How to Buy Employee Time Clocks For Small Business: The All-Encompassing Guide
Congratulations! You found the most comprehensive guide to employee time clocks on the web.
If you have a small business and need a time clock, you’ve come to the right place. Operating a small business requires brains, brawn and good work tech. When it comes to tech, an employee time clock should be your first purchase.
Let’s discuss why…
6 Critical Reasons Why You Need an Employee Time Clock System
- Stay compliant with workplace laws
- Reduce payroll errors
- Maximize labor resources
- Prevent employee time theft
- Minimize overtime
- Improve employee oversight
In this article, we’ll discuss everything you need to know about time clocks. This guide is organized as follows:
How to Buy Time Clocks For Small Business
- Types of Employee Time Clocks
- Debunking Common Myths About Biometric Time Clocks
- How Biometric Time Clocks Empower Entrepreneurs
- State Biometric Laws
- How To Implement a Biometric Clock and Automated Timekeeping
- How Your Employee Timekeeping System Can Solve 6 Obstacles To Business Growth
- 8 Reasons To Make Attendance Tracking A Priority—Even For Salaried Employees
- How a Biometric Time Clock Will Increase Retail Profitability
- Case Study: Preventing Employee Time Theft With a Biometric Time Clock
Before we talk about types of clocks, let’s look at some numbers…
5 Key Findings About Employee Time Tracking for Small Business
- $7.4 billion is lost per day to unrecorded work activities. (Source)
- Time theft can take as much as 7% from your gross annual payroll. (Source)
- Automated time tracking can reduce the time it takes to calculate timecards from 7 minutes/card/pay period to 1 minute/card/pay period. (Source)
- Daily timesheet updates improve timekeeping accuracy. Employees who log their time at least once a day are 66 percent accurate, whereas people who log their time weekly are only 47 percent accurate, and people who complete their timesheet less than once a week are only 35 percent accurate. (Source)
- The average cost of labor every time an employee fills out a timecard is $9.37. For a company with 100 employees, that’s $937 in employee time every pay period.” (Source)
Now that we’ve highlighted some critical statistics about timekeeping, let’s dive into our first section.
Understanding 6 Time Tracking Clock Categories
- Card punch
- Key fob
- PIN entry
Clocks for small business come in a wide range of types and styles. Small teams use them to track time and attendance. Employees use them to clock in and out for shifts. In like manner, they track breaks and meals.
They are important for small and mid-sized companies because they help keep accurate records. Moreover, good records protect against potential lawsuits. And all businesses need to do regular payroll audits. Hardware devices are essential in an automated system. In fact, they save more money than they cost.
Here’s a review of the types of employee clocks for SMBs:
Card Punch Time and Attendance Clocks
What is a Card Punch Clock?
Firstly, I am only including a review of punch clock technology as a warning. If you are still using a card punch system, the rest of this article is especially important for you.
Card punch is a device introduced in the late 1800s. To clock in, employees find their card, insert it into the clock, and receive a physical timestamp. Obviously, as a mechanical device, they are out of date by today’s standards.
If you have a punch card machine it’s time to upgrade. Let’s move on…
Biometric Time and Attendance Clocks
What is a Biometric Clock?
In contrast, biometric tech is cutting-edge. A biometric employee time clock uses a unique physical attribute. The attribute, or identifier, confirms an employee’s identity. Common biometrics include fingerprints, palm prints, iris scans, facial and voice recognition.
Equally important, timekeeping software powers biometric hardware. Biometric timekeeping automates the process of clocking in or out.
In addition, biometric clocks are often connected to an access point such as a door or gate. Activating the clock opens the door. This helps avoid missed punches because the employee can’t enter the workspace without clocking in or out.
What are the Cons of Biometrics For Timekeeping?
There aren’t many drawbacks to using biometrics. Admittedly, early fingerprint clocks sometimes failed to identify registered fingerprints. However, current generation models have solved that problem. In the age of COVID-19, many employers are turning to touchless or minimal-contact clocks. These include facial recognition and iris scan types. They provides a more sanitary clock-in method.
Who Uses Biometrics?
The hospitality industry uses biometrics to manage large staffs and frequent shift changes. This includes hotels, convention centers, and traditional office environments. Quick access and no need for fobs makes clocking faster for large teams.
In the same fashion, biometrics are also used in healthcare. They help meet regulatory requirements and ensure qualified personnel are in the right place at the right time. Similarly, biometrics are used in manufacturing, retail, and education.
Web-based Time and Attendance Clocks
What is a Web-based Clock?
Web-based clocks work through a web browser on a computer. Workers can clock in from any internet-connected device.
They clock in through a secure web page. Each employee has a unique identity for login. Web clocks usually run in the background while an employee works.
4 Ways a Web-based Time System Helps My Company
Given these points, web clocks have a lot of advantages:
- Web clocks are convenient because you can access them from any connected computer.
- Employees can clock in from home, on the road, at a remote location, or in multiple locations at the office.
- Web clocks are software-based and run in the cloud.
- Employers can use them for large workforces at little incremental cost.
- Cloud-based web clocks provide centralized oversight. Managers can view statistics and run reports from a central login. (This is true for many modern time and attendance clocks, but particularly so for web clocks.)
What are the Cons of Web-based Clocks?
Of course, no system is perfect. One drawback of web-based clocks is that employees sometimes forget to clock out. This is common for other types, but a particular problem for these. Employees must build reminders into their routine.
Furthermore, another drawback is identity confirmation. But this is an inherent problem in remote work. Web-based clocks can’t confirm identity. Small companies must trust that employees are reporting accurate work hours.
Then again, these are minor drawbacks. Many employers believe the low cost makes up for them.
Who Uses Web-based Clocks?
