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Why Paper Time Cards Can Put You at Risk of FLSA Fines
How often do you worry about labor law compliance, such as FLSA laws that govern minimum wage, child labor, and overtime pay? There are also ACA standards that apply to employers with over 50 full-time equivalent workers. Using an outdated or ineffective employee time and attendance system puts you in danger of being fined for noncompliance. And make no mistake: being fined for a DOL violation can completely put you out of business. Knowing the compliance risks of manual time cards, however, can help you avoid these violations.
To comply with regulations that govern employee wages and hours, you first have to know exactly how many hours your staff members are working. If your time and attendance system does not collect accurate records, any other attempts at compliance are moot. Accurate records are your most crucial layer of protection.
Human Error Happens
There’s a reason mistakes are blamed on human error. Humans make errors all the time. Are your workers supposed to add up their hours on a paper timesheet? There are ways to mess up any step of the way. They can write down the wrong shift start time. They can fail to account for an unpaid break. Maybe the employee forgot to punch out last Monday. The worker has to remember when their shift ended when filling out the time card several days later.
Then your employees need to calculate their total hours. Even simple math can prove too challenging for a tired employee who is eager to hand in his time card and punch out at the end of a long shift. If you are old enough to remember what shopping was like before cash registers automatically calculated your change, you know that people make simple mathematical errors all the time.
After a staff member totals her hours on her time card, she turns it into her boss. In many small companies, it goes to the owner or payroll manager to be entered into the payroll system. In businesses that don’t outsource their payroll to a payroll provider, the owner writes out a physical check.
Manual Data Entry Is Fallible
The practice of manually entering hours into a payroll platform is also a weak link in the multi-step process. Try doing an audit of your paper time card records. Compare the hours listed on the time cards to the hours recorded in the payroll system. A statistician could tell you exactly how many errors you could expect to find, but we’ll just venture this guess: “more than you want.”
Inaccurate Time Cards Put You at Rick of Noncompliance
Suppose you are an employer with 10 part-time and 48 full-time equivalent employees. Since you don’t have 50 full-time equivalent staff members, you are not subject to some of the standards in the Affordable Care Act. You hire a couple more part-timers. The ACA defines full-time as 30 hours per week on average or 130 hours per month.
Suppose the two part-timers you hire are authorized to work 28 hours per week. But say the manager over them is too busy to pay much attention to exactly how many hours and minutes these two employees work each shift. You have an unusually busy couple of months and everyone is in “all hands on deck” mode. These two part-timers record more than 30 hours per week. It doesn’t matter if they actually work that many hours or if they intentionally inflate hours, either way, you now have 50 full-time equivalent employees according to the ACA.
That is just one example. A similar scenario could put you at risk of overtime noncompliance. Suppose one of your non-exempt associates adds two overtime hours he or she didn’t actually work on a few time cards. But no one notices this seemingly trivial aberration of the employees’ usual forty hours per week schedule. A couple months later, the employee realizes that he or she was due overtime and files a complaint with the Department of Labor. If the can prove he or she worked overtime and you can’t prove otherwise, you will be fined.
Labor law compliance can be complicated, but employee timekeeping doesn’t have to be. GTM’s solution ensures accurate tracking of employee time and attendance. Call (518) 373-4111 to schedule a no-pressure demo.
