Employee clocking in and out policies

In the absence of a proper clocking in and out policy, small businesses, especially those tracking work hours, are vulnerable to time theft and abuse. This can result in overpayments and financial loss, limiting their ability to scale up.

To accurately track employee work hours, prevent payroll errors, and potential disputes, we recommend hourly businesses implement a well-defined clocking in and out policy.

Let’s understand what time tracking entails and how to create a clocking in and out policy that works well for your unique business needs.

Basically, a clocking in and out policy is a set of clearly defined rules and procedures that employees must follow to record their work hours at the start and end of their work hours. A clocking in and out policy helps businesses track attendance, accurately record the number of hours each employee works, calculate wages, and ensure compliance with labor laws.

 In the US, the Fair Labor Standards Act (FLSA) provides guidelines for time clock rules for hourly employees. It also regulates minimum wages, overtime payments, and recordkeeping.  

Creating and implementing a clocking in and out policy is essential for promoting punctuality and accountability among employees. By ensuring that the recorded work hours are genuine, it can help businesses prevent fraud and unnecessary overpayments.

Crafting a clocking in and out policy

Create a clocking in and out policy that meets your unique business needs while ensuring compliance with the labor laws. Consider following these steps:

Check eligibility: Begin by ascertaining whether the FLSA covers your business. Please note that only hourly or nonexempt salaried workers are covered under the FLSA, as salaried workers are not eligible for overtime pay and don’t need to clock in and clock out their work hours.

Automate time tracking: Paper timesheets are not only error prone but also time consuming. Consider using swipe cards, where employees enter their employee code, or use biometric authentication (fingerprint or iris scan) to sign in and out of work. If this sounds expensive, consider using kiosk-based time clocks, where employees log in with their unique IDs and PINs on a designated computer or tablet. Another efficient method is to use time clock apps that allow employees to log in from a range of devices.

Set break and overtime rules: Clearly define the break and overtime rules in accordance with the FLSA guidelines. This includes 20 minutes of paid rest breaks and 30 minutes of unpaid lunch breaks. In overtime payments, for every hour that an employee works over the stipulated 40 hours a week, they must be paid 1.5 times their usual hourly rate.

Implement rules: Require employees to clock out for lunch breaks and clock in once back. Ensure employees move away from their desks completely during meal breaks, as continuing to work while eating lunch at their desks, makes them eligible for payment for the break time as well.

Review timesheets: Use automated timesheet review systems to accurately review recorded times against scheduled hours, check if all overtime was authorized, and all days off had been approved.

Round off time: Check the applicable state regulations and accordingly specify your company policy for time clock rounding. Generally, time is rounded to the nearest quarter of an hour. For instance, for an employee clocking in at 9:07 am, the start time is recorded as 9:00 am. If an employee clocks out at 5:38 pm, it gets rounded off to 5:45 pm.

Calculate wages and taxes: Use automated payroll solutions to accurately calculate the wages and withholding taxes according to the state regulations and the FLSA.

Eliminate fraud: Prevent dishonest practices like buddy punching (employees clocking in and out for others) time theft (claiming work hours while not working), and unauthorized overtime (intentionally working more than the scheduled hours) with automated time clock apps. These apps can track geolocation of employees clocking in and out, thereby eliminating the possibility of employees signing in from outside office premises.

Document and communicate: Document your clocking in and out policy in a clear and easy-to-understand manner. Include it in the orientation programs for new hires and regularly communicate to existing employees.

Focus on core business activities

For a small business, there are multiple areas that need attention; and time tracking and payroll need not be an added burden. 

Focus on business growth and let Fingercheck’s automated solutions take care of accurate timesheets, payroll, and compliance with the FLSA and the other state-specific labor laws