Notably, small companies who have remote teams use web-based systems. Before COVID, professional services and support teams were the most common. Of course, when millions starting working from home in 2020, web clocks became ubiquitous.
Proximity-based Time and Attendance Clocks
What is a Proximity Clock?
In contrast to the web-based clock, a proximity-based clock is a hardware device. It uses a card or fob. The timer activates when the employee places their fob or card near the device. Some devices have a manual button to indicate clock in or out.
5 Ways a Proximity Time Clock Helps My Company
Because they don’t require the employee to touch the device, proximity-based clocks provide multiple advantages:
- They are convenient for large teams and won’t hold up the line during rush hour.
- Proximity systems are very accurate. They are software-driven and record data by physical proximity to a unique device.
- They are easy to set up.
- Synced with timekeeping software, they provide centralized time management.
- Proximity devices offer a higher level of security. Fobs and prox cards are unique to each employee. Of course, employers can deactivate a card if a loss occurs.
What are the Cons of Proximity Clocks?
On the negative side, one of the drawbacks is the potential for buddy punching. Sharing cards is an easy way to cheat.
In addition, employees can lose them. When employees lose or forget their card, the system fails. Many companies pass on the replacement expense to the employee. Some systems allow for pin-based login when this occurs.
Who Uses Proximity Clocks?
Regardless of their drawbacks, prox clocks are used in most industries, Small companies, especially those with large workgroups use them. Likewise, companies with many workplace access points. In other words, businesses use them not only to track time, but to control physical entry. In addition, some firms use proximity cards to track attendance for salaried employees.
Card Swipe Time and Attendance Clocks
What is a Card Swipe Clock?
In contrast to a touchless prox card, card swipe clocks use a magnetic card. As with the prox, the card identifies the employee. However, the employees must swipe the card through the reader on the clock.
Employers assign a unique card to each worker. Many models have a button to indicate clock in or out. Swipe clocks are easy to use.
How Does a Card Swipe Clock Help My Company?
Although they contain older tech, swipe card devices are effective for small companies. They use a convenient card that can double as ID. As such, swipe card systems help improve security and accurate time tracking.
What are the Cons of Card Swipe Clocks?
Because they use a physical card, they have similar drawbacks to the prox clocks. Lost cards can cause disruption. Magnetic strips become dirty, damaged or worn. Nonetheless, these are minor drawbacks, each with a simple solution. Cards can be cleaned or replaced.
Who Uses Card Swipe Clocks?
Like prox cards, swipe systems can provide small companies with a secure solution. A small company can use them to manage employees, track time, and collect accurate data.
For example, restaurants use swipe card clocks to track hourly shifts. The self-help nature of swipe cards allows employees to enter shifts at random times. Thus, overlaps and shift changes are easy to manage.
Key Code Time and Attendance Clocks
What is a Key Code Clock?
Equally popular is the key code clock. A key code clock is a hardware device for punching in to shifts. Key code clocks use a PIN. A PIN or Personal Identification Number is a four or six-digit numerical code. Similar to the previous clocks, employers assign each employee a unique ID in the form of a PIN.
3 Ways a Key Code Clock Helps My Company
In light of its simplicity, key code clocks have their place:
- It’s an easy and affordable way to add security.
- You don’t have to worry about lost fobs or prox cards.
- You can save money by not needing fobs or ID cards.
If cost is a consideration, PIN systems are something to look into.
What are the Cons of Key Code Clocks?
In spite of the benefits, there are cons as well. For example, employees forget PINs, which disrupts the clock in queue. This isn’t the end of the world; employers can reassign a PIN. But lost time and effort can add up if you have a forgetful crew.
In addition, PIN-based punches can be a little slower than prox cards. Employees have to stop and enter data. Therefore, if you have large teams, adding devices can speed up traffic.
Remember, however, that PIN clocks are less sanitary than touchless prox or biometric clocks.
Who Uses Key Code Clocks?
For the most part, low cost PIN clocks are appealing for companies on a budget. For example, smaller restaurants, patient care facilities, and offices with small workgroups use key code clocks.
Mobile Time and Attendance Apps
What Is a Mobile Employee Time Clock App?
Similar to the web-based system, the mobile app is a software solution. Mobile time tracking apps run on mobile phones (or tablets). Plus, they often integrate with GPS for location-specific tracking.
As you can imagine, mobile time and attendance is a fast-growing area of workforce management. On the whole, it is inexpensive and easy to adopt.
Employees can use their own smartphones. Equally convenient, employers can manage teams from anywhere.
5 Ways a Mobile Timekeeping App Helps My Company
As discussed, mobile timekeeping is all about remote access and accuracy.
- Small companies with remote and mobile workforces can track accurate time without restrictions.
- Managers can approve timecards on the go.
- GPS allows managers to confirm punch locations.
- Employees have more freedom to take part in management tasks like shift-trading.
- Employees aren’t tied to a physical hardware station and can log in from anywhere. This is handy on construction projects, delivery assignments, and service visits.
What Are The Cons of Mobile Clocks?
Like the web-based systems, the drawbacks are inherent in mobile workforce management. Any time you have employees offsite, there are issues with security.
For example, buddy punching. Mobile apps don’t have a good answer to this persistent problem. GPS tracking provides a partial solution, assuring that the device is onsite. This makes it more difficult, but it doesn’t completely prevent it.
Who Uses Mobile Clocks?
Generally, small businesses that have remote employees use mobile clocks.
Firstly, construction companies with onsite crews. With an app, it’s easy to track a small team on a remote project. Clock in, breaks, lunchtime, and clock out are all covered.
Secondly, delivery companies use mobile clocks. Clocking in at the start of a delivery and then clocking out when finished can all happen on the road.
Lastly, field service businesses use mobile to streamline time tracking. Reps moving from site to site can track time on the road.
