have meal break policies in place. Typically, with state meal break rules, employees take their breaks within certain timeframes and these breaks are paid. Depending on the region, employees may have to take a meal break sometime between the first five to eight hours of their shifts. Whatever the case may be, they must take their breaks during the time specified by their local laws or the employer could be held accountable.
On the other hand, the federal government does not mandate break time. However, they do require employers to pay employees during short (less than 20-minute) breaks. Other than that, you aren’t federally required to provide breaks. As an employer, you must keep your local laws and regulations in mind when it comes to meal breaks.
A lot of employees try to work through their meal breaks because they want to “just get things done”. Although their dedication is admirable, this isn’t okay. Employees who work in certain states and cities must comply with their local meal break laws. As mentioned above, they may have to take meal breaks within a certain timeframe. When workers take these breaks, they must relieve themselves of all work duties. If they work through their mandatory meal breaks instead of taking a true break, employers must pay them for that time. When a break is missed, this not only means that the employer must pay the employee for that time, but the employer may also face penalties by the state because they didn’t enforce a true break for the employee. Keep yourself protected and ensure employees are taking their required breaks.
5. Keep Their Records
Tracking employee time correctly is half the battle. The next step is ensuring that timesheet records are correct and kept in a safe place. The Department of Labor says that you must keep your payroll and timesheet records for a certain amount of time. Here are the details:
“Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales, and purchase records. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages.”- Department of Labor
You must keep these records in case you are asked you to verify your payroll. If you’re an employer who has at least one employee, you’ll want to keep your records on hand.
Takeaways
Keeping up with the ever-changing employment laws is a challenge for any employer. When laws vary by federal, state, and city levels, it can cause many employers to be confused as to what to do. Luckily, there are many local labor boards and human resources professionals who can assist you with staying compliant. Once you understand local policy, you can get started on the search for a reliable time tracking system. You will need to find an online time tracking system that works for your company’s specific needs. Not all systems are the same, so you’ll need to do some testing before you decide to invest in a timesheet system. Once you find the system that will work best to ensure your company’s compliance, you can have peace of mind knowing that payroll and billing will be one less thing to worry about.
Need a reliable online time and expense tracking system? Try Timesheets.com! It’s affordable and accurate.
