There’s no way an employer can completely eliminate the possibility of a wage and hour claim when it records employee working time. Federal law introduces ambiguity over compensable and non-compensable time, and that alone can give rise to potential claims.
“You have to accept that as table stakes when you’re an employer. There’s no risk-free way to be an employer, especially when it comes to timekeeping,” said Epstein Becker Green Member Paul DeCamp. “There’s no set-it-and-forget-it way to do this that guarantees you’ll never have a claim arise.”
The murky nature of timekeeping doesn’t mean there aren’t ways to minimize claims, DeCamp pointed out. In the last 80 years, timekeeping claims have featured a consistent crop of issues. Plaintiffs have argued that rounding practices disproportionately favored employers, that time records failed to capture time worked during prep activities or end-of-day procedures, that managers pressured employees to underreport their working time.
These claims hint at practices employers should follow to avoid timekeeping trouble, said DeCamp, who previously served as an administrator at the U.S. Department of Labor’s Wage and Hour Division. In an interview with HR Dive, DeCamp laid out five tips employers can follow to minimize claims of timekeeping violations.
Tip #1: Educate supervisors about pay practices
Employers must understand the importance of paying workers correctly and emphasize that message among supervisors and managers, DeCamp said. “That mindset can head off a lot of the sorts of bad behavior that occurs in the workplace, or that plaintiffs allege occurs in the workplace,” he said.
Managers are often pressured to lower costs and improve efficiency. As they pursue those goals, they may not understand when they cross a line separating the legal from the illegal. They may, for example, encourage workers to shave their time when they report their hours. Employers can prevent such wage and hour violations with education and training, DeCamp said.
Employers may want to teach the basic requirements of the Fair Labor Standards Act and relevant state and local wage laws to supervisors “as a baseline minimum,” DeCamp said. And managerial employees should understand that it’s imperative to pay workers for all working time.
“Managers and supervisors need to understand the rules of the road,” he said. “In their minds, they’re not trying to break the law. They’re just trying to be efficient managers. But if they knew they weren’t supposed to be doing those things, they wouldn’t be doing them.”
DeCamp emphasized the importance of interactive trainings that are reinforced by actions. “Don’t just put it in a handbook,” he said. Employers must carry out frequent trainings to familiarize everyone with company values and expectations. “And if someone breaks the rules, you deal with it.”
Tip #2: Nix rounding, automatic deductions
Defining and communicating a mindset about timekeeping and pay can be a somewhat nebulous task. DeCamp’s next tip is much more concrete: Do away with rounding and automatic deduction practices.
DeCamp said he’s been encouraging clients to nix rounding in timekeeping for more than 20 years. “That comes as a surprise to some clients because frankly the federal regulations expressly authorize rounding,” he said. “Rounding isn’t a per se unlawful practice. It’s not. So when you tell an employer to look hard at why you have rounding and consider doing away with it, they look at you like you’ve got three eyes.”
But when DeCamp highlights what can go wrong with rounding — he describes the practice as “a lightning rod for litigation” — clients start to understand.
“Considering the litigation history, it’s proved to be a practice that isn’t worth the risk,” he said.
DeCamp presented similar logic in arguing against automatic deductions for meal periods. “It’s a situation where an ounce of prevention is worth a pound of cure,” he said. “If you have people clock in and out for meals, you’ll have a pretty clear record of time that will have a lot more evidentiary weight and substantiate a lot more that the employee received a break. It will protect you much better from class action litigation.”
Tip #3: Consider installing more time clocks
DeCamp’s third tip is likewise concrete, but he reserves it for large employers only. In a small restaurant employing 10 people, it doesn’t matter that the establishment has one timeclock. But in a factory, a hotel, or a casino, a singular timeclock can cost employers — literally.
Timeclocks cost a few thousand dollars, so some employers balk at the thought of purchasing extra. But if too few clocks mean employees are spending extended amounts of time walking to a clock or waiting in long lines at the end of their shifts, employers could lose more money than it would take to buy another clock.
“In my experience, in most larger workplaces, the employer will in the long run save money and be happier having more clocks,” DeCamp said.
Tip #4: Create alternative reporting avenues
Timekeeping isn’t risk free because work isn’t standardized. Employees work through lunches. They stay late. They return to a task after clocking out. And for each of these anomalies, they need to be paid.
Employers must create ways for employees to record their unorthodox working time. Once they do, it’s imperative they follow up by paying for the time worked. “Do something with that information — if they don’t, the employer is very vulnerable to the claim that the time went unpaid, even though it was reported or known,” DeCamp said.
Tip #5: Make changes auditable
Another part of timekeeping’s risk comes from the guarantee of human error. When employees are responsible for making their time entries, they make mistakes. They may forget to clock in or out, or transpose a digit.
Usually, supervisors are in charge of reviewing these mistakes. “In a perfect world, the reviews would be centered on making sure employees have recorded their time accurately,” DeCamp said. From a compliance standpoint, it’s not an issue if a manager corrects an employee’s entry of the day from 100 hours worked to 10. But problems can arise if employees suspect managers shaved their time not for accuracy, but for frugality, DeCamp said.
To avoid these suspicions, employers should include in the timekeeping process an avenue for employees to see and review changes made by managers. “If they disagree, there should be a discussion to get that dispute resolved,” DeCamp said. “Ideally that would happen before the paycheck arrives.”