Debunking 4 Myths About Biometric Timekeeping
Now that we’ve discussed the various types of clocks, let’s turn our attention to the most advanced type–the biometric clock. Although they contain the latest tech, biometric time clocks are becoming very affordable. However, there isn’t widespread adoption in all industries. This is partially due to misconceptions. Let’s debunk the most common incorrect beliefs about biometric timekeeping.
Myth 1: Biometric Employee Enrollment is Difficult And Time Consuming
Unfortunately, some assume biometric devices take longer to enroll employees than regular punch clocks. To clarify, biometric devices don’t take any longer to enroll employees than conventional hardware.
Furthermore, biometric enrollment is a one-time activity. It can be handled remotely and employees are enrolled the first time they punch in.
Myth 2: Biometric Timekeeping Devices Store Employee Fingerprints
Equally important to know, most biometric clocks don’t store the actual fingerprint. Biometric fingerprint clocks do scan an employee’s finger surface. However, the software uses a hash or a pattern to identify specific features. It then deletes the employee’s fingerprint.
In other words, no fingerprints are kept on file. The pattern, or hash, used to identify each employee cannot be used to recreate a fingerprint.
Myth 3: Biometric Devices Don’t Work in Wet or Dirty Locations
Another common misconception is that biometric clocks can only be used in clean, dry environments. This may have been true years ago, but biometric technology has improved significantly.
In fact, the latest hand geometry scanners can identify employees with dirty hands. This is because they do not scan surface features for identification. They also help with the identification of older employees, whose skin may be more elastic and harder to identify with finger scans.
Facial recognition clocks identify workers by scanning their face. The scanner measures facial landmarks to confirm the match to a registered user. Verification is quick and touch-free. As such, this makes them ideal for employees wearing gloves or PPE. Touch-free biometrics overcome the challenges of biometric clocking in wet, dirty or sterile workspaces.
Myth 4: Employee Fingerprints Can be Shared With Law Enforcement or Other Government Agencies
Ultimately, security is always a concern for both employers and employees. As we have mentioned, biometric clocks do not store fingerprints. Thus, they can’t be used to share fingerprints with other entities.
Furthermore, biometric devices are closed systems. Of course, employers should be vigilant about protecting sensitive information. For example, they should only allow law enforcement to obtain data through a warrant.
Biometric employee time devices do:
- Individually identify employee who are registered by the employer
- Track employee shifts to the minute
- Eliminate buddy punching
- Keep exact records of time and attendance
Biometric employee time devices don’t:
- Store fingerprints
- Share fingerprint information with government or law enforcement
- Link to other platforms such as social media for employee monitoring
- Identify individuals not registered in the timekeeping system
8 Ways Biometric Time Clocks Empower Entrepreneurs
Clearly, it’s unfortunate that more businesses don’t take advantage of biometrics. In this section, we focus specifically on entrepreneurs.
1. Biometric Clocks Save Time
To process payroll, it’s important to know that the average payroll manager spends 7 minutes per timecard. This includes verifying information and inputting it into the system. Also, they have to figure shift differentials and department totals. Plus PTO and sick leave accruals. In addition, they must correct incomplete timesheets. This usually requires contacting an employee or supervisor.
Of course, this is valuable time that your employees could be spending on other activities. This fact is extremely important. When payroll doesn’t take as long, HR has a lot more time. They can use these hours to work on employee development, better training, and other activities.
2. Biometric Timekeeping Reduces Human Error
Because biometric devices identify employees with near 100% accuracy, they don’t require manual tracking. This, in turn, reduces payroll errors.
3. Biometric Timekeeping Provides Employee Self-service
Let’s discuss another advantage; employee self-service. Unified hardware/software time systems have employee self-service (ESS). These portals allow employees to access and update their own HR information. Though this may sound simple, it transforms the way your workforce operates.
For example, when an employee needs to update their W-4 form, they can do it themself. Ditto for an update to an insurance plan. Employees don’t have to call or email HR to manage their data. On the flip side, administrators don’t have to answer those calls and emails.
4. Biometrics Timekeeping Saves Trees
Let’s talk about a lesser-emphasized benefit. When you do away with paper timesheets, it reduces your company’s carbon footprint. This is one of the easiest ways to improve eco-responsibility at your company.
5. Biometric Timekeeping Changes Bad Habits
Equally important is employee behavior as related to time and attendance. Accurately tracking time reveals attendance issues. These include tardiness, unauthorized overtime and failure to clock out for unpaid breaks. By revealing these problems, managers can help the employee improve.
6. Biometric Timekeeping Improves Employer Accountability
As we’ve discussed, transparency is the first step to improving employee attendance. This type of transparency affects the employer, as well. Employer payroll accountability increases trust. Increased trust improves workforce morale. Improved morale, in turn, boosts productivity.
7. Biometric Timekeeping Simplifies Compliance With Employment Laws
Of course, all HR processes have a compliance component. Let’s turn our attention to this important topic. On the federal level, laws such as the Affordable Care Act, the Family Medical Leave Act, and other labor laws require employers to keep accurate records. The Fair Labor Standards Act (FLSA), specifically, requires records of employee work hours.
In addition to federal laws, an increasing number of states and cities are passing employment laws. Some require paid sick leave or family leave. Employers provide paid leave to employees based on hours worked. Additionally, employers must track and report accrual, eligibility, and usage of these paid hours.
In addition, secure scheduling laws may penalize employers who don’t provide stable schedules.
Furthermore, the DOL assumes employer guilt if they fail to provide adequate records.
To emphasize, biometric timekeeping systems streamline compliance for these and other workplace laws.
