Timeclock policy leaves firm owing $165K: How to avoid a similar fate

Here’s a seemingly innocent Finance procedure that can end up costing your organization a bundle.  

It’s not uncommon for employees to show up a little early for their scheduled shifts. But if these early birds are doing anything that’s even remotely related to their jobs, chances are they have to be paid for that time.

A recent DOL investigation on one firm’s pre-shift practices serves as a powerful reminder on just how costly this type of mistake can be.

Pre-shift ritual

According to the agency, Health Inc. had a practice of having employees report for their work shifts early. Problem was, employees weren’t allowed to clock in until the very first minute of their scheduled shift.

While these employees waited to clock in, they wound up doing work and work-related activities. That off-the-clock work resulted in overtime and recordkeeping violations, the DOL said.

Because of these issues, Best Health was ordered to pay $165,190 in back wages and penalties.

While most clock-in violations aren’t this blatant, issues in this area are surprisingly common.

3 key steps

Employers will want to ensure a number of safeguards are in place to prevent timeclock problems. Here are three ways to do that:

1. Make sure managers and supervisors are properly trained. Managers should know employees who aren’t on the clock should never be performing even minor tasks – and they should make sure workers are clear about this rule if and when an issue arises.
2. Watch for problems. When employees punch in earlier or later than their shift but aren’t doing actual work during those times, it doesn’t count as hours worked.
3. Rounding is OK, but … It’s acceptable to record employees start and stop times to the nearest five minutes, but these times must be rounded up/down every single time – not just when it benefits the employer.