Time Is Money: A Quick Wage-Hour Tip on … Tracking Employee Working Time

I had planned to focus this month’s installment of “Time Is Money” on the practice of rounding timeclock entries, addressing the history behind the practice as well as factors that make rounding today a riskier proposition than it used to be.  Then, while reviewing our previous writings on the subject, I came across my colleague Mike Kun’s treatment of the topic in our July 2019 installment, where he already said pretty much everything I had to say.

Back at the drawing board, it occurred to me that rounding is part of a broader challenge that businesses face: how best to record employee working time.  Nearly every large case we handle involving non-exempt employees includes allegations that the employer hasn’t compensated workers fully for their time. Sometimes the claim is unfair rounding, other times exclusion of potentially compensable pre-shift or post-shift activity, and recently we see more employers concerned about recordkeeping in the context of remote work.

These concerns all have a common thread:  there is no risk-free way to record employee working time.  Every timekeeping system yet invented has pros and cons, with varying opportunities for cost savings or budget-breaking overruns, employee evasion, manipulation by wayward supervisors and managers, and exposure to claims in litigation that are increasingly likely to wind up as certified class or collective actions.

As with many aspects of employment law compliance, options that tend to reduce the risk of litigation also tend to cost more.  In timekeeping, that means potentially overpaying employees for their work.  And while overpaying employees can be expensive, paying lawyers—including plaintiffs’ lawyers—to address these issues in litigation can often be even more expensive.

So what’s a well-meaning, compliance-minded employer to do? Are the only choices overpaying your employees, which in many industries can put a company out of business rather quickly, or blindly trusting your employees and your supervisory staff to handle timekeeping properly, which can put an employer on a fast track to litigation?

While there are no perfect solutions, some practices have emerged that many employers see as striking an appropriate balance between cost and litigation risk:

1. Consider eliminating rounding.

Our 2019 post covered this topic well, and we won’t restate it all here. But increasingly, employers are moving away from rounding in order to save themselves the inconvenience and expense of litigation it tends to invite.

2. Give more thought to the number and placement of timeclocks.

Many employers with physically large workspaces, such as factories, casinos, and hotels, have employees clock in at a central location before walking several minutes to their work area.  These employees then finish their shifts and walk several minutes to clock out for the day. Several minutes a day, every day, for hundreds or thousands of workers quickly adds up to a lot of money in wages for unproductive and potentially noncompensable time.

What if the employees had the ability to clock in much closer to their work area?  Depending on the employer’s timekeeping system, this may require purchasing more time clocks, but the potential savings from not having to pay for unproductive walking time at the start and end of shifts could quickly pay for the additional time clocks.  If employees engage in compensable donning or doffing away from their work area, placing time clocks by their changing areas serve the same goal: paying for all time the law regards as compensable, while not paying for lengthy pre-shift or post-shift walking to and from the time clock.

In work environments like call centers, where the employees are normally unable to perform compensable work away from their workstation and issues arise regarding time spent booting up, logging in, and loading applications, many employers have moved toward having employees clock in and out as they enter or leave the call center floor.  That approach may result in paying employees for an extra two or three minutes on either end of the shift, but it spares employers the common allegation in lawsuits that it took employees five, ten, or even more minutes to get their computer ready at the start of the shift or to close out at the end of the day.

There is no single correct answer that fits all workplaces, but by giving some thought to how many time clocks an employer has and where to place them, there may be opportunities to make time records more accurately reflect the compensable activity the workers perform.

3. Provide employees an avenue for reporting time worked outside of the normal routine.

Things happen that render employee time records inaccurate or incomplete. Employees forget to clock in or out. Situations arise after hours. Employees may interact with their supervisors before or after shifts. The key to achieving compliance is to be sure that the employees have—and know about—a way to correct errors or to record working time not already reflected in the timekeeping system. These corrections may involve the supervisor in the first instance, or the employee may have the ability to make changes or to include new or additional time entries directly. If your timekeeping system recognizes only those activities that occur between in-punches and out-punches, you may be failing to capture the full scope of your employees’ compensable working time.

4. Consider requiring creation of an auditable record whenever a supervisor or manager changes an employee’s time entry.

Time shaving by supervisors and managers continues to be a common claim in litigation, often tied to the assertion that these individuals alter their workers’ time records in order to reduce or to eliminate overtime.  One important way to prevent time shaving and reduce the likelihood of such claims is to require the timekeeping system to record the identity of any person who changes a time record, along with a short statement of the reason for each change. In addition, periodic auditing of changes to time records can help identify patterns of abnormal adjustments by certain supervisors or managers.

*  *  *

Devoting some time and attention to these timekeeping issues can go a long way toward reducing the likelihood that you will face litigation down the road.  Once you establish practices that work best for your business, you will want to follow up with periodic training so that your non-exempt employees and their supervisors and managers clearly understand your policies and expectations.  Your compliance will very likely improve, and you will probably save money in the long run.