8. Biometric Timekeeping Prevents Time Theft
Of course, compliance violations aren’t the only financial risk. Employee hours theft can sink a small business. It’s so common, in fact, business advisors recommend building theft into budgets. Biometric time and attendance systems eliminate hours theft by buddy punching. Indeed, an employee simply can’t clock in for a co-worker.
To recap: here are eight benefits of biometric devices synced with timekeeping software:
- Saves time
- Reduces human error
- Provides employee self service
- Saves trees
- Changes employee behavior
- Increases employer transparency
- Simplifies compliance
- Eliminates time theft
State Laws on Biometric Employee Timekeeping
In this section, we discuss state-specific laws that govern biometrics.
Currently, there are four states that have biometric laws; Illinois, New York, Texas, and Washington.
The Illinois Biometric Privacy Act
Let’s start with the midwest.The Illinois Biometric Privacy Act or BIPA, requires employees be notified regarding the use of biometric data. Thus, employers can comply with BIPA by telling employees they will collect biometric data.
Furthermore, they should explain the nature of the biometric data and how it will be collected. Also, employers should only use biometric identifiers for time tracking and not for other purposes.
In addition, companies should also notify employees regarding the length of time their data will be stored. Usually this is for the length of the employment. In other words, delete biometric data when the employee is terminated.
In Illinois, biometric data cannot be sold, leased or used for profit in any manner. Also, it cannot be shared without the employee’s consent unless its required by law or a search warrant.
New York Biometric Laws
New York prohibits an employer from requiring an employee’s fingerprint unless it is required by law.
As a result, employers who wish to use biometrics can risk penalties if a fingerprint clock is used.
There are two ways that New York employers can legally use biometric timekeeping.
Firstly, employers can use a fingerprint biometric device, but it must be on a voluntary basis.
In other words, employers cannot require employees use it. Nor can they reward employees for using it or punish for not using it. Keep in mind that employees involved in time theft are most likely to decline.
Secondly, employers can require the use of biometric hardware that does not scan the surface of the fingers or hands.
A hand geometry clock, for example, measures the fingers and width of the hand, but does not scan any surface information.
Finally, New York employers may also consider facial recognition or iris scan clocks.
Texas Biometric Privacy Law
Like those previously discussed, the Texas biometric law requires disclosure. Specifically, biometric information cannot be sold, leased, or shared for commercial purposes unless the individual is informed.
Therefore, employers who use biometric information must inform employees of the details. Employers must also inform employees how long they will store the data and when they will destroy it.
Additionally, employers must protect biometric data with at least the same level of security as other information.
Texas’s law governs the actual biometric identifiers. Importantly, however, it doesn’t not cover systems that use other indicators from which the actual biometric identifier cannot be recreated.
For example, clocks that store a hash of the employee’s fingerprint or a mathematical sequence do not violate Texas law. In other words, the law does not consider a hash as biometric data.
Washington Biometric Timekeeping Laws
Washington, like New York, prohibits companies from using biometric data for commercial purposes.
What does that mean for employers?
Washington defines ‘commercial purposes’ as using biometric data for selling or marketing goods and services.
It’s important to note that the law does not include hand geometry as a defined biometric identifier.
As a result, employers in Washington can use biometric clocks and still be compliant with state law. (Assuming they never sell or profit from the biometric data.)
How to Implement Biometric Timekeeping Hardware and Software
In addition to choosing the right system, a good rollout is key to success, Therefore, let’s turn our attention to implementation. Following is a six-step guide.
1. Get Feedback From all Departments
Firstly, talk to your IT Department, supervisors, managers, and payroll department. These folks are on the ground and know what they need to be more effective. They can also help to champion the new system. This is critical.
2. Educate Employees About Reducing Labor Costs
Indeed, many employees don’t realize how the cost of labor affects business decisions. Thus, explain the benefits that they will see from automated timekeeping. Point out that paying unearned wages can subtract from other programs or lead to layoffs.
3. Inform Employees About Biometrics and Answer Concerns
Also, be aware that some employees have heard rumors about how biometric clocking is ‘big brother.’
Dispel these concerns by explaining what information it captures, how it identifies employees, and where information is stored.
In addition, explain your data security practices. Above all, emphasize that their data will not be sold or shared with other entities.
4. Document Your Policy
Furthermore, include your policy in your employee handbook. Therefore, employees can read and review it.
It can assure them that you have a formal policy. Plus, they can review the policy if they have questions.
5. Test, Train, and Document
Of course, make sure that everyone is trained on the new system and understands how to use it. Indeed, consider running the new system parallel to the old system for a payroll cycle or two. This gives everyone a chance to get used to the new system.
6. Review and Revise as Needed
Later, after you’ve been using the biometric system for several months, check for hold-ups in the clocking queue. You may need to add more terminals or provide additional training.
How a Mobile Timesheet App Solves 6 Obstacles To Business Growth
Despite their advantages, perhaps you aren’t interested in a biometric system. In fact, maybe a mobile timesheet app is all you need. Mobile timesheet apps have multiple benefits for all types of small businesses. Indeed, a timesheet app can spur business growth.
Firstly, timekeeping apps are popular with companies of all sizes. After all, using an app comes naturally to anyone with a smartphone. Furthermore, they are affordable. And, of course, they require little training.
Let’s discuss straightaway how an affordable timekeeping app will solve rather than create problems.
The Fastest and Cheapest Way to Improve Efficiency
Indeed, when it comes to ROI, no business management app comes close.
Improved labor management is a big deal. Specifically, because labor is your biggest expense.
Next, let’s look at the problems an employee time app will solve. Indeed, each problem is an obstacle to business growth.
1. We Have Too Much PTO Confusion
Certainly, confusion surrounding time off is a common problem. Without a formal system, for example, you are at risk for double booking. Even worse, forgetting someone’s request.
