Time Clock Rules for Hourly Employees
Working with hourly employees has numerous benefits for businesses in many industries, especially around flexibility and efficiency.
At the same time, you should be careful with the time clock rules for hourly staff for your company. It’s essential to get acquainted with the applicable time clock labor laws.
This will save you potential legal issues, as well as possible financial damages. It will also ensure you are treating your hourly employees fairly.
Here are the basics about following the United States’ time clock rules for hourly employees.
Exempt vs. nonexempt employees
The exemption here refers to whether or not employees are entitled to receiving the federal minimum wage and overtime pay for more than 40 hours of work per week.
Hourly employees are considered nonexempt. This means that your hourly staff should get payment, which is not below the minimum wage. They should also receive 1.5 times the regular payment for overtime hours for anything over 40 hours a week.
Don’t forget that states may have different minimum wage and overtime pay requirements. You need to choose either the federal or the state law, opting for the one that’s more favorable to employees.
As for salaried staff, they can be both exempt and nonexempt, depending on the exact role description. For example, executive, administrative, professional, computer, and outside sales employees can qualify for exemption. The full details are in the Department of Labor’s Fact Sheet.
Time clock rules for hourly employees: clocking in and out
The guiding principles for setting up your time clock rules are contained in the federal Fair Labor Standards Act (FLSA), as well as in state laws. You need to know the federal time clock laws and the specific requirements that your state imposes.
That’s how you can be on the safe side, both in terms of your business interests and for the sake of fair practices for your employees.
There is no legal requirement for employers to have a time clock. Nevertheless, the FLSA stipulates that businesses should have clear records of the time their staff has worked. This includes the start date and time of a working week, hours worked for every week day, and the full number of hours for the whole week.
There are, however, specific recordkeeping requirements set forth in the FLSA. Payroll records have to be kept for at least three years. On the other hand, records on whose basis wage calculations are made should be preserved for two years. These include time cards and piece work tickets, wage rate tables, schedules, and wage additions or deductions. All these types of records have to be ready for inspection by the Department of Labor’s Wage and Hour Division.
Timesheet rounding rules
Many businesses use timesheet rounding to handle their payroll. It’s one of the cornerstones in the time clock rules and regulations that you should be aware of.
According to Department of Labor’s time clock rules, timesheet rounding is a legal practice. However, there are well-defined guidelines on how it can be used, so that it does not infringe on the rights of employees.
The essential need for timesheet rounding comes from the difficulty of accounting for the so-called indefinite periods of time that employees log in. They usually constitute seconds and minutes. In order to avoid having to deal with such small periods of time, businesses choose to handle logged time in certain intervals.
According to the FLSA, the maximum rounding interval is 15 minutes. Companies can round to smaller intervals as well, such as 5 or 6 minutes.
In addition to sticking to the 15-minute maximum, you also have to comply with the 7-minute rule for payroll. It states that you have to round down if the logged time is up to the 7th minute after a 15-minute interval mark, and round up if it is 8 or more minutes after the last 15-minute interval.
Your time clock punch in and out policy should first and foremost be fair towards employees. It’s not legal to round logged hours in a way that benefits only your business — you must set up a system that is only favorable to your staff. Alternatively, you can opt in for a policy that balances between the interests of your employees and of your company.
Whether you have to pay employees if they clock in early or not will depend largely on the exact parameters of your timesheet rounding practice. If you round down the clock out time (which rounds it in your favor), then you need to pay your staff for the time that they log in before the official start of work. However, clocking in before a shift should not be more than a few minutes in any case in order to prevent off-the-clock work.
Time tracking rules
There is no state or federal requirement as to what clocking system a company should use. It should simply allow complete and accurate time tracking. The options throughout the decades have been different — from punch clocks and time cards to mobile and digital systems.
Having solid timesheet and payroll management and ensuring legal compliance is easier than ever before. Instead of using old-school punch cards, today businesses can benefit from time tracking software that ensures efficiency and accuracy, as well as ease of use for employees.
Solutions like Hubstaff are built for the modern workplace. Besides automatic time tracking and manual input of timesheets, our tool also offers extras like GPS time tracking and geofencing technology that can meet the needs of every type of business.
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