Managing employee hours worked comes with the territory of running payroll. Under the Fair Labor Standards Act, you must use a timekeeping method and retain records for your nonexempt employees. An employee time clock is one type of timekeeping system you can use.
Read on to learn what employee time clocks are, common types of time clocks in the workplace, the advantages and disadvantages of using them, and timekeeping rules.
What is a time clock?
A time clock is a device that employees use to record when they clock into and out of work. Generally, employees manually insert their time card into a machine or press a button. The machine records the date and time when employees punch in and out. Employees who use time clocks must be physically present to clock in and out of work.
Depending on the type of time clock you use, you may need to collect time cards from employees at the end of the time period. You can use the information from time clocks to create an employee timesheet and run payroll.
Common time clocks in the workplace
If you are interested in using a time clock in your business, you can choose a system that works best for your small company.
There are many types of time clocks to choose from, including these common options:
- Punch card time clock
- Digital time clock
- Biometric time clock
The punch card time clock option is the traditional timekeeping method you might associate with clocking in and out. With a punch card time clock, employees insert a paper time card into a machine, which stamps or punches the date and time on the card.
A digital time clock stores time card information in the system instead of printing it on the employee’s time card. Employees may swipe a badge through the digital time clock or input a code to clock in and out.
Another type of time clock businesses might use is a biometric time clock. A biometric time clock may have either a fingerprint or facial scan which identifies the employee and clocks them in or out. However, some states have laws on using biometric time clocks, so be sure to check with your state first.
Employee time clock alternatives
In lieu of a time clock, you might have someone track employee work hours or use timekeeping software.
Timekeepers authorize employee time cards and might be responsible for running payroll. Keep in mind that hiring a timekeeper for your small business can be expensive.
You can also use software to track employee hours. With a time and attendance software, employees can clock-in and clock-out online, without time clocks. Once you approve the hours that employees entered, you can run payroll. Often, time and attendance software integrates seamlessly with payroll software.
Time clock pros and cons
Before establishing an employee time clock in your small business, weigh the pros and cons.
Employee time clock pros
Many businesses use time clocks to monitor attendance, decrease time theft, and increase timekeeping accuracy.
When you’re a busy small business owner, monitoring employee attendance can be a challenge, especially if they have varying schedules. With a time clock, you know when employees are working and when they aren’t, making it easy to see attendance issues.
Time theft is a common and costly problem many businesses face. Time theft is when you pay employees for time they weren’t working, such as if an employee takes an extended break or is late. Time clocks, especially biometric time clocks, can decrease time theft instances because employees must physically be in your business to clock in and out. However, using time clocks doesn’t prevent time theft.
Time clocks can also improve the accuracy of your payroll and recordkeeping. When employees use a system to punch in and out, the time clock automatically generates a record. This can make it easier to track regular and overtime hours.
Employee time clock cons
Although using time clocks works for some businesses, it might not work for yours. Take a look at some of the cons of using time clocks in the workplace.
Employees might think that you mistrust them if you require time clocks. Requiring employees to punch in and out each time they enter and leave your business can be seen as a type of micromanaging, which may lead to a drop in morale. And, employees might be more concerned with timeliness than putting in quality work.
Another disadvantage of using time clocks is that they might be inaccurate. Employees might forget to punch in or out, which can completely throw off their time cards. This can be time consuming to fix.
Again, time clocks don’t guarantee employees are in your business when they say they are. An employee can still commit time theft with time clocks by punching in and leaving. Or, they can have a fellow co-worker clock in for them if they are running late or skipping a day.
Employee time clock rules
When employees use time clocks, they likely won’t clock in on the hour each day. For example, an employee who works at 8:00 a.m. might clock in at 8:07 a.m. some days. Before calculating hours worked, you need to know about FLSA rounding rules.
According to the FLSA, you can round employee time to the nearest quarter hour (15 minutes). You can round down employee time if they are off by seven or fewer minutes. But, you must round up employee time if they are between eight and 14 minutes off, and count it as 15 minutes of work.
Let’s say an employee who works until 5:00 p.m. clocks out at 5:09 p.m. You must round up their time and pay them for an additional 15 minutes of work.
Keep in mind that you must abide by the FLSA’s rounding rules regardless of which timekeeping method you use.
You must keep timekeeping records for at least two years and store other employee-related records, like payroll records, for at least three years.
In addition to time clock documents and timesheets, you need to hang onto other basic records such as the employee’s payroll deductions, overtime earnings, and birth date.
Don’t make more work for yourself. Automate your timekeeping and payroll responsibilities with Patriot’s online payroll software and time and attendance add-on. After your employees clock-in and clock-out online, you can review their timesheets and run payroll. Try both for free!
This article has been updated from its publication date of October 31, 2018.
This is not intended as legal advice; for more information, please click here.