All things considered, the solution is a mobile PTO tracker. Indeed, a mobile time/scheduling/PTO app improves vacation management for everyone involved.
Firstly, team members request time off in the app. Similarly, managers can see all the requested dates together, side by side. Consequently, it puts everyone on a level playing field. This is especially important if you have a first-come-first-served policy. Thus, it removes any actual or perceived inequity.
2. I Use Guesswork in Client Billing
Equally important, an app can track time by project, team, client, etc. For example, if you’re in field service or construction, you can view billable time at a glance. Consequently, you can bill clients based on accurate employee hours. Indeed, stop leaking billable time!
3. Payroll Takes Too Long
Whether you pay your employees weekly, bi-weekly, or monthly, payroll is relentless. In fact, it seems to roll around quicker each pay period.
If you dread it, moreover, it’s probably because you use spreadsheets. Indeed, tracking time in spreadsheets doesn’t make sense anymore. All in all, a simple employee time app is a game-changer.
4. My Operating Expenses Keep Rising
Most operating expenses are fixed. Leasing office space, for instance. Administrative costs, however, are variable.
Inefficiency costs you big time. When it comes to employee timekeeping and payroll, a mobile app can improve efficiency dramatically. Improved efficiency saves money in several ways.
Let’s do the math…
There are many employee time apps that cost less than $8/employee per month. Even at $8 per user—which is on the high end for basic apps—a business with 10 employees would spend $80 per month.
How many hours do you (or your payroll manager) spend each month preparing payroll? This includes gathering timesheets, correcting errors like missed punches, and calculating PTO. Plus figuring withholdings and submitting payroll taxes.
Regardless of who does what, let’s suppose, in total, your team spends 15 hours a month on payroll. Let’s value this time at $21/hr (the BLS’ median wage for a payroll manager). That totals $315 in labor. $235 more than an app that costs $80 a month!
The savings in admin time alone is a compelling argument for an employee timekeeping app.
And what about the opportunity cost? If you could reclaim those hours, what could you do? Find new clients? Launch a new product? Clean your office? Go to the gym?
5. Late Timesheets Are Driving Me Crazy
Time to ditch paper timecards. You don’t need the hassle. Employees forget to fill them out. You have to track them down. In addition, they are vulnerable to math errors.
A mobile app replaces timecards. You can see each employee’s online timesheet. Approve them with a click. Import them into payroll. Make it home for dinner.
6. I Worry That I’m Overpaying For Labor
There is at least a 2%-3% error rate in manual data entry and calculation. When an app does the calculating, you protect your payroll from human error. It also prevents timecard padding.
Do you have a problem with employees adding extra minutes here and there? Look for an app with schedule lockout. Once you create a shift schedule, the web clock won’t allow employees to punch in early or punch out late. Of course, managers will have to disable lockout if they authorize extra hours.
Automated employee time tracking reduces unnecessary payroll bloat due to errors and time theft.
8 Reasons To Make Attendance Tracking A Priority—Even For Salaried Employees
An employee attendance tracking system (or app) automates timecards, schedules, and PTO. Small employers have moved to turnkey cloud-based apps. They are inexpensive and intuitive. They are equally valuable for employees, managers, owners, and HR.
Time tracking is essential for hourly workers. And it provides valuable benefits for companies with salaried workers as well.
1. Attendance Tracking for Employee Accountability
Employee accountability is paramount for productivity and engagement. Regardless of how your team gets things done, accountability is critical. This is true for all employee types including contractors, freelancers, and telecommuters.
Timekeeping apps like WorkforceHub can help you know when remote employees are working. They clock in with their phone, tablet, or laptop. Managers have oversight from wherever they are working. as well.
Using an employee attendance app creates accountability. Smart entrepreneurs insist on time tracking from day one. Even during those crazy first few months or years when everyone is working 80-hour weeks. Good employees want to document their commitment to working the long hours required to launch a start-up. When your team has settled into a saner schedule, time tracking helps you manage schedules to maintain productivity.
2. Document Management
Efficient document management is critical for success. Human Resources handles the most important documents—those that allow you to pay your employees accurately.
Employee time and attendance is well-defined. This makes it uniquely suited to automation.
3. Attendance Tracking for Compliance
Consider Fair Labor Standards Act (FLSA), Affordable Care Act (ACA) and Family Medical Leave Act (FMLA) laws. They apply equally to all workers, regardless of the way they are paid. Automated timekeeping creates a foundation for compliance.
It not only ensures accurate payroll, it automatically stores essential records. Schedules, PTO, overtime, and employee classifications must be retained.
4. Overtime Management
Mismanaged overtime is a surefire way to trigger employee burnout. In addition, it eventually leads to higher attrition. Every time you have to find and train a new employee, you slow business growth.
5. Time Tracking for Resource Allocation
Employee timekeeping reveals team productivity. Regardless of the operational classification—project, client, or product. Simplify client billing and project timelines. Analyze historical schedule data to forecast staffing needs.
6. Administrative Efficiency
How much time does your Human Resources team spend preparing payroll? How about tracking PTO? WorkforceHub empowers your payroll department. In addition, it allows your team to access HR info on their own. Admin staff and employees both appreciate eliminating the phone calls.
7. Time Off Requests
WorkforceHub makes it easy for your employees to request time off. You (or your managers) approve vacation requests in the app. This eliminates confusion and ensures that your clients aren’t shortchanged because of a scheduling mix-up.
8. Data Security
Swipeclock’s WorkforceHub HR system keeps your employee data secure. At Swipeclock, we have been protecting business payroll information since 2001. Our resources and data security expertise give you peace of mind.
How Biometric Timekeeping Will Increase Your Retail Profitability
Businesses with fewer than 500 employees provide around 60% of private sector jobs in the US. They are the lifeblood of our economy.
