One of the most important responsibilities that a small business has is to pay its employees accurately and on time.
In the past, performing payroll was a meticulous process that required the HR staff to track employee timesheets, calculate overtime hours, or convert minutes to hours.
Valuable time and resources were expended to make sure that laws were followed and workers were paid correctly. Though some continue to employ traditional methods to track hours and conduct payroll, others have taken a more modern approach.
Time attendance systems allow workers to input and manage their own hours, removing the burden off of the employer.
By streamlining the attendance process, businesses have saved money, increased productivity, and improved compliance with labor laws. Here's everything to know about employee time clocks and how organizations can use them to their benefit.
What is an Employee Time Clock?
An employee clock system is a device that records the start and end times for hourly employees in the workplace. Depending on the type of time tracking software, workers can punch in through a time clock app or on a console at the worksite.
Punch-in data is automatically integrated with a payroll software system that is utilized by the HR staff to pay employees for hours worked. The purpose of time clock software is to electronically track and document attendance to maintain payroll accuracy.
There are five different types of time clocks, including-
1. Punch Card Clocks Employees insert a paper card into a machine upon arriving and leaving work. The machine stamps the date and time on the card to indicate a start and end time. Due to their simplicity, these clocks are most frequently implemented by small businesses that don't employ remote workers.
2. Digital Clock With a digital time clock, instead of injecting a punch card, workers swipe a card with a magnetic strip through a machine. The machine automatically tracks the punch-in date and time for later use by the payroll staff.
An electronic touchpad is another type of digital clock that doesn't require employees to hold onto a card. Instead, workers put a personal code into a machine that automatically saves the punch-in data.
3. Time Station Software Time station software lets workers clock in and out through a computer. Employees utilize one specific computer for all punch-ins.
Or businesses can integrate the software with a personal computer to allow employees to enter the time at their individual workstations.
A benefit to time station software is that time data can be integrated with a payroll software system, making it easier to conduct payroll later.
4. Fingerprint Clocks Biometric time clocks identify a person through individual human traits such as a fingerprint.
Employees put their finger on a scanner that identifies the person by matching the fingertip to a pre-stored image in a database. If there is an accurate match, the time clock machine makes a discernible thank you sound.
Biometric fingerprint time clocks prevent buddy punching or fraud because a fingerprint is impossible to duplicate.
Another benefit is that employees no longer need to worry about remembering a code or accidentally forgetting their punch card at home. It's difficult to forget a part of the body!
5. Hand Punch Clocks A hand punch clock is another form of a biometric authentication system. Instead of a fingerprint, these types of clocks use the palm of a hand to authenticate the worker's identity.
A scanner matches a portion of the palm to a pre-stored database image to verify the worker. Like fingerprint clocks, these types of devices are also helpful at preventing buddy punching and fraud.
Why Are Time Clocks Important?
Workers that utilize a timekeeping device have an accurate representation of when their day starts and finishes.
Employers will know exactly when a team member is due for lunch or a break, and when he/she is supposed to come back. This ensures that team members are not asked to work more than they are supposed to.
An effective time software system also ensures that everyone is working when they are supposed to be. Managers can utilize punch-in data as evidence to confront those who are consistently late or taking excessively long lunches. This will help maximize productivity and efficiency levels over time.
Clock-in data is automatically integrated with a software system which makes it much simpler for HR clerks to conduct payroll. Payroll integration makes it easier to comply with labor laws because there is data to prove that employees are working the correct number of hours and being paid accordingly.
How Are Time Clocks Beneficial?
Time clocks offer several benefits to businesses, including-
1. Saves Time and Money
Automatically Collects Data and Performs Calculations - Because punch-in data is automatically collected and calculated, the HR staff spends less time verifying hours and sorting through timesheets.
Provides Less Room for Human Error - Manually converting minutes to hours and estimating overtime is a meticulous process that is easy to miscalculate.
Inaccurate calculations cost businesses up to 7% of their overall payroll costs. This also results in more work to amend the mistake in a later paycheck.
