Tracking employee time can be a major challenge for small to mid-sized businesses. As a business owner, you should be aware of all the labor compliance issues that can cost you a lot of money if you aren’t carefully tracking employee time. Incorrect or misrecorded wages are unfair to employees and can cost you a lot of money down the road. These errors are easily avoidable, but you need to have an accurate method for tracking and allocating employee time to nip this problem in the bud. Here are 5 challenges:
- Cost – The U.S. Department of Labor says 70 percent of companies are not compliant with wage and labor laws! Labor compliance issues are generally expensive to resolve. In 2012, companies shelled out roughly $4.8 million to resolve wage and hour disputes. Errors in wages come with very steep penalties, and those can often break the budget for small to mid-sized businesses. Even in the face of leaner budgets and fewer resources, investing in a good time management system will save you from potentially steep fines from miscalculating wages.
- Process – Small to mid-sized businesses often manually track time on spreadsheets. While this may seem more cost-effective right now, this puts your company at risk to make errors and oversights, which could then put you at risk down the road. If you don’t have a time-tracking system at the moment, you need to put time tracking processes and accuracy double checks in place. Cloud-based time tracking may help you keep the most accurate timesheets.
- Poor visibility – If you’re using spreadsheets to track time, you lack the visibility to have the most accurate records. Having a designated person (like an HR professional) who tracks time manually can leave lots of room for errors. If you have a manual process and you need to generate an audit trail, you may not be able to recreate everything that person has done in your timekeeping system. It’s better to have your timesheet information centrally located and transparent to employees and management, so that you have multiple sets of eyes and approval steps to avoid errors. Cloud-based time tracking systems can offer better visibility, improved reporting options which lead to more accurate time reporting.
- Lower-wage earners – If your business employs lower-wage earners, you have a much higher risk for compliance issues. There are different minimum wage and labor laws for each state, and it’s easy to misinterpret or apply those laws. Hourly workers are also subject to making overtime, which further complicates calculating their pay. The Department of Labor frequently audits companies who employ a large number of low-wage employees to make sure they are paying employees correctly. It’s critical for you to accurately track time of minimum wage earners to make sure they are paid properly.
- Part-time and contingent workers – If you have a large number of contingent or part-time employees, you’re at a higher risk for non-compliance with wage and labor laws. Contingent workers are often not working on-site during regular hours. The employees are harder to track, so you have to be very careful ensuring their hours are accurately recorded to avoid expensive litigation and penalties.
Does all this sound confusing to you? If so, you are not alone. Excelsior Pay Group would be happy to answer any questions you have. They provide HR support, training and services that include state-of-the-art time tracking software. Contact them today for more information.
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