Owning a retail business is no small feat. Owners have to juggle more and more balls just to stay afloat. Managing inventory. Competing with e-commerce giants. Handling both online and offline sales. Complying with yet another workplace regulation. Satisfying customers who know as much about your products as the manufacturer. It’s a wonder any survive at all.
Remove a Barrier to Profitability
Let’s discuss an affordable and easy-to-implement solution to a barrier to profitability: employee time theft. The solution is uniquely capable of virtually eliminating time fraud: a biometric time collecting device for each of your locations.
In addition, biometric employee clocks provide less obvious but equally valuable benefits to everyone. This includes HR, payroll, supervisors, and yes, even your employees.
Time Theft is an Avoidable Expense
When it comes to employee fraud, inventory shrinkage seems to get the most attention. But for many retail businesses, time theft is even more widespread and costly. Simply put, time theft occurs when an employee is paid for time he or she didn’t actually work.
Accidentally on Purpose?
Timecard falsification can be inadvertent; Ryan accidentally enters 9:00 as his clock-in time when he actually starts working at 9:03. And time theft can be infuriatingly flagrant; Ashley punches in for Jessica who doesn’t show up until three hours into the shift. (Fire them both!)
Of course, the Ashley/Jessica buddy punching scheme obviously inflates labor costs significantly, but a careless 3-5 minute padding committed by a larger percentage of employees may be even costlier. Though perhaps more forgivable.
Manual Timekeeping Systems Are Fraught With Error
What if your timekeeping system requires employees to recall shift punch times after the fact and enter them on a timecard? In the end-of-pay-period scramble, do you really think your employees err in your favor when guesstimating?
It’s hard for most people to recall what they ate for lunch let alone when they clocked out last Thursday. An outdated system that requires employees to fill out either a physical or digital timesheet is a time-waster and a relic of workplaces of the last century. (Come to think of it, last millennium.)
Do All The Dishonest Employees Work For You?
Wage theft is so prevalent that business consultants routinely recommend that small employers take it into account when planning labor budgets.
According to an anonymous study conducted by corporate investigative firm Kessler International: of 500 employees working in common retail and service industries, over 30% admitted to misrepresenting time worked.
It’s not hard to imagine that some who are guilty don’t admit it even in an anonymous survey. So if you fire both Ashley and Jessica, the two employees you replace them with may be just as likely to buddy punch for each other. Especially if they become friends. Unfortunately, hiring employees who are honest 100% of the time is impossible in an imperfect world.
What are the ways employees willfully commit time fraud?
- Clocking in early
- Punching out late
- Not clocking out for unpaid breaks and meals
- Buddy punching
When you pay workers for time they didn’t actually work, you inflating what is already your biggest expense—labor. In addition, labor costs can be unnecessarily high due to human error.
How are labor costs inflated non-intentionally?
- Inability to recall previous shift times after the fact
- Miscalculations when supervisors reconcile timecards
- Human error when HR managers calculate accruals
- Mistakes when entering employee hours in the payroll system
Do The Math And Cry
So what’s the financial damage if a typical percentage of your retail employees are padding their timecards or buddy punching? Estimates of the total amount of time employers routinely overpay workers range from 2-4 hours a week per employee.
For our example, let’s assume that you are paying an extra three hours a week per employee. If the average hourly wage in your company is $12, and you have 30 employees, the grand total is $56,160 dollars in overpayment each year.
If you have employees who make deliveries, pick up supplies, or run errands, you are even more vulnerable to time theft.
Here’s Your Company Card—Have Fun!
Making it easy for your employees to falsify timecards makes about as much sense as leaving your stores unlocked at night or giving each employee a company credit card.
The Problems With Swipe Cards
Swipe cards were supposed to solve employee time theft but proved to be woefully inadequate. Cards get lost. They get bent. And dirty. They can be borrowed. When an employee complains that the machine won’t take his swipe, you are back to the shaky ground of trusting him to honestly report his hours.
Biometric Time Clocks for Small Businesses
If swipe cards can’t prevent time theft, what is the answer for identifying your employees in a way that can’t be exploited? Enter biometrics. If you are unfamiliar with the term, take it apart. Bio (biological) + metric (measurement).
Simply put, biometric technology verifies a person’s identity by analyzing a unique physical or behavioral attribute. The most common physical identifiers for biometric timekeeping devices are a fingerprint, palm, iris, or the entire face.
Biometric technology is used in myriad applications such as law enforcement (particularly border control and surveillance), healthcare, and access control. It is also not limited to the hands, face and eyes. Biometric devices can use identifiers such as voice characteristics, keystroke rhythm, and personal odor (insert wisecrack here).
Biometric Employee Time Clocks
Biometrics and retail businesses are a match made in heaven for the tech-savvy business owner or HR manager. But even if technology isn’t your forte, rest assured that Swipeclock biometric clocks are not difficult to set up or use.
They do, however, make it nearly impossible for employees to steal time. Ashley simply can’t punch in for Jessica anymore. And Ryan can’t fudge his timecard. And Derek can’t lose his iris as easy as he can lose a swipe card or key fob. (Picture Tom Cruise getting a hairy black-market eye transplant in Minority Report. It’s a significant deterrent for most employees.)
Easing The Administrative Burden
In addition, your supervisors won’t have to track missing timecard information. And your payroll manager will automatically have accurate data from the timekeeping system synced with the clocks. And your HR team won’t have to manually calculate PTO accruals.
You May Be Hemorrhaging Cash
Many small business owners think cutting-edge biometric technology is prohibitively expensive. In the example cited previously, however, a retail business with thirty $12/hour employees loses $56,160 a year in time theft. Talk about expensive! And just to reiterate, the estimate is for a typical retail business, not an outlier. Your business might have more time theft than the average.
