Most company’s today are focus on growing their business. Many businesses do not protect their organizations well from labor litigation. There are 2 major kinds of labor related law suits: one initiated by Department of Labor, and another kind from employees. Labor related litigation is on the rise and keeping accurate and accessible records on your employees is crucial to protecting your business and bottom line. Most companies today track their employees worked and non-worked hours manually.
According to Alfred J Landegger, Esq. of Landegger Baron Lavenant & Ingber, serving businesses in Los Angeles for over 30 years, specializing in representing and counseling management in labor and employment matter, wage and hour litigation including class actions are increasing throughout the country. “No employer, large or small, is safe from legal claims because the laws are not understood by employers. The major violations include misclassification of employees as exempt, not paying overtime properly, not recording working hours accurately, and failing to comply with rest and meal period requirements. Every employer must audit their own practices on an annual basis.”
Manually processing this data is error prone, complicated, time consuming and difficult to manage. Most companies using manual process tend not to keep any records of salary employees’ work hours. A common mistake of misclassifying an employee, made by many major corporations and small business alike, could literally put a company out of business.
Any organization that has had a lawsuit filed against them by an employee or ex-employee knows producing the necessary information to protect your company is hard to do if the records are not accessible and accurate. The Fair Labor Standards Act (FLSA) does require that employers keep accurate records of hours worked and wages paid to employees.
The following is a listing of the basic records that an employer must maintain:
1) Employee’s full name and social security number.
2) Address, including zip code.
3) Birth date, if younger than 19.
4) Gender and occupation.
5) Time and day of week when employee’s workweek begins.
6) Hours worked each day.
7) Total hours worked each workweek.
8) Basis on which employee’s wages are Regular hourly pay rate.
9) Total daily or weekly straight-time earnings.
10) Total overtime earnings for the workweek.
11) All additions to or deductions from the employee’s wages.
12) Total wages paid each pay period.
13) Date of payment and the pay period covered by the payment.
Each employer shall preserve for at least three years payroll records, collective bargaining agreements, sales and purchase records. Records on which wage computations are based should be retained for two years, i.e., time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. These records must be open for inspection by the Department of Labor representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.
If an employer does not have accurate record of actual hours worked for their non exempt hourly and salaried employees, the employee’s oral testimony and whatever records an employee has are excepted as evidence. Since it is the employers responsibility to record hours worked. It is up to the employer to prove the employee’s testimony and records are wrong. Mr. Landegger states: “Employers that rely on manual methods of recording orders are almost always in violation. Such employers have significant exposure with little or no defenses. The statute of limitations is from two to four years and the employer must not only pay what is owed but also, penalties, interest and attorneys fees. The cost to defend such claims is significant and, therefore, it is usually a better business decision to settle. “
The Department of Labor may recover back wages, either administratively or through court action, for the employees that have been underpaid in violation of the law. Violations may result in civil or criminal action.
Over the last few years employees had filed a record number of lawsuits against employers trying to collect back wages, claiming they were improperly paid. In cases where the employer could not produce accurate records the employees were awarded millions of dollars in back wages.
Implementing a workforce management solution is an investment to protect your company for many years to come. A solution that keeps accurate records and makes the information easily accessible can keep you out of court.
An automated workforce management solution eliminates the error prone task of manually calculating employees worked time. With a few clicks of a mouse employers can accurately produce the records and times that are in question. As well as assisting you with compliance, an automated solution is a tool for managers to proactively monitor their workforce to make sure the company’s pay policies are being enforced fairly and accurately.
It is highly recommended that an employer keeps track of all their employees’ time, exempt and non-exempt. Supervisor exemptions are not very clear sometimes. It is always good for employers to keep track of their hours. It’s a difficult burden for employers. However, using an automated workforce management solution makes time keeping a breeze.
According to studies from the Robert Half Agency and the American Payroll Association (APA), employee “time theft” — when employees clock in/out early or late or take long lunches or breaks — exceeds 10 minutes per day, per employee. The study estimates that manual timecard computation errors can cost 1% to 8% of your annual gross payroll. You may not know it using the honor system, but the information will definitely be visible if you choose a right time and attendance system.
An automated workforce management solution not only makes sure your company is in compliance it can also save your organization thousands of dollars by eliminating the human error factor. Let’s say you use 3% as a cost savings basis and your annual payroll is $1,500,000.00, automating this process using conservative figures an organization can save $45,000.00 over the course of 1 year. Over a five year period this can add an additional $225,000.00 to your bottom line. Most organizations calculate the payback period for implementing an automated workforce management solution to be between 9 and18 months.
This doesn’t take into account the ability to proactively manage your overtime and control your labor costs. An automated workforce management solution is one that truly pays for itself in a short amount of time.
Not only it will help you control labor costs, it can assist you in rewarding employees that comply with your organizations pay policies and rules. Rewarding employees for perfect attendance and following guidelines can be monitored automatically using a point system module. A point system allows you to assign point values to exceptions, such as arriving late or leaving early and building multiple threshold levels that accurately track the employees’ trends in regards to following your company policy.
A workforce management solution from NOVAtime is a tool many organizations have implemented to streamline processes and control labor costs. With a broad range of data collection devices and software applications a new level of efficiency can be achieved whether you have a few employees or thousands, one location or several, NOVAtime has a scalable solution to meet your needs.
Some of the data collection options available today include: biometric devices, portable bar code scanners, badge terminals and web based applications. Biometric devices eliminate the risk of employees clocking in and out for each other. Portable bar code scanners can be used on the shop floor to collect necessary data for job costing, labor distribution or even piecework. Palm-PDA devices support your mobile workforce. Web based applications allow you to collect information from workstations around the world.
The data collected from a time and attendance system is used to control many costs an organization incurs. Overtime can be reduced by managing schedules and eliminating time theft. Powerful reporting and scheduling give you timely information to make well-informed decisions.
Whether to save money or time, a good time and attendance solution can relieve you of the error prone tasks involved with labor management. This way you can spend more time focusing on your business, rather than working in your business. Getting the balance right is key to running an efficient and profitable business, no matter what industry your company operates in.
A workforce management system is not just for major corporations. According to Mr. Landegger, small manufacturing companies, non-profits organizations, dental and medical offices, law firms accounting firms and restaurants are easy targets because of historic industry practice not in compliance with the law. He states that the average settlement is between $20,000 and $60,000 for a small business. “Attorneys representing employees are willing to litigate the small $20,000 case because of the opportunity to recover attorneys fees in excess of $100,000. Regretfully, I have had to refer many small employers to bankruptcy counsel. “
One of the most important things in evaluating a time and attendance management solution is to make sure it can grow with your company. Ask questions. Even though the solution is provided by the same company, you may be surprised to find out one version is acquired from one vendor and another version is acquired from another vendor, and they don’t really integrate nor upgrade well. You may have to retrain your staff, re-enter your data and lose all the custom programming changes and history data. Look for a solution that will fit your company’s challenging needs and grow with your company.
NOVAtime is headquartered in Diamond Bar, California, and has become the leader in integrating Time and Attendance Management with Human Resource and Payroll systems. Known for its scalable and leading-edge software and hardware technology, NOVAtime has been selected as the preferred Time and Attendance / Workforce Management solution provider by many of the best-managed companies in the world.
For more information about NOVAtime, please visit www.novatime.com or call 877-486-6682.