The Sixth Way: Risk Reduction
Whew! We’ve made it to the final installment of our series looking at how you can save both time and money with automated time tracking systems.
This time, let’s look at one of the most important reasons every business with employees should maintain accurate, complete payroll records (including time and attendance records) for all employees, not just hourly: risk reduction. You’ll find you need those records in the event of a Department of Labor (DOL) audit or a wage and hour lawsuit.
In fact, one of the most common problems cited in DOL examinations is employers not maintaining adequate records.
Inadequate Records = Big Problems For You
Many experts recommend you have all employees record their work time, even those you classify as exempt. That way, if there are any future questions about employee time worked versus time paid, or on down the line any employees you considered exempt from overtime regulations are reclassified as non-exempt, you’ll have complete time records for them all.
This is important, because in the event you’re judged to have misclassified any employees, most courts will use your time records to calculate how much back overtime you have to pay. If overtime-eligible employees claim they worked any hours for which they weren’t paid, your time and payroll records could help prove otherwise.
However, if you don’t have that time data, the courts and examiners will usually simply rely on the employees’ own recollections and personal records. The problem with this, of course (human nature being what it is): people tend to remember those times they worked late, and forget the times they left early or took a long lunch.
In other words, without accurate time records for all employees, you could end up paying out a lot of money you don’t really owe.
Beyond that, what many employers may not realize is that lack of adequate records is sometimes taken as evidence of a “cover up.” Examiners (and judges) may decide the reason records are incomplete is that the employer is trying to conceal additional violations. Since “willful violations” carry significantly higher penalties than inadvertent mistakes, inadequate or incomplete records can cost you more than you might think.
Accurate Records = Reduced Risk
The solution, of course, is to install a good time and attendance tracking system… and make sure all your employees use it! It doesn’t matter what time and attendance system you have — if the employees don’t use it, it isn’t going to do much good.
Some employers may fear their “white collar” workers will resent being asked to clock in and out. And in fact you may hear some grumbling, at least at first. People often have trouble adapting to new processes and procedures.
However, we’ve found if you explain up front the benefits of reduced costs and increased accuracy, most employees understand why an automated system is a good idea. And if they’re able to clock in and out quickly, discreetly and without a lot of hassle, it soon simply becomes a normal part of the work day.
With modern software-based or web-based time and attendance solutions, clocking in and out may involve nothing more than waving a proximity badge across the front of a terminal, or placing a fingertip or hand briefly on a scanner. Employees can clock in and out using the PC on their desk — or for remote workers, over the web or using a cell phone.
We don’t like to think about the possibility of a lawsuit or DOL audit, but these things do happen, more often that you might think. In a recent survey of 1,800 senior legal and HR professionals, over one-third of the responding organizations reported they’d been hit with one or more wage and hour claims in 2009 — and everything seems to indicate the situation will become worse before it gets better.
In the event of an adverse judgement, would you rather pay overtime based on your accurate and official time records, or based on employees’ memories and calendar notes? (I know which one I’d pick!) An automated time and attendance system makes it easy and convenient for all employees — including salaried exempt employees — to track their time. Those time records could some day save your company thousands of dollars.
Take steps now to safeguard your business with one of Acroprint’s automated time and attendance solutions. If you wait until you’ve been served with a lawsuit or the DOL has notified you of an audit, it will be too late! Whether you’re interested in installed PC-based software or the security and convenience of a pay-as-you-go web service, all our solutions offer reliable and accurate records of employee time worked.