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 or leave late, travel for business, participate in company trainings, and use mobile devices to remain connected to work after-hours. Here are some do's and don'ts to help you manage your timekeeping responsibilities.
- Use an accurate timekeeping system. Employers may choose their preferred timekeeping method (such as time clocks, timesheets or badge readers), provided it is complete and accurate. While it is a best practice to track employees' time to the minute worked, the federal Fair Labor Standards Act (FLSA) permits employers to round employees' hours to a maximum of 15 minutes. Your time rounding policy must be applied fairly and cannot consistently round in the company's favor or result in the failure to count all of the time employees have actually worked. For example, if an employer rounds to the nearest 15 minutes, they may round down employee time from one to seven minutes, but they must round up time from eight to fourteen minutes.
Note: Some states place additional limits on time rounding. For instance, the California Supreme Court recently 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 consider consulting legal counsel before implementing a time rounding policy.
- Require employees to record all time worked. Time spent using technology outside of the traditional workplace to respond to work email, access the company network, check phone messages, or perform other work tasks is generally considered compensable work time. Make sure non-exempt employees know they must report all time spent working, including time they spend checking work email outside of work hours. If employees can't use your regular timekeeping system to record after-hours work, instruct them on how to promptly and accurately report these hours.
- Record nonproductive time that must be paid, too. Under the FLSA and many state laws, employers must pay employees for time actually spent working, and also for certain nonproductive time, such as time spent in training or traveling on business. Make sure you understand the rules on the nonproductive time that must be paid and instruct employees to record their time accordingly.
- Consider rest breaks "work time." Under the FLSA, rest breaks of a short duration must generally be considered paid working time. The U.S. Department of Labor defines a rest break as any period lasting 20 minutes or less that the employee is allowed to spend away from work. The duration of the break is generally the sole factor used when determining whether pay is required, not the reason for the break (such as for a cigarette, coffee, snack or to make a personal phone call).
Note: Under federal law, employers must provide reasonable break time for non-exempt employees to express breast milk for their nursing child for one year after the child's birth each time they need to do so. Federal law doesn't require employers to compensate employees for these breaks. However, where employers already provide compensated breaks, an employee who uses that break time to express milk must be compensated in the same way that other employees are compensated for break time. Some states and local jurisdictions do require paid breaks for nursing employees regardless of whether the employer provides other types breaks.
- Require employees to verify hours worked. At the end of each pay period, require employees to review their time records and verify that they are accurate. This can help you make corrections before running payroll and document that the employee has confirmed the accuracy of their time records.
- Withhold pay if employees fail to submit/sign/confirm timesheet. Under the FLSA and many state laws, an employer must pay employees for all hours worked on the next regularly scheduled payday, regardless of whether the employee adhered to the company's timekeeping procedures. If an employee fails to submit/sign/confirm a timesheet, ask the employee and their supervisor to immediately provide/confirm the hours worked and pay the employee accordingly.
- Permit employees to work off-the-clock. Employers can't ask or allow non-exempt employees to work "off-the-clock." If you know or have reason to believe that work is being performed, the time must be counted as hours worked and therefore paid. Make sure you have a policy that expressly prohibits off-the-clock work and have controls in place to prevent it. Managers should also be trained on how to spot potential off-the-clock work and how to respond. For example, let's say a manager receives a project from an employee via email after the employee's normal work hours and the employee hasn't reported any additional time worked. In this case, the manager should investigate further to determine if the employee worked past 5 p.m. or if there is another explanation (e.g., the employee was done by 5 p.m. but scheduled the email to deliver after that time).
- Withhold pay for "unauthorized" or "unscheduled" work time. Under federal law, employers must pay non-exempt employees for all reported and unreported work hours they know or have reason to believe have been performed. This is true even if the work wasn't authorized/scheduled 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). You may have a policy that requires employees to get permission before working overtime (or before starting work early/leaving late). If employees violate the policy, the employer may subject them to disciplinary action for failing to get approval in advance, but in no case may the employer withhold pay.
- Make automatic deductions for meal periods. It's a best practice to require employees to clock out and back in for their meal periods. This can help ensure employees are paid for missed lunch breaks and account for times when employees return from lunch late. Time records should accurately reflect that the employee took a meal period, how long the meal period lasted, and the actual hours worked. In addition, some states have meal period recordkeeping requirements, and automatic deductions may violate these requirements. Check your state law for compliance.
- Forget to address interrupted meal periods. Under the FLSA, for a meal period to be unpaid, it must generally be at least 30 minutes without interruption and the employee must be fully relieved of all duties for the purpose of eating regular meals (some states have additional requirements). If the employee's meal is interrupted (including requiring the employee to be available to work if needed during their meal period), the employee should either be paid for the full meal period or be allowed to continue their meal period for a full 30 minutes following the interruption. Instruct employees to report interrupted meal periods, so they can be paid for the time.
Note: At least two states (California and Washington) require employers to provide premium pay to employees for interrupted or otherwise noncompliant meal periods.
- Neglect recordkeeping responsibilities. The FLSA requires employers to keep time cards and other records on which wage calculations are based for at least two years. Employers must also keep payroll records, including hours worked each day and total hours worked each workweek, for at least three years. Records required for federal tax purposes must be kept for at least four years. Check your state law for any additional recordkeeping requirements.
Develop policies and procedures to 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.