Are Your Employees Punching In?

Understanding DOL Time Clock Rules
By Michael Henckel
Many employers use time clocks to track and document employees’ work time. But what counts as hours worked can often be a point of confusion. Some employers believe they need to pay nonexempt employees only for their scheduled hours and can ignore extra time on timecards when employees punch in early or punch out late. This may be true in some instances, but you need to make sure you’re taking the right steps under the Fair Labor Standards Act (FLSA) if you’re not paying workers for this time.

Disregarding time

When an employee punches in early for a shift or punches out late at the end of the day, the FLSA does allow you to “disregard” the additional time outside the normal shift if the employee does not actually perform any work.
For example, if an employee arrives 20 minutes early, punches in, and then sits in the break room drinking coffee or chatting with coworkers, you are not obligated to pay for that time.
On the other hand, if an employee punches in early and starts working, you must pay the individual for that time. You may not adjust the timecard to match the employee’s scheduled starting time if the employee was actually working.

Rounding practices

The FLSA also allows for rounding on timecards. For example, with a seven-minute rule, you would round a punch up or down to the nearest quarter hour. For instance, if an employee punches in at 7:54 a.m., and punches out at 5:12 p.m., he would be paid from 8 a.m. to 5:15 p.m.
When used consistently over time, rounding practices will average out the actual number of working hours. You are not allowed to use rounding only to your advantage because it would result in paying employees for fewer hours than they actually worked.
In the example above, if the employee’s end time was rounded back to 5 p.m., the employee would be denied 15 minutes of pay (even more if you consider the six minutes lost due to rounding at the beginning of the shift).

Automatic deductions

Many employers provide employees with a 30-minute meal break, which may be unpaid. Employees, however, will sometimes forget to clock out for their meal break, prompting employers to question whether they can automatically deduct the 30-minute break from employee timecards (especially when meal breaks are required by company policy).
Automatically deducting meal breaks can be risky, especially if you are not sure whether an employee actually took them. Automatically making the deduction and finding out later that the employee did not take the meal break would make you responsible for those unpaid wages, which might include overtime pay.
Before making any deductions for meal periods not documented by the employee, be sure to first talk with your employee to get a better understanding of hours worked on the day in question.

Document time reporting and policies

Your time reporting records should reflect employee hours worked as accurately as possible. Regular changes to timecards may create the impression that the company is unlawfully trying to avoid paying overtime. For any changes made to timecards, having employees initial the adjustments can help avoid the impression that you’re shorting employees’ working hours.
While you must pay employees for all hours worked, you may have a policy prohibiting employees from working hours beyond their scheduled shifts and may discipline them for violating it. Having well documented policies should help you substantiate any discipline or corrective actions you may decide to impose.