Employers not tracking employee hours risk potentially expensive claims and penalties. It may be time to take a fresh look at how you or your human resource department is tracking employee hours.

Tracking Employee Hours

The percentage of companies that permit or encourage flexible work arrangements has grown a lot – to 77 percent, from 66 percent seven years earlier, according to a recent Families and Work Institute survey.

But in allowing these arrangements, some employers “may not be paying sufficient attention to the compliance implications of wage payment laws that may affect these arrangements,” warns labor attorney Michael Abcarian.

Even without flexible work arrangements, employers need to pay attention to wage and hour compliance due to increasing Department of Labor (DOL) enforcement actions and litigation in this area.

Last year the DOL put out a new timesheet app for smartphones to encourage workers to keep tabs on their hours (see picture below).

“This information could prove invaluable during a Wage and Hour Division investigation when an employer failed to maintain accurate employment records,” the DOL stated at the time.

Overtime, Exempt Status

Under the Fair Labor Standards Act, employers are required to pay overtime to non-exempt employees who put in more than 40 hours a week.

Many employers falsely assume, Abcarian said, that the mere fact that an employee is paid a salary makes that person exempt from overtime pay requirements. It is not the form of pay, but the nature of the individual’s job duties, that determines exempt status, he added.

Another point of confusion among some employers, according to Abcarian: Whether employees who work overtime despite instructions from their supervisor to the contrary must be paid overtime wages.

The answer is yes. However, employers are within their rights to discipline workers who do so. Actions can range from a tongue-lashing to suspension and even, in extreme cases, to termination, Abcarian said.

Suggestions (Abcarian)

1) It may be necessary to implement a more precise recordkeeping system to accommodate flexible work arrangements. “If not, small timekeeping errors may gradually accumulate,” leading to substantial liabilities for unpaid wages, penalties and legal fees, he warned.

2) Not only managers but also employees may need to be trained or re-trained on proper timekeeping processes. Employees and supervisors who fail to follow strict timekeeping procedures should be disciplined.

3) Remember that even if overtime work is optional for workers operating on flexible schedules, you are still obligated to track that time and pay overtime rates.

4) Operate on the assumption that all employees are non-exempt and thus eligible for overtime pay, unless you have made an affirmative determination to the contrary.

 

Compliance Tips (Kronos)

Technology to assure timely recordkeeping has advanced light years beyond the mechanical punch-card systems of old.

One large vendor of high-tech time and attendance systems, Kronos, in a recent white paper urged employers to take the following steps to avoid running into compliance issues:

-Build a “culture of compliance.” Among other things, that means recognizing that it is wrong to assume that simply by treating employees ethically, you have satisfied legal requirements.

-Determine whether the official time and attendance policies you have adopted are actually being implemented throughout the organization.

-Look for — and fix — any incentives supervisors may have to engage in “dysfunctional behavior.” For example, if managers are rewarded for staying within labor budgets, watch for any efforts to encourage employees to work off the clock.

-Train people “over and over and over again” to ensure that they become and remain current on relevant policies.

-And, a final tip (optional, said Abcarian) that plays to Kronos’ raison d’etre: Automate timekeeping, scheduling, overtime tracking and other pay information “to reduce the possibility of human error.”