The Compliance Risks of Manual Time Cards
The article highlights that small employers using manual pen-and-paper time cards risk noncompliance with FLSA and ACA regulations due to frequent human errors in recording and calculating work hours, which can lead to inaccurate wage payments and potential costly fines from the Department of Labor.
In today’s article, the focus is on small employers who use pen and paper timesheets.
Why Paper Time Cards Can Put You at Risk of FLSA Fines
How often do you worry about labor law compliance? This includes FLSA laws that govern minimum wage, child labor, and overtime pay, as well as ACA regulations for employers with over 50 full-time equivalent workers. Other regulations affecting business owners include OSHA, COBRA, Title VII, and ADA. For this discussion, the focus is on FLSA and ACA compliance.
The main argument is that using an outdated or ineffective employee time and attendance system puts you at risk of being fined for noncompliance. Being fined for a DOL violation can potentially put you out of business.
Pen and Paper Time Cards Are Not Always Accurate
To comply with regulations governing employee wages and hours, you must know exactly how many hours your staff members are working. If your time and attendance system does not collect accurate records, any other attempts at compliance are moot. Accurate records are your most critical layer of protection.
Human Error Happens
Humans are fallible. Mistakes are often blamed on human error. Employees may be required to add up their hours on a paper timesheet, and there are many opportunities for mistakes:
- Writing down the wrong shift start time
- Failing to account for an unpaid break
- Forgetting to punch out
- Having to remember shift end times days later
After recording their hours, employees must tally their total hours. Even simple math can be difficult for a tired employee eager to finish their shift. Once the employee totals their hours, the time card is turned in to the boss or payroll manager to be entered into the payroll processing platform. In businesses that don’t outsource payroll, the owner writes out a physical check.
Manual Data Entry Is Fallible
Manually entering hours into a payroll platform is another weak link in the process. An audit of paper time card records compared to payroll system records will likely reveal more errors than desired. These honest errors could cause you to pay more or less on a paycheck, depending on the direction of the error.
There is also the threat of deliberate employee time theft, which always causes you to pay more in labor.
Employees Falsify Time Cards on Purpose
When employees deliberately record more time than they actually work, you are not only on precarious FLSA grounds, but you also pay more for labor. Time theft is a recurring issue that can have significant financial implications.
Inaccurate Time Cards Put You at Risk of Noncompliance
Consider an employer with 10 part-time and 48 full-time equivalent employees. With fewer than 50 full-time equivalent staff members, some ACA regulations do not apply. If a couple more part-timers are hired and they work more than 30 hours per week, you may now have 50 full-time equivalent workers according to the ACA, even if the extra hours are due to inaccurate time cards.
A similar situation could put you at risk of overtime noncompliance. If a non-exempt employee adds overtime hours they didn’t actually work and no one notices, the employee could later file a complaint with the Department of Labor. If the employee can prove they worked overtime and you cannot prove otherwise, you will be fined.
Labor law compliance can be complicated, but employee time and attendance doesn’t have to be. Using an automated system with accurate tracking, such as a biometric time clock, can help ensure compliance and reduce risk.
WorkforceHub is a unified Human Resources portal that includes tools for scheduling, time and attendance tracking, onboarding, benefits enrollment, performance reviews, and employee engagement. It is designed to help employers streamline scheduling, automate time and attendance tracking, maintain regulatory compliance, and reduce labor costs.
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