Time clock software eliminates opportunities for human error and saves money by performing all of the necessary calculations automatically.
Minimizes Fraud Employees can no longer ask a friend to clock in for them when utilizing a time clock device. Some timekeeping software integrates with GPS to make sure workers are where they need to be when punching in.
This will also save money by ensuring businesses are paying exactly what they owe to the correct person.
Makes it Easier to Track Labor Costs Businesses can see which employees are working the greatest number of hours and what areas of labor are the most expensive.
Time clock software also shows who is utilizing the most overtime to complete work and how these costs accumulate and compare to industry standards.
Businesses can make more informed decisions about whether to hire more workers or confront an employee who is less productive than he/she should be.
2. Increases Productivity and Employee Engagement
Time clocks also improve productivity and efficiency levels while maximizing employee morale. There are several reasons for this, such as-
Employers Have Immediate Access to Payroll Data - Timekeeping devices give businesses instant access to data and reports that demonstrate repeated tardiness or excessive absences.
By staying informed, it's easier to address attendance issues and increase productivity.
Managers Can Prevent Absenteeism
Absenteeism causes constant interruptions in the flow of day-to-day operations. Time clocks make it easier for employers to track workers who tend to call out regularly. Employers can work with these individuals to prevent and minimize future absences.
Time Clocks Help Improve the Company Culture
When there is a flux of employees who call off work, there is an assumption that management is lax. Staff will take their jobs less seriously and not worry about calling in sick.
Time clocks make it easier to address attendance issues and decrease absenteeism, helping to improve morale. This will decrease attendance problems while improving productivity levels.
What Are Employee Time Clock Rules?
The Fair Labor Standards Act (FLSA) authorizes a set of rules for employee hours, overtime, and pay. Here are the important regulations and rules to follow-
1. Tracking Time THE FLSA allows employers to track time any way they wish as long as records are accurate. Options include-
Biometric Clocking - Any method that employs a biometric scanner to track the punch-in data of every worker
Proximity Clocking - A system that utilizes various methods such as punch cards or ID badges to manage employee time
PC Clocking - Employees can use software to record their time on a personal computer
SMS Clocking - This provides a way to clock in through text messaging
2. Rounding The FLSA allows employers to round the number of employee minutes rather than record the exact number of minutes worked.
Businesses can measure time in 10 minutes increments and then round up or down depending on how close the number is to the tracked increment.
For example, if a person worked 7 hours and 58 minutes, the 58 would round up to 60. This means the employee has worked a total of 8 hours.
3. The 7-Minute Regulation Most businesses track time in 10 to 15-minute intervals. For increments of 15 minutes, 7 minutes is the cutoff to round down. For 8 or more minutes, the employer would round up.
For example, if working 4 hours and 6 minutes, the employer can round down to 4 hours worked. If working 4 hours and 12 minutes, the employer can round up to 4 hours and 15 minutes worked.
Why Are Employee Time Clock Rules Important?
Implementing effective timekeeping rules is essential for complying with state and federal laws and regulations. Utilizing a time clock will minimize the chance of breaking one of these rules.
Non-exempt employees are those who work on an hourly schedule. Businesses are required to track their hours and breaks and compensate them for any overtime hours worked.
Because nonexempt employees work a variety of hours, utilizing a timekeeping device helps to manage their time accurately.
Check to see if the state has enacted predictive scheduling laws that require businesses to give advanced notice of any changes in schedules to non-exempt employees.
It's also essential to ensure a good timekeeping system is in place as schedule changes can make it more challenging to manually track time.
Hourly non-exempt employees are entitled to pay in certain states if they are on-call. Being on-call means that an employee is available for work and is waiting for the employer to contact him/her to come in.
In certain states, these on-call workers are compensated even if they aren't called into work. It can be difficult for the HR staff to track the time of on-call employees who aren't actually at the worksite.
Implementing a time clock system helps to comply with any state regulations because on-call workers can simply manage their own time through their mobile phone or personal computer.