Increase Profits, Not Overhead
Retail businesses have many different challenges, but shrinking profit margins seems to concern most every owner. One of the golden questions is “How can I increase my profits without raising my overhead?” By adopting Swipeclock biometric units at all of your retail locations, you can reduce the big chunk of your overhead that is your payroll expense—and increase your profits without even touching any of your other fixed or variable costs.
Worried That Your Employees Can Protest Due to Privacy Laws?
First off, most people have already accepted the fact that Google knows when you brushed your teeth this morning and has probably already asked you to leave a review of your toothpaste. That said, note that many states have restricted the type of biometric information that an employer can require. Before purchasing a biometric system, make sure you know the laws that affect you.
Employers who train their teams when introducing biometrics will explain the mechanisms that protect them from data misuse. We can help you with an effective plan that will include employee education about the safeguards in place to protect their information. At Swipeclock, we have discovered that most retail employers who have adopted biometric time clocks in the past few years received less employee resistance than expected and were able to adequately address their workers’ concerns.
Hopefully, we have successfully made the case that biometric clocks lower labor costs for retail SMBs. We will now describe some additional benefits that biometric employee time and attendance systems will bring to your organization. Keep in mind that this is not an exhaustive list.
Biometric Time and Attendance Systems Increase Efficiency
Many small businesses have implemented smartly designed technology to improve efficiency for merchant transactions, inventory management, and CRM. Strangely enough, however, many are using outdated systems for employee time and attendance.
Let’s look at a typical journey for one timecard in such a system.
First, each employee enters shift start, shift end, and break times for each shift of the pay period. When timecards are due at the end of the pay period, a manager views and approves each employee’s timecard. If there are errors, the manager has to track down the information to make corrections.The the timecard is submitted to HR. An HR team member manually enters the data into the payroll system.
At least three different people touch each timecard in order for the payroll system to generate a paycheck. Imagine if each customer sale was as cumbersome as this. Plus, each step of this manual journey provides an opportunity for error.
Biometric Timekeeping Devices Bring Compliance Peace of Mind
Labor law compliance can be a full-time job. Large companies have the resources for massive compliance departments and extensive legal teams dedicated to protecting them from labor violations. Regardless, billion-dollar global companies are penalized for wage hour violations every single year. Disney was ordered to pay several million in back wages due to an FLSA action.
Retail employers are subject to laws regarding minimum wage, overtime, family leave, predictive scheduling, and extra hours for part-time employees. Accurately tracking hours, schedules, PTO, and overtime is priority one for compliance.
For some retail employers who adopted a biometric time and attendance system, the compliance benefits were the greatest motivator, even more persuasive than the reduction in labor expenses that resulted from the implementation. Accurate employee schedule information that can be readily accessed and validated is your protection against a labor violation resulting from either an audit or employee dispute.
Employee Accountability and Empowerment
Retail employees who are required to use biometrics know they will get paid for every minute worked. That type of assurance is valuable for those employees you want to keep.
A biometric device allows you to recognize your prompt employees who arrive on time, punch out for unpaid breaks and meals, and clock out when authorized. Giving credit where credit is due improves employee morale and lowers turnover.
In summary, small retail employers have much to gain financially from implementing a biometric time and attendance system. And efficiency, employee accountability, and reducing time on non-billable activities are just as compelling.
Why You Need a Time Tracking System: A Case Study
In this section, a small business owner shares his experience.
“Not my employees,” I said to myself. I trust them. They’re really good people. I had no reason to believe that one of the biggest factors in our struggle to grow the company was our own employees cheating on their timecards. As it turns out, it can be a pretty big problem, and it happens both intentionally, and unknowingly.
Becoming Aware: “My first time getting the ball rolling.”
When the issue of time theft first came to my attention, I was at a conference dedicated to serving the time and attendance needs of small businesses.
For the most part, attendees were HR managers or accountants for brick-and-mortar retail stores across the United States.
There were also people from the hospitality industry. This included hotel and resort managers, event planners and travel agents.
In addition, there were reps from national restaurant chains and mom-and-pop establishments.
An eclectic mix with one thing in common; we all have hourly employees.
Buddy Punching: “It hurts more than a light tap on the shoulder.”
The issue of “buddy punching” came up in a session I attended. I whispered to my companion that “we used to do that in high school.” He wasn’t amused.
As it turns out, it’s no joking matter; according to research by the American Payroll Association, buddy punching affects about 75% of our nation’s small organizations.
4 hours per week, per employee!
And though I couldn’t believe it at the time, a survey of actual employees found that, on average, companies are losing about 4.5 hours per week, per employee.
I reached for my phone and tapped on the calculator to run a rough estimate of what this could mean for my business. I have 15 employees. Eleven of them are hourly. I took a conservative route and assumed that 75 percent of my employees could be buddy punching, and did the math.
Here’s how I calculated for my business:
First, I multiplied the number of employees I have on my hourly payroll by 75% to determine the number I could expect might be buddy punching:
11 x .75 = 8.25 employees
This gave me a number of 8.25. To keep things simple, and to err on the side of conservative estimates, I rounded down to 8 for my next calculation.
Next, I multiplied the number of employees (8) by the average number of hours reported stolen per week in the report cited in my conference session: 4.5 hours.
8 x 4.5 = 36 hours
36 stolen hours per week.
Thirty-six. Let that sink in for a minute. I did, and the more it sunk in, the more I wanted to jump out of my seat and run back to the office to figure out how to make it stop.
According to the research, my company is losing 36 hours per week to buddy punching, alone. My initial thought was that this amounted to an entirely new employee joining our company—something we have not been able to justify because of our budget constraints. According to my phone, which I double-checked, I had already hired this person and didn’t even know it.
