According to the Fair Labor Standards Act (FLSA), employers are responsible for collecting and maintaining accurate records regarding the number of hours each employee works. Many states also require employers to document worked time, break time and leave time. Establishing a reliable timekeeping system also helps HR manage employees, track performance management, and stay on top of payroll compliance! Time management systems come in many forms including: time clocks, handwritten time cards, employee badge readers, and electronic workforce management solutions. Employers who rely on automated systems find they can save time and money while increasing processing efficiency! Some of the benefits of automation are:
Improved Accuracy: Handwritten time records are often difficult to read and include calculation mistakes. Handwritten records also pose the risk for record abuse whether from simple mistakes or actual intent to falsify hours worked as this system heavily relies on an employee honor system. Electronic records eliminate error and ensure calculation policies are applied correctly and consistently across all employees.
Increased Productivity: Businesses that use payroll tracking technology report an increase in productivity among workers. Instead of wasting time hand recording hours and payroll exemptions, data is automatically tracked and recorded. The timekeeping system then transfers this data to the HR/Payroll system electronically further reducing errors and allowing Managers to spend time working instead of chasing paper.
Greater Employee Engagement: Timekeeping systems also allow for managers, HR and business owners to track and measure employee performance. Often, automated punch systems can be programmed to alert HR if an employee clocks in early/late or if he or she clocks out before or after hours. A few minutes here or there should not affect payroll compliance but if it’s a common occurrence, HR can use the data system to pinpoint the issue, making it faster and easier to get the problem under control. Employees also have greater insight into their own performance and can better meet expectations.
Stronger Compliance: The use of an automated system is especially helpful should the company be audited by the IRS. Timekeeping systems store employee hourly data, which makes it easier to comply with labor regulations. Having this stored data makes it easy for human resources to provide documentation for attendance and to review time punches. Having these records on hand makes an audit run smoother and is considered one of the top business utilization tools. Even if the business is not under a legal audit by the FLSA, HR managers can use it to periodically audit themselves to ensure payroll is in compliance with the law and that employees are being accurately compensated for their work.
Regardless of the system used, businesses should have written policies detailing their timekeeping practices and should require all employees to sign a statement acknowledging their understanding and acceptance of these policies. The policies should include information regarding what happens when a discrepancy occurs and what disciplinary action may result from intentional violation. Payroll/HR managers should make use of occasional audits to ensure their employees remain in compliance with the organization’s policies.
For more information about automated electronic workforce management solutions, please visit the Sage Time and Attendance website.