As an employer, you know the Fair Labor Standards Act (FLSA) requires you to track how long your hourly employees work and what they earn. How you do it, though, is up to you.
Each method has its share of pitfalls:
- Hand-written timesheets - One of the oldest methods, completed by either the employee or the employer. Of course, it’s not too hard to alter a document like this, or to question legibility of the numbers.
- Punch clocks – Harder to alter by hand, but in many cases there’s little to keep a co-worker from punching in or out for someone else, commonly called “buddy punching.”
- Computerized and biometric timekeeping – These simplify tracking and reporting data, and it’s pretty hard to fake out a fingerprint scanner. But, they can’t prevent employees from clocking in on time and making personal phone calls or surfing the web instead of starting work. And it may still be possible to enter unauthorized overtime.
“The most common cases of time fraud usually involve a nonexempt employee recording time for a coworker or falsifying a time record to cover up a missed work day, tardy arrival time, or an extended meal period,” according to law firm Fisher Phillips. And an employee who routinely clocks in a few minutes early and out a few minutes late could rack up considerable overtime pay as the weeks go on.
Employees might steal time without realizing it. If they don’t record time spent on various tasks or accounts each day, by Friday they might rely on memory and make a wildly inaccurate guess. In other cases, employees may be clocked in and on duty but without active work to do. Retail and restaurant settings, both with periods of downtime, are examples. “If you just say, ‘Can you clean up that aisle?’ the employee might think it's a one time request. Instead say, ‘When you are not directly helping customers, you need to do tasks A, B, and C. Can you please do A right now?’” says The Balance.
Be sure your hourly employees know that timekeeping applies differently to the salaried employees they work with: salaried colleagues commonly perform work outside of business hours, adjust their schedules to meet with clients, or spend more or fewer hours at their desks based on their current workload.
Can employers change timekeeping records?
“Under the FLSA … employers—not the employees—have the ultimate responsibility to maintain these records. For this reason, employers have the ability to change employee time records but must ensure that the records accurately reflect the time actually worked,” says the Society for Human Resource Management. But, “when changes are made to a time record, an employer may want to keep the original record and create a modified record, or line through the error on the original time record, make the correction, and have both the employer and employee sign and date.”
There are valid reasons to change time records, such as adjusting a meal time or recording a paid sick day. What is not permitted is falsification by an employer to violate the FLSA. This includes changing time worked to avoid paying overtime, fabricating “ghost employees” in an attempt to defraud, or misclassifying non-exempt workers as exempt (this 2014 case against several Subway restaurant locations in Minnesota is just one example).
How to Avoid Time Theft
Even if you don’t suspect falsification or time theft, spell out expectations for time and attendance, record keeping and work requirements in your policies. Include details like when meal breaks begin and end or how changing into or out of a uniform affects clocking in and out. Any potential gray area without clear guidance is an opportunity to pad hours.
Your policy should outline consequences for submitting false time records. For example, give a verbal warning for the first offense, then progress to a written warning, suspension and termination for additional offenses. Review the policy with employees and always ask for an explanation of any discrepancies in time records – it’s easier to catch and correct problems before payroll time.
Create a culture of ethical timekeeping:
- “If you have a time clock, post a sign reminding people that clocking in for someone else is not allowed. If people clock in on their computers, or by filling out a time sheet, remind people that it's against the rules to use someone else's login and that falsely filling out a time card is fraud,” says The Balance.
- Have managers or supervisors approve hours and question anything suspicious
- Don’t give employees access to hours after they’ve been approved
- Be sure those approving hours are familiar with the employee’s job and usual schedule
- Stress to salaried employees the importance of being on time and not abusing the flexibility that comes with a salaried position
In a perfect world, every employee would be honest and ethical. In the real world, those who aren’t can make time and attendance challenging. You can improve the accuracy of your timekeeping system with help from Horizon Payroll Solutions. Contact us today about our time and attendance solutions, including TimeWorksPlus, with cloud-based mobile access, OT alerts and a range of clock support.