Employee Timekeeping: The Do’s & Don’ts

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No one said that employee timekeeping was fun. Just necessary. 

In fact, the Fair Labor Standards Act (FLSA) has clearly established the rules for employers when it comes to employee hours, wages, and overtime.

Employee timekeeping seems like straightforward process. But it can easily become highly complex when an employee clocks in early or leaves late, has to travel for business, and so on. 

We dive into a few do’s and don’ts so that you can efficiently manage your timekeeping responsibilities.

Employee Timekeeping: The Do’s & Don’ts

The Do’s: Employee Timekeeping

1. Use An Efficient Timekeeping Method

The FLSA does not say what method of employe timekeeping you must adhere to, but it does require managers to keep accurate time records for every single non-exempt employee. 

For example, these records must cover hours worked per day, the exact clock in and out times, breaks, overtime (if any), wages paid, and anything else in relation to the employee’s eployement. If a manager, or business owner, does not comply with the  FLSA time tracking requirements, they will incur heavy fines and additional penalties. 

It is crucial that you have an efficient system to record this data.

In today’s day and age, however, manual timekeeping is an outdated method that is open to countless errors. Therefore, many managers and business owners – especially at a federal level – are turning to a employee time tracking app.

With that in mind, there are countless benefits to implementing a time clock solution, especially if you have a large workforce, have employees working multiple shifts, and have a workforce that is deskless.

  • A record of all employee timesheets
  • A more efficient payroll process
  • Smaller margin for potential bookkeeping errors
  • Employees have more ownership and accountability over their work, hours, and schedules
  • Data helps employers build out a strategic direction for the company when it’s clear how time is spent and what the total payroll numbers are
  • Check team and individual attendance in real-time
  • Curb buddy punching with GPS timestamps
  • Curb employee time theft
  • Greater level of transparency for your clients – and your employees 
  • Easier to manage overtime before it strikes 
  • Happier, more productive employees when their paychecks are accurate and paid on-time without the back and forth 

An employee time tracking app can, and will, save you time and money. Plus, it keeps you compliant with FLSA regulations. 

2. Reduce Payroll Miscalculation 

Through an employee time tracking app, you have a digital and clear overal of how many hours each employee worked per period. (And you can review this in groups when and if necessary). 

This record of hours helps you to avoid payroll errors as you have a GPS timestamp per clock in and clock out action per employee. Just thinking of it like this – paper timesheets and punchcards are very fragile and even perishable. It’s a huge liability for your copmany! For example, these paper versions can be lost, swapped, altered manually without a record of changes made, destroyed, or misplaced. So, if you have to tend with a payroll miscalculation, having a digital record is far more accurate and reliable.

3. Reduce Overtime Miscalculation 

You must calculate overtime wages correctly, and overtime is not the same as regular wages. If you don’t calculate overtime correctly, you will owe wages, penalties, and interest. 

The FLSA requires you to pay your employees 1.5 times their regular rate of pay, or essentially time and a half, for any time that is worked past 40 hours in a workweek. 

  • For example, an employee that is regularly paid $10 per hour should be paid $15 per hour for overtime.

Note that most states and cities have different overtime wage laws so be sure to study if you are required to follow the more stringent rules.

4. Pay The Correct Tax Rate

Tax rates are always changing so the rate that you first applied to pay your employees may be inaccurate now. If you pay the wrong rate, then you must make it up in taxes, penalties, and interest.

Regularly, ensure that you are checking your employment tax rates as most tax rates are updated each year. For example: 

  • Federal income tax
  • Social Security tax
  • Medicare tax
  • Federal unemployment tax
  • State income tax
  • State unemployment insurance tax
  • Local income tax

Additionally, check your state – at a local level too – on any additional taxes you may be required to pay. 

The Dont’s: Employee Timekeeping

1. Don’t Miss Deadlines for Payment

Employers must pay for every single hour that is completed by their employee(s). Even if there was a discrepancy over the pay, the employee must receive full payment regardless.

And yes, even if your employee forgot to hand in their timesheet, they are still required to receive payment.

2. Don’t Misclasify Employees

If you employ a mix of employees in terms of pay period, like independent contractors, full-time employees, part-time employees, and so on. However, if you misclasify your staff, you are required to pay the employee and employer’s share of taxes, plus all penalties and interest.

Additionally, you may owe back wages to the employee.

Refer to the U.S. Department of Labor six-part economic realities test to know how to classify employees. 

And if it still isn’t clear, file a Form SS-8 to avoid misclassification as you are requestin the IRS determine the worker’s status.

3. Don’t Allow Employees to Work Off the Clock

Employers are not allowed to have their non-exempt employees work “off-the-clock.” Therefore, you must create a work policy that clearly and directly prohibits off-the-clock work. Have protocols in place to help prevent it.

The Bottom Line On Timekeeping

Be sure to create clear policies and procedures to ensure you have access to accurate timesheets, process payroll accurately, and protect your company from lawsuits or hefty fines. 

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.