Hang tight; it gets worse…
As I sat there pondering the long-term benefits of hiring a new employee, or saving 36 hours per week, the presenter shifted to early punch-in and late punch-out.
An early clock-in is something we have considered, and late clocking is always a concern. But I had no idea how much this was already affecting my business.
With only 11 employees on our time system, the numbers started adding up quickly. I looked around the room and wondered how many of my new hotel friends or restaurant owners would multiply by tens, or even hundreds.
I watched as attendees whipped out their smartphones and started calculating. By the looks on many faces, the numbers were scary.
Hotels can save thousands per year.
In the hospitality industry, for example, a single mid-sized hotel can easily employ over 50 employees working hourly to perform tasks such as housekeeping, laundry, room service, and security.
If each employee at a hotel clocks in just five minutes early each day, that can result in a budget overreach of four hours per week. Or roughly 208 hours per year. If those employees are earning $8 per hour, that equals about $1,664 in unaccounted time per year.
It all adds up.
The conversation quickly turned to the daily number of clock-ins and clock-outs.
Employees arrive to work, take a morning break, leave for lunch. After lunch, they clock in and out for an afternoon break. Finally, they clock out at the end of the day. That’s a lot of ins and outs.
Suddenly a few minutes here and there turned into vast amounts of time.
A plumbing analogy…
This reminded me of the water quietly draining away through that leaky faucet I still haven’t fixed in my guest bathroom. I considered the comparison for a second; every time I walk past the guest bathroom, I am reminded that I have a small leak in the faucet. I often think “I’ll get to that on the weekend.” But never do. The faucet has been leaking now for the better part of a year, and I am suddenly aware that I am losing a lot of water without even realizing it.
Losing Battle: “What is the cost?”
So I ran the numbers on my own business. It looked like this…
I have eleven employees, and each of them has an opportunity to record a clock in or clock out on eight occasions:
- Start their shift
- Morning break (clock out and back in)
- Afternoon break
- End of shift
This means there is a potential for each employee to clock in or out by five extra minutes. Eight times each shift! This results in a potential advantage of 40 minutes each day. If they stretch that to 10 minutes, it can be 80 minutes of unauthorized time. This would total about 1.5 hours each day.
Granted, most workers aren’t going to take advantage of both ends of a break, potentially reducing their break time to only a few minutes. However, some employees will absolutely take a few extra minutes.
The impact can be more than just unplanned overtime; there are also implications for time-and-a-half calculations. Plus FLSA, ACA, and other regulatory restrictions that could have you paying even more.
Plus, you have to consider how it affects the actual work your employees need to do.
For my business, I multiplied 11 hourly employees by a conservative potential of 40 minutes per day (11 multiplied by 8 opportunities), and then divided by 60 (the number of minutes in an hour) to get a whopping 7.3 hours each day:
(11 employees x (8 punch in/out opportunities of 5 minutes)) / 60 minutes = 7.3 hours each day.
7.3 hours each day works out to 36.5 hours each week or the rough equivalent of (another) full-time employee.
Two full-time employees!
If you’re keeping track, that’s two full-time employees I could have hired if I had a better way to manage time theft, buddy punching, and early and late punch ins and punch outs. And those are conservative estimates for my small team of eight.
If you are a company with 10, 20, or 50 employees, we’re talking significant unplanned overtime. The American Payroll Associate estimates this could account for as much as 30 percent of your bottom line. Money walking out the door means you’ll continue your struggle, as we have. Talk about an eye-opener.
An Easy Fix: A Biometric Device and Automated Timekeeping System
Over the course of the ensuing question and answer period, I researched how other small companies are solving the problem of employee time theft.
The answer seems to be “biometric time clocks for small business.”
I was always under the impression that biometrics were for the big guys, and have associated the thumbprint reading technology with big offices, big budgets, and big brother.
To my pleasant surprise, many vendors had plenty of answers to dispel our collective concern about budgets and implementation.
Biometrics: A Primer For Small Business Owners
When it comes to solving the problems of things like buddy punching and skimming a few minutes here and there, biometric devices have a lot of answers that make solving these problems nearly as easy as plugging in a toaster.
There are several varieties of biometric hardware. Most require an employee to confirm their identity with a fingerprint, handprint or facial scan.
Fingerprint technology is in wide usage, is easy to install and set up, and solves a lot of our problems without the high-tech intimidation I originally associated with such a James Bondian device.
Another advantage is that several companies providing the biometric solutions have designed their products to integrate with popular time and attendance solutions offered by leading providers such as Swipeclock.
Keeping Time: How Biometrics Will Help Our Small Business
We’re combining Swipeclock’s Vision+ with WorkforceHub small business HR system. This will make buddy punching a realistic impossibility.
Employees will confirm their identity with a facial scan, and won’t be able to punch in for a late buddy.
This single solution alone promises to save our company the cost of one whole full-time employee.
We’ll make up the cost of the new hardware in less than two months, and employees will now be personally accountable for their time. Happily, this will eliminate the ethical dilemma of how to respond when your buddy asks you to punch in for them; it literally can’t happen. Honest employees appreciate this.
Early and late punch-ins are also reduced to our own tolerances based on the software we have selected. Swipeclock allows us to set parameters on how early, or late, an employee can punch in.
Since we have eliminated buddy punching, employees are now responsible for regulating their own time in and out and are not allowed by the system to punch in any earlier than their prescribed start time.
Likewise, it flags lat punch-outs and sends an alert. We are also preventing unplanned overtime.
We’ve discovered that implementing biometrics will help with missed punches. The Swipeclock system can filter punch-in and punch-out options based on conditional logic.
For instance, if an employee punches out for a break, the system knows their only option is to punch in from the break. This reduces errors and helps