5 Time Keeping Fails

Charles Read, CPA, USTCP, IRSAC
President/CEO GetPayroll
Find me on LinkedIn

Timekeeping is a real necessity for almost every business, whether it be a factory or a software developer and everything in between. Not using a time keeping system is expensive. After many extensive studies by the American Payroll Association and many other businesses nationwide, it has been determined that employees are overpaid from 1% to 8% of their annual wage if there is no timekeeping system in place. Just having a time keeping solution is not the end all be all. There are a number of “Fails” that can still happen, and here are five of them.

Wrong solution
You have to have the right solution for your situation. Not all systems work in all situations. Here are a few that don’t work:

• One manual clock when people enter from multiple entrances
• A network timeclock and the factory floor does not have computer access
• Mobile timekeeping for employees that don’t have cell phones list goes on and on.

You need to analyze your particular situation and even seek an outside consultant to ensure that the solution you pick is optimal for your needs. Not what some high-pressure salesperson wants to sell you or what your brother-in-law uses.No Supervisory oversight of clock
If the clock is not biometric or network with password and location use tracking, then the clock needs to be where it can be observed by management and or locked from use except by management intervention at other than shift start and end. Buddy punching is when an employee punches the clock for a fellow employee who is not there to punch the clock. This can be a major problem if you don’t have clock supervision or biometric clocks. When I worked at a Colgate Palmolive soap factory back in the 1970’s the clock was available from five minutes before shift start and end to five minutes after. If you needed to clock in or out other than shift end a supervisor had to unlock the clock for you to use it. Employees will cheat the company for each other by punching in an absent or late employee or punching out at end of shift an employee who has left early. This is done as a favor that they either freely give or in order to have the same done for them in the future. Either way, the company is paying time for absent employees. Buddy punching can be very expensive to the company if not prevented by a sophisticated system or simple management oversight.No supervisory oversight of corrections
Mistakes will be made. Supervisors must take responsibility for correcting these errors seriously. Management must be committed to making sure that the time keeping system works and is fully enforced. Every correction must be signed off by a responsible party and they must be held to account if there are problems. Letting employees correct their own “Errors” obviates the rationale of having a time clock.

Lack of training
Train your employees on the use of the time clock system. Have procedures in place for all aspects of the system, even if it as simple as a manual punch clock. Make sure they understand exactly what needs to be done under all circumstances. Have this part of your employee handbook/policy manual that they have to acknowledge in writing that they have received, read, and understand.
• How do they clock in
• How do they clock out
• Clocking for breaks
• Clocking for meals
• Clocking when leaving early
• Clocking when arriving late
• Clocking for someone else (Forbidden)
• Reporting non-clocking instances
• Job Cost Clocking
• Fixing clocking errors.
• Reporting problems
• Password changes
• Replacement cards
• And anything else that applies to your system.

No penalties for non-use or abuse
When you set out procedures for the use, you need to publish penalties for non-use. “Not clocking in or out is an easy way for some employees who are late or leave early to get a full paycheck. Also, see buddy punching above.
The Fair Labor Standards Act, or FLSA, is the federal statute that controls pay to employees. According to FLSA, an employer may not reduce pay for employees who fail to clock in or out. It requires that employees are paid for all time worked even if it is not recorded correctly. The employer must report and pay for the actual hours worked regardless of an independent record-keeping system
If this is a problem, how do you fix it? This is where the employee handbook/policy manual is critical. Besides all the aspects of use (above), there need to be policies concerning the company’s repeat offenders’ responses. This should include progressive disciplinary action in case of repeated failure to follow procedures
• verbal warnings,
• written warnings,
• probation,
• suspension,
• and up to termination.

Your employee handbook/policy manual that the employees have acknowledged in writing is your protection against unemployment claims and discrimination or wrongful termination lawsuits.

Learn more about timekeeping solutions by visiting https://getpayroll.com/service/time-and-attendance-system/

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