Time tracking – what should you know?

Keeping track of employees’ working hours makes sense for both employers and employees. However, the process can also bring about problems for both sides. Often, time tracking fails because of the grey areas in monitoring employees. However, as long as the working hours are laid out in the employment contract, there is no rule book telling employers how to keep time records.

Time tracking – a definition

Depending on the state, many employers in the United States have the right to monitor employees’ computers, internet activities, and even intercept their emails. However, there are better methods for monitoring employee performance. When it comes to tracking staff hours, there are more transparent ways to make sure employees are productive at work. In the business world, monitoring working hours is one of the main duties of the human resources department.

Definition

Time tracking (also referred to as timekeeping or time logging) refers to the documentation of an employee’s daily working time in a company. From a legal perspective, the recorded working time refers to the time during which an employee fulfills their work obligations.

What time tracking laws exist in the United States?

Keeping track of your employee’s working hours is not optional. The Fair Labor Standards Act (FLSA) sets minimum wage, overtime pay, record-keeping, and youth employment standards, and every employer covered by the FLSA is obliged to keep records of employees, including their hours worked each day and total hours worked each week. The records must be accurate and must be kept for at least two years, but there’s no particular format that time tracking records should follow.

Time tracking and data protection

Developments in technology have made it possible to monitor employees at work, collect data, and in that way, track their working hours. In this way, an employer can follow how often an employee leaves the office or their desk to smoke or go to the bathroom. Every step can be meticulously digitalized. Collecting this kind of sensitive employee data or recording employee behavior is not illegal, but it is still questionable. Generally speaking, an employer must take the following into account when recording working hours:

  • The employee must know where to find the documentation of tracked time and which employee is responsible for it.
  • Both the employer and employees have access to working time documentation at all times. For this reason, access must be regulated.
  • Only the employee, the employer, and responsible personnel have access to the employee’s tracked working hours. Access must first be specifically granted to other persons, offices, or the police.

What can be tracked?

Contrary to the strict data protection regulations found in Europe, the United States is not shy about intruding on personal privacy. In fact, it’s been reported that employers are keeping closer tabs on employees than ever before. There are many ways that employers can monitor their employees: by tracking the location of a company-issued phone’s GPS or ID badge, email monitoring, through Slack messages, and through keystroke logging.

What must be tracked?

According to the Fair Labor Standards Act, accuracy is key for legal compliance. For practical purposes, employees can round their time worked to the nearest 15 minutes. If employers round down, then they must also round up from time to time so that their employees are fairly treated.

The following are the basic records that an employer is required to maintain:

  • Employee’s full name and social security number
  • Address
  • Birthdate, if younger than 19
  • Sex and occupation
  • Time and day of the week when employee’s working week begins, hours worked each day, and total hours worked each week
  • Basis on which employee’s wages are paid
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime earnings for the workweek
  • All additions to or deductions from the employee’s wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by the payment

Since there are no clear rules on how working hours should be kept, employee’ hours can be tracked, for example, on handwritten time cards or time sheets, by physically clocking in and out at work, or by using online time tracking software – as long as the total number of hours is set out in the work contract. However, as you might have guessed, land mines abound in everything from meal breaks to overtime, and privacy.

For example, each state has different rules when it comes to documenting meal breaks. While some states like New York and Connecticut require precise time tracking by clocking in and out, other states automatically deduct meal breaks from the daily working hours. In California, employers can omit the tracking of meal breaks as long as they provide employees with a 30-minute window. However, in some states, the employer can be penalized if they clock in early after a break because staff must be given adequate time to eat. And when auto-deductions are used, companies run the risk of facing class-action lawsuits if they wrongly presume that meal breaks are taken by all non-exempt employees when they shouldn’t.

Rounding time is another tricky area. Because many employers round time up or down to the nearest quarter or half-hour, it can obscure time spent working. As a consequence, employees may not be paid correctly.

