Timekeeping Do's and Don'ts

Employers must keep accurate records of non-exempt employees' work hours to comply with federal, state and local laws. This seemingly straightforward process can become complex when employees start work early, leave late, travel for business, participate in company training, or work remotely.

Here are some do's and don'ts to help you manage your timekeeping responsibilities.

Timekeeping Do's

Train managers and employees.

It's a best practice to train supervisors on timekeeping laws. At a minimum, the training should cover overtime requirements, the prohibition against off-the-clock work, and ensuring all hours of work are recorded and compensated.

Additionally, train all non-exempt employees on your timekeeping policies and on using your timekeeping system. If you ever reclassify an employee from exempt to non-exempt from overtime, ensure you also provide them with training on timekeeping policies and practices.

Integrate payroll and timekeeping systems.

Manually transferring time data to payroll systems increases the risk of errors and can delay payroll processing. Ensure the system updates in real time to reflect any last-minute changes, such as overtime or corrected entries.

Resource: How to choose a payroll provider for your business

Consider tools to help prevent misuse.

Some employers also face issues with misuse of timekeeping systems. For example, employees who work in the field may try to clock in before they actually arrive at the worksite. As such, consider timekeeping systems that can ensure that clock-ins and clock-outs are tied to job sites and help prevent other misuse.

Ensure remote work is reported and compensated.

Time spent outside of the traditional workplace responding to work email, accessing the company network, checking phone messages, or performing other work tasks is generally considered compensable work time.

Make sure non-exempt employees know that they must report all time spent working, including time they spend checking work email. Remember that employers must pay non-exempt employees for all reported and unreported work hours that they know or have reason to believe have been performed. This is true even if the work wasn't authorized in advance. In most cases, you may satisfy your obligation under federal law by providing reasonable time-reporting procedures and paying employees for all reported hours (state law may require additional actions). If employees can't use your regular timekeeping system to record after-hours work, instruct them on promptly and accurately reporting these hours.

Note: You can't ask or allow non-exempt employees to work "off-the-clock." Be sure you have a policy that expressly prohibits off-the-clock work and have controls in place to prevent it.

Track time worked to the minute.

It's a best practice to track employees' time to the minute worked. Federal law permits employers to round employees' hours to a maximum of 15 minutes, provided it is applied fairly and doesn't consistently round in the company's favor or result in the failure to count all of the time employees have actually worked. However, there has been an increasing amount of litigation over rounding practices, and some states and local jurisdictions may further limit the practice.

For example, the California Supreme Court has ruled that employers are prohibited from using rounding practices when tracking whether meal periods are provided in compliance with state requirements.

Check all applicable laws and consult legal counsel before implementing a time rounding policy.

Conduct regular audits of timekeeping practices.

If timekeeping errors go unnoticed for an extended period of time, employers may face penalties. Consider assigning a team or hiring an external consultant to review timekeeping records regularly.

Timekeeping Don'ts

Ignore state- or city-specific requirements.

Several state and federal laws require employers to provide rest breaks and meal periods. Some of these laws cover all employees but others are industry-specific or are limited to non-exempt employees or minors.

In California, for example, employers must provide employees the opportunity to take an uninterrupted 30-minute meal period after no more than five hours of work, unless the total workday is less than six hours and the employer and employee mutually consent to waive the meal period. The meal period must begin before the end of the fifth hour of work, and the employee must be relieved of all duty during any state-mandated meal period. If the employee isn't relieved of all duty during the 30-minute meal period, the meal period counts as hours worked, which must be compensated at the employee's regular rate of pay.

Suppose an employer fails to provide a compliant meal break by the end of the fifth (and tenth) hour in California. In that case, they must provide one additional hour of pay at the employee's regular rate for each workday that the meal period isn't provided. This is often referred to as premium pay.

If you require that an employee remain on the premises during their meal period in California, you must pay the employee for the meal period and provide the premium pay. There's a limited exception under which an "on duty" meal period is permitted, but only if:

The nature of the work prevents an employee from being relieved of all duty; and
There is a written agreement between the employer and employee for an on-duty meal period. In such cases, the meal period must be paid, but no premium pay is due.

As with meal periods, California has state-specific rules on rest breaks. Check your state and local laws for details.

Rely on verbal reporting.

Verbal accounts can be prone to inaccuracies, cause disputes, and may fail to comply with federal, state and/or local recordkeeping requirements. Instead, require employees to log all hours worked in the designated timekeeping system. For exceptional cases (e.g., system outages), create a written verification process that a manager reviews and approves.

Overlook pre-shift and post-shift activities.

Under federal law, time spent on pre-shift or post-shift activities must be counted as hours worked if it is an integral and indispensable part of the employees' principal work activities.

For example, putting on and taking off required safety gear must be counted as time worked and paid since it is considered an integral and indispensable part of the employees' principal work activities.

By contrast, the U.S. Supreme Court has ruled that warehouse workers completing an employer-required security screening after the end of their shift aren't considered an integral and indispensable part of their principal work activities, and accordingly, aren't compensable work time.

Employers should consult legal counsel if they have employees performing pre-shift or post-shift activities to determine whether work time is compensable.

Overuse auto-populated time entries.

Auto-filled time entries can lead to inaccurate records, particularly when:

Employee schedules vary or employees work late;
Employees skip or shorten meal periods; or
Employee work time includes compensable pre-shift activities, post-shift activities, and/or nonproductive time.

Instead, consider requiring that all non-exempt employees clock in and clock out each day and to review and confirm time logs at the end of each payroll period.

Timekeeping do's and don't's, conclusion

Develop policies and procedures to help ensure you keep accurate time records for all non-exempt employees. And ensure that employees are paid for all of the time that must be compensated under federal, state and/or local laws.

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_{This article was originally published as an "ADP HR Tip of the Week," a communication created for ADP's small business clients.}