FLSA rules dictate that nonexempt workers are entitled to overtime pay that is equivalent to or more than 1 and times their normal pay if working more than 40 hours per week.
Businesses are responsible for ensuring nonexempt employees that work overtime are paid accurately. Utilizing a time clock to manage overtime hours will take the pressure off of the HR staff and prevent violating any labor laws.
How to Manage Employee Time and Attendance
Here are the best practices for managing employee time and attendance in the workplace-
1. Research Absenteeism Issues Determine which absenteeism problems exist, why they exist, and the best solutions to resolve any reoccurring issues.
Undertake a holistic approach that examines historical punch-in data, specific problem areas, and the departments that have the highest levels of absenteeism.
2. Strategize to Decrease Absenteeism Once the root cause of absenteeism is researched and analyzed, enact strategies to combat the problem. Here are the best practices-
Take Disciplinary Action - Instruct the HR department to monitor absenteeism and enact disciplinary measures where necessary.
Require Verification of Illness - After 2 days, require workers to show a doctor's note to verify illness. This will prevent employees from calling out sick unless there is a medically-approved reason to do so.
Utilize Paid Time Off Banks - Paid time off banks gives workers an allotted amount of days for illness, vacation, or other purposes. Utilizing a paid time off bank allows employees to use their discretion to make time-off requests.
Reward Compliant Employees - Implement a sick-leave incentive policy where cash bonuses are given to those who have minimal absenteeism. This will boost productivity levels while creating a company culture that encourages workers to follow the rules.
Incorporate a Wellness Program - Because there is a link between sickness and absenteeism, implementing a wellness program might be a beneficial idea. If financially possible, offer a gym membership or provide a list of resources to workers that encourage healthy living.
Why an Employee Attendance Tracker Matters
An effective employee time clock and attendance software can streamline work, save money, and promote the company's success. Here are the important reasons why an attendance tracker matter-
Proves the Ability to Address Attendance Issues It's important to make sure that any policies pertaining to break time or sick days are not being abused.
Having an effective timekeeping system will help management address any persistent concerns with the appropriate people.
Allows Employers to Accommodate Remote Workers Utilizing an employee time tracking device manages remote workers' time and enforces accountability without being overly restrictive.
Businesses who want to save money by employing remote workers can rest assured that productivity will not be affected.
Ensures Payroll Accuracy An attendance management system is especially helpful for maintaining payroll accuracy. It prevents accidentally overpaying or underpaying non-exempt hourly employees because hours are calculated exactly as they are inputted.
Promotes Collection of Real-Time Productivity Data Utilizing a reliable method to collect real-time attendance information shows who is productive and who isn't.
An accurate view of productivity levels makes it easier to hire and schedule according to the needs of each department.
Over time, this can save money because businesses will be hiring and scheduling based on reliable productivity data rather than instinct alone.
Streamlines HR Payroll Duties Timekeeping devices allow the worker to track his/her own time instead of relying on one or two payroll clerks to manage the entire task.
Provides Proof in Case of a Lawsuit Time devices collect accurate clock-in data that prove useful in case of a lawsuit or audit from the IRS.
This information can be used as evidence in case a former employee tries to sue for lost wages or if the state claims there is non-compliance with FLSA regulations.
Here are the key takeaways to remember time management systems.
Pick the right time management system - Decide which device is optimal for the company's needs. Options include the punch card clock, digital clock, time station software, fingerprint clock, or a hand punch clock.
Remember the reasons for using time clocks - Time clocks provide an accurate representation of hours worked while accurately managing payroll information for the HR staff.
Research the benefits - Time management systems save time, money, increase productivity, and boost morale in the workplace.
Know and follow the FLSA rules - Research FLSA rules along with state regulations to make sure that all laws are followed.
Strategize to prevent absenteeism - Implement policies that encourage attendance. For example, enact disciplinary measures for repeat offenders, incorporate a wellness program, or require verification of illness.
Know why utilizing a timekeeping system matters - Among other benefits, a time management system increases payroll accuracy, improves productivity, provides back-up clock-in data, and streamlines HR work.