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Workforce Management:

Compliance Tools to Protect and Save Your Organization

Most company’s today are focused on maximizing business productivity and profit.  Labor is one of the largest expenses an employer incurs and is a controllable if the right tools are in place. Proactively monitoring and controlling your labor costs can drive business productivity and profit.

Is your company’s current time and attendance solution giving you the tools you need to manage your labor expenses and plan business productivity? Is producing employee work records a challenge and time consuming? Are you protecting your organization from employee wage and hour lawsuits? Many organizations do not protect their business well from labor litigation.  There are 2 major labor related law suits:  one initiated by the Department of Labor, and another initiated by disgruntled employees. 

Labor related litigation is on the rise and keeping accurate and accessible records on your employees is crucial to protecting your business and bottom line. Most companies today track employees worked and non-worked hours manually.

Manually processing this data is error prone, complicated, time consuming and difficult to manage.  Most companies using manual process tend not to keep any records of salary employees’ work hours.  A common mistake of misclassifying an employee, made by many major corporations and small business alike, could literally put a company out of business. 

Al Klein, an attorney of Rodi, Pollock, Pettker, Galbraith & Cahill serving businesses in Los Angeles for over 30 years, specializes in representing and counseling organizations in labor and employment matters, said, “one of the biggest problems is employers tend to make employees exempt, pay them salary, and do not keep track of their time.” 

Al highly recommends that employers keep track of all their employees’ time, exempt and non-exempt. Al states, “It’s wise for employers to keep track of both their salaried and hourly staffs worked and non-worked hours. Many employers because they pay an employee a salary feel they do not have to pay them overtime because they are exempt. Classifying employees is a very intricate process and consulting a labor law attorney is wise to do to protect your organization… In most cases employees win cases because they are in fact non exempt employees.” 

Any organization that has had a wage and hour violation filed against them by an employee or ex-employee knows producing the necessary documentation to protect the organization is hard to do if the records are not accessible and accurate. The Fair Labor Standards Act (FLSA) does require that employers keep accurate records of hours worked and wages paid to employees.

The following is a listing of the basic records that an employer must maintain:

1)         Employee's full name and social security number.
2)         Address, including zip code.
3)         Birth date, if younger than 19.
4)         Sex and occupation.
5)         Time and day of week when employee's workweek begins.
6)         Hours worked each day.
7)         Total hours worked each workweek.
8)         Basis on which employee's wages are Regular hourly pay rate.
9)         Total daily or weekly straight-time earnings.
10)       Total overtime earnings for the workweek.
11)       All additions to or deductions from the employee's wages.
12)       Total wages paid each pay period.
13)       Date of payment and the pay period covered by the payment.

Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales and purchase records. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. These records must be open for inspection by the Department of Labor representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office. 

If an employer does not have records for their hourly employees, whatever records an employee has are acceptable.  It is up to the employer to prove the employees wrong.  When an employer does not have the record, according to Al, “You have to look for accredited external records.  In these cases, it’s almost never litigated because a company is almost guaranteed to lose.  If a company loses, they are required to pay for the prosecuting attorney fees, their own attorney fees, any back wages owed to their employees and in some cases penalties imposed by the Department of Labor.” 

The Department of Labor may recover back wages, either administratively or through court action, for the employees that have been underpaid in violation of the law. Violations may result in civil or criminal action.

Over the last few years employees have filed a record number of lawsuits against employers trying to collect back wages, claiming they were improperly paid. In cases where the employer could not produce accurate records or were in violation of wage and hour laws the employees were awarded millions of dollars in back wages.

Implementing a time and attendance solution is an investment to protect your company for many years to come. A solution that keeps accurate records and makes the information easily accessible can keep you out of court. 

An automated time and attendance solution eliminates the error prone task of manually calculating employees worked time. With a few clicks of a mouse employers can accurately produce the records and times that are in question. As well as assisting you with compliance, an automated solution is a tool for managers to proactively monitor their workforce to make sure the company’s pay policies are being enforced fairly and accurately. 

According to studies from the Robert Half Agency and the American Payroll Association (APA), employee "time theft" -- when employees clock in/out early or late or take long lunches or breaks -- exceeds 10 minutes per day, per employee. The study estimates that manual timecard computation errors can cost 1% to 8% of your annual gross payroll.  You may not know it using the honor system, but the information will definitely be visible if you choose a right time and attendance system.

An automated time and attendance solution not only assists in making sure your company is in compliance it can also save your organization thousands of dollars by eliminating the human error factor. Let’s say you use 3% as a cost savings basis and your annual payroll is $1,500,000.00, automating this process using conservative figures an organization can save $45,000.00 over the course of 1 year. Over a five year period this can add an additional $225,000.00 to your bottom line. Most organizations calculate the pay back period for implementing an automated time and attendance solution to be between 9 and 18 months.

This doesn’t take into account the ability to proactively manage your overtime and control your labor costs. An automated time and attendance solution is one that truly pays for itself in a short amount of time.

Not only it will help you control labor costs, it can assist you in rewarding employees that comply with your organizations pay policies and rules. Rewarding employees for perfect attendance and following guidelines can be monitored automatically using a point system module. A point system allows you to assign point values to exceptions, such as arriving late or leaving early and building multiple threshold levels that accurately track the employees’ trends in regards to following your company policy.

A time and attendance solution from NOVAtime is a tool many organizations have implemented to streamline processes and control labor costs.  With a broad range of data collection devices and software applications a new level of efficiency can be achieved whether you have a few employees or thousands, one location or several, NOVAtime has a scalable solution to meet your needs.

Some of the data collection options available today include: biometric devices, portable bar code scanners, badge terminals and web based applications. Biometric devices eliminate the risk of employees clocking in and out for each other. Portable bar code scanners can be used on the shop floor to collect necessary data for job costing, labor distribution or even piecework. Palm-PDA devices support your mobile workforce.  Web based applications allow you to collect information from workstations around the world.

The data collected from a time and attendance system is used to control many costs an organization incurs.  Overtime can be reduced by managing schedules and eliminating time theft.  Powerful reporting and scheduling give you timely information to make well-informed decisions.   

Whether to save money or time, a good time and attendance solution can relieve you of the error prone tasks involved with labor management. This way you can spend more time focusing on your business, rather than working in your business.  Getting the balance right is key to running an efficient and profitable business, no matter what industry your company operates in. 

A time and attendance system is not just for major corporations.  According to Al, the employee payout was about $30,000 for a bed and breakfast resort with 10 rooms; however, the attorney fees were in excess of $100,000.00.  It is not uncommon for Al to refer small business clients to bankruptcy attorneys. 

One of the most important things in evaluating a time and attendance management solution is to make sure it can grow with you as your company’s needs change. Many vendors have a one size fits all approach. When searching for a time and attendance system research each vendors complete product line to make sure you are purchasing a solution that will grow as your organizations needs change. In evaluating time and attendance systems look for a solution that provides tools to proactively manage your business productivity and profitability. Labor is a controllable expense given the right tools that can add to the bottom line of any organization. 

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For more information on NOVAtime and how a time and attendance solution can benefit your company, please contact us.