As already touched upon, privacy is a major concern among the United States workforce. Digital technology has created many gray areas, like the limits of tracking employees via GPS, when they’re not working, or when they are on the road. In 2015, the company Intermex was sued by an ex-employee after she was fired for uninstalling an app on a company work phone that tracked her movements 24 hours a day every day of the week. These privacy limits vary from state to state.

Lastly, overtime is another hot topic in the United States. In the past decade, the number of overtime lawsuits have significantly increased, and will probably keep rising. In 2019, McDonald’s agreed to pay $26 million to settle a legal battle with California cooks and cashiers who accused the company of failing to properly pay them.

Under current FLSA regulations, nonexempt employees “must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.” It might seem straightforward, but determining which employees are exempt and nonexempt is tricky since it depends on various things such as salary, hours, duties, and the nature of the job itself.

Fact

A new rule that took effect on January 1, 2020, states that most salaried workers who earn less than $35,500 per year will be eligible for time-and-a-half overtime pay, up from the previous threshold of about $23,700.

What types of timekeeping are there?

The FLSA does not regulate employee time tracking, except in child labor situations. This means that under federal law, an employer can change their employee’s schedule without telling them. They also have the right to terminate employment at any time and for any reason.

Tracking time on a time sheet

Time tracking can be done by physically jotting down the time, which is one of the most common methods. The employee enters start and end working times manually in a table. Break times are also recorded in this way. Writing a timesheet is common among construction site workers or for project-based work. Temporary or part-time employees also often write down their working times in tables, which they hand to the employer or personnel department on a weekly or monthly basis. This is a popular method used by smaller companies.

Written time tracking methods are not standardized and can be created by the company. The only thing that matters is that the working times can be accurately identified. The sheets must be kept for two years. Using this method of recording working times, managing flexible hours is just as easy.

Electronic recording of working time through data entry or data generation

In many industries, time is tracked using a device that resembles a punch card system. At the beginning and end of the working day, a device is used to check in and out. The electronic system is connected to a PC program which processes and analyzes the data. Usually, the employee receives a card, chip, or wristband, through which he or she registers with their name and ID number. Some systems require the employee to check in using their fingerprint.

It is possible to register working hours manually with a program or via an online service or a time tracking app. This is a more modern version of time tracking.

Choosing a time tracking system

You should take various factors into account when selecting a time tracking system:

Which industry does your company operate in? Does it make sense to track time in the sector in which your company operates? Or are working hours tied to opening hours? Shops and public authorities, for example, have fixed opening hours and working hours. No separate system is necessary here. Without fixed opening or office hours, the working hours of individual employees can vary, so a timekeeping system may be useful.

How is your company organized? Is it an international company that is bound by transnational standards or an independent, medium-sized company? The number of employees also plays a role. In small companies, time tracking can be handled more easily than in large enterprises, since, for example, spontaneous changes in the work schedule can be discussed and adjusted easily. However, to ensure the rights and obligations of all involved, proper documentation is useful.

Which work model do you use? When, where, and how work is done has an influence on the choice of the time tracking system. Not every office has core working hours. Shift work, customer service, work on-call, contract work, remote work, or job sharing must be taken into account when choosing a system.

What are your preferences? A digital time tracking system near the office entrance makes sense for staff who work in the same location. A time tracking app makes more sense for an employee who is often on the road.

Example: If you run a medium-sized flower shop with five employees, you could keep an analog list of the working hours in your shop. Once your employees are tied to one place to do their work, this method is practical and easy to implement. As the number of employees increases, the investment in an electronic system becomes worthwhile. This eliminates paperwork and limits errors.

The situation is different for a company that frequently visits clients or sends employees to trade fairs. In this case, employees are not tied to a specific location to check in and out. A time tracking app would be ideal in this case. The app can also be used to document time on the road and time spent meeting clients. In this way, the system not only helps to record working hours, but also to analyze performance. The data can be used to help optimize work steps.

Click here for important legal disclaimers.


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