Four Timekeeping Tips to Mitigate Wage and Hour Issues

Employers do their best to eliminate the possibility of wage and hour claims when recording an employee’s time.  However, with conflicting Federal and State employment laws, it can be challenging to stay in compliance.  Here are some timekeeping tips to help mitigate wage and hour claims.

1. Set rules on rounding and meal breaks

In the past, rounding time helped payroll add employees’ time for the day, week, and pay period.  It was much easier to round to the quarter or tenth of an hour than by the minute.  FLSA even permits this practice as long as the rounding practice is neutral and averages out over time so that employees are compensated for all the time they actually work.  Unfortunately, this practice is where employers get into trouble.  If a difference between the rounded amount and the actual worked time does not favor the employee, there is a potential for a wage and hour claim.  In addition, rounding lunches can be a problem.  In California, the state supreme court ruled rounding time for meal breaks is not allowed by employers.   If rounding occurs, the employee may not get their entire state-mandated meal break time.  Modern timekeeping systems make it much easier to calculate time to the minute to avoid these potential wage and hour claims.  Meal and rest violations are the number one wage and hour claims.

2. Compensate employees for “unaccounted time”

Hourly employees need to be compensated for all their work.  In general, hours worked include all time an employee must be on duty at the employers’ premises or any other prescribed place of work from the beginning of the first work activity to the end of the last work activity of the workday.  Therefore, the workday may be longer than the employee’s ability to register their time.  The time may start before the employee clocks in or end after the employee clocks out.  A prime example is when using a security system.  If an employee must disarm the security before clocking in for the day, they must be compensated for this time.  Another example is if it takes significant time for a computer system to boot up before an employee can clock in for work.  Unaccounted time violations are the number two wage and hour claims.

3. Ensure proper overtime calculations

Improper tracking of meal breaks and unaccounted time can be a double whammy if this added time puts an employee into overtime.  Once an employee works this time, they must be compensated for it, even if they did not have permission to work.  Unless exempt, employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rate of pay.  In addition to hours worked, the regular rate of pay may include bonuses, commissions, shift differentials, and other money tied to performance.  Determining the regular rate of pay can be difficult without a modern time and attendance system.  Overtime violations are the number three wage and hour claims.

4. Train supervisors about proper pay practices

Many supervisors are not versed in employment law.  Many supervisors are in this role for the first time.  Employers may want to teach the basic guidelines of the Fair Labor Standards Act (FLSA) and relevant state and local wage laws to supervisors at a minimum.  FLSA discusses minimum wage, overtime law, what counts as worked time, child labor laws, and how employees should be notified of their rights.  In addition to Federal Law, State employment laws must also be covered.  Most state employment laws give more protection than federal laws.  Teach supervisors, when in doubt between federal and state guidelines, always side in favor of the employee.  This practice helps mitigate wage and hour claims.

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