What Happens if You Don’t Track your Employees’ Time?
The Fair Labor Standards Act requires all covered employers to keep certain records for each nonexempt worker, including hours worked each day and total hours worked each workweek.
However, for smaller businesses, tracking employee time is often treated more casually. Employees may receive no instruction or information regarding how their time is monitored. Instead, supervisors are trusted to keep an eye on every worker’s time, and payroll is run based on the hours they report, regardless of whether or not the times are accurate.
This lax system of time recording creates opportunity for wage theft, as time is not tracked to the minute and little effort is expended confirming that the hours are correct. Not only is accuracy at question, the employee has no way of knowing whether their hours are being dutifully tracked, reported, and accounted for. If met with resistance from management for requesting these records, the employee can notify the Department of Labor, who can then open an investigation and look into these claims.
If the employee claims they are owed unpaid wages or overtime, without being able to produce accurate time and attendance and wage records, you could be found as violating the FLSA, and face a cash settlement. This could include retroactive payment, such as unpaid wages and unpaid overtime pay, as well as fines. Additionally, the invasive investigation into your company’s practices will disrupt the work environment, lowering employee morale and jeopardizing your business’s reputation.
Instead of waiting for an employee to voice their concerns before changing your company’s practices, start today. Sign up for an automated time tracking system like FingerCheck and have all your employee’s hours, breaks, and time off be accurately tracked and calculated. For advice on how to prevent DOL audits, see our previously published article which offers laywer-backed advice on how to avoid and prepare for audits and wage and hour lawsuits. Without a formal HR department to advocate for employees, situations like this often go unchecked until the right disgruntled worker comes along.
It’s important that you run your business according to the law, not only to avoid future disasters, but because your employees deserve to work in an accountable workplace that abides by the rules and pays them fairly for the work they do.