The Fair Labor Standards Act (FLSA) requires that employers track hours worked by nonexempt employees, who typically are paid by the hour. Although you can choose your own timekeeping system, it’s essential that the records you keep are accurate and complete.
The evolution of technology has yielded an increased selection of timekeeping systems, including online web portals, mobile device options, and biometric systems. Despite the growing use of computerized timekeeping systems, some employers prefer to stick with old-school methods, such as paper forms and paper punch cards. Regardless of the system used, the goal should be to reduce timecard errors and bolster compliance.
Recording Work Hours
When an employee’s timecard data does not match his or her compensation, this can put employers in a vulnerable position, particularly if the employee files a lawsuit for unpaid wages or if the Department of Labor decides to audit your payroll records.
For example, if you use paper timecards and an employee works 40 hours per week, you may find it easier to have the employee submit a timesheet every week showing 9 a.m. to 5 p.m. for each workday. To avoid mismatched timesheet and compensation data, however, ensure that the employee understands the importance of recording exceptions on the timesheet, such as those occasional times when returning from break late or starting work early.
As a precautionary measure, you can tell employees to record their exact start and end times each day rather than setting an automatic 9 a.m. to 5 p.m. precedent.
Breaks and Meal Periods
Under the FLSA, you do not have to provide meal or coffee breaks. If you choose to give short breaks lasting around 5–20 minutes, the time should be paid. You do not have to pay for unauthorized breaks. Meal periods, which usually last at least 30 minutes, are unpaid. To simplify timekeeping, require that employees record all breaks and meal periods taken. Consult state law as well, because some states have break laws that differ from federal law, in which case the higher standard applies.
The FLSA allows employers to round time “to the nearest five minutes, or to the nearest one-tenth or quarter of an hour.” For example, an employee arrives to work at 7:57 a.m. and leaves at 5:17 p.m. If you’re rounding to the nearest five minutes, round the start time up to 8 a.m. and the end time down to 5:15 p.m. Note that modern computerized timeclocks come with rounding capabilities, thereby eliminating the administrative burden of manual rounding.
Your rounding procedures should be consistent and fair. For instance, if you choose to round to the nearest quarter of an hour, that rule should apply across the board. You must round up or down as the situation warrants; you cannot choose only to round down. Also, be sure to see whether your state has rounding rules. When federal and state rounding laws differ, use the law that favors the employee the most.