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The Importance of Time Tracking: What are the Most Effective Options?


Employers may want to believe that everyone they hire is a conscientious worker whose time on the job need not be monitored. However, even if employers want to believe the best about their employees, the federal Fair Labor Standards Act (FLSA) requires employers to track employees' hours worked and maintain certain records.

Why track employee hours?

Wages paid to hourly employees are based on the amount of time they work. The failure to adhere to the FLSA and any applicable state wage and hour laws can result in governmental penalties and employee-initiated litigation. What's more, making key business decisions – including hiring needs, worker termination, and job assignments – may require knowing exactly how many hours employees have worked. Here are just a few reasons to track employee hours:

  • Basic pay. Wages paid to hourly employees are determined by the number of hours worked. Employers want to be sure that they're accurately paying for hours worked.
  • Overtime pay. Most non-exempt workers, whether hourly or salaried, are eligible for overtime pay when they work more than 40 hours per workweek. Federal overtime rules are set out in the FLSA regulations which is administered by the Department of Labor, and there may also be state wage and our rules applicable to your business and your employees.
  • FMLA. Eligibility to receive benefits under the federal Family and Medical Leave Act (FMLA) requires having at least 1,250 hours of service during the 12-month period preceding the leave. Some states have their own FMLA rules as well.
  • State rest and lunch breaks. Some states require that employees receive certain breaks during their shifts. Tracking hours can show that employers are compliant with state law in providing these breaks.
  • Paid time off (PTO). Companies that award paid time off for personal, vacation, and sick days based on hours worked must be sure that they're calculating this earned time correctly.
  • Time tracking. Tracking hours can help determine whether workers are arriving on time in accordance with company policy, or arriving late/leaving early.
  • Affordable Care Act compliance. The federal employer mandate requiring employer-provided health coverage or the payment of a penalty applies to companies with at least 50 full-time and full-time equivalent employees. This determination is based on hours of service.
  • Small employer health insurance credit. Small businesses may be eligible for a federal tax credit of 50 percent of the premiums they pay for their workers. Credit eligibility is determined by the number of full-time and full-time equivalent employees (another calculation based on hours worked).
time tracking

Methods for tracking hours

According to a recent Paychex Small Business Snapshot that polled 400 principals of U.S. companies with fewer than 500 employees, 20 percent of small business leaders – and 34 percent of those with 1-19 employees – are using paper time sheets to track and report employee time. Not surprisingly, as a business grows, the more likely they are tracking employee time via technology rather than paper. Forty-eight percent of respondents said that the most important reason for investing in a time and attendance solution was for the efficiency and accuracy of collecting time for payroll reporting.

Iris recognition vs. other biometric time clocks

Biometric clocks have gained traction in recent years, offering safeguards against time theft, including "buddy punching," where one employee punches in under another employee's badge number. They can also help eliminate the problem of lost badges and cards.

There have been some privacy concerns based on incorrect perceptions that biometric clocks store actual fingerprints or face scans. Biometric scanning uses an image of a hand, fingerprint, or face that is converted into a mathematical algorithm as a basis for employee identification. The algorithm cannot be reverse-engineered to reproduce the original image or be linked to an individual employee.

However, many businesses still find biometric systems frustrating because grease, dirt, or moisture common in many work environments can skew results. In the case of fingerprint clocks, users need to press their fingers on them in a specific way to make them work. Biometric devices may work better for some employees than others, thus the employer may need to set up a parallel, non-biometric system to accurately track employee time.

Facial recognition systems may seem to solve some of these issues, but they're also rare, expensive, and can still be prone to error. It can take considerable time for them to capture facial features, and this can create user issues as people age or change any features (i.e. hair, glasses, etc.).

The latest iteration of identification technology, iris recognition technology, helps solve many of these issues:

  • No part of the body needs to touch the system to clock in.
  • An iris clock is not a "retinal scanner," and instead it safely takes a photo of an employee's eyes.
  • The camera captures a highly detailed map of the 240+ unique data points in each person's iris.
  • Once the data points are captured in the enrollment stage, the model works for a lifetime, regardless of age or changes in style.
  • It works with contacts, eyeglasses, or even goggles.
  • It's great for medical, construction, warehouses, restaurants, and other more challenging work environments.
  • Implementation and administration are fast

Save money and improve accuracy

Many businesses are throwing away valuable time and money by continuing to manually record and track employee hours worked. A modern, biometric time and attendance solution may offer several practical benefits for businesses that take advantage of them:

  • Employees don't have to remember to complete time cards, which may take several minutes per pay period to complete.
  • Managers can monitor employee work hours in real time, which helps them make better workforce decisions:
    • Analyzing employee productivity;
    • Identifying patterns of missed work; and
    • Improving time-off scheduling.

It’s important to recognize the importance of keeping accurate time records for your employees, and determine how to do this effectively. Consider iris recognition technology as your solution for effective time tracking at your business.


About the Paychex Small Business Snapshot

Data included in the Paychex Small Business Snapshot was taken from the results of the Paychex Small Business Survey, administered by Bredin, a third-party research firm specializing in small business. The survey was conducted online between March 31, 2017 and April 8, 2017 and polled 400 principals of U.S. companies with fewer than 500 employees. The group surveyed was not exclusively Paychex clients, but included other small business owners to provide a full view of the small business landscape.

barbara weltman
Barbara Weltman is a tax and business attorney and the author of J.K. Lasser's Tax Deductions for Small Business as well as 25 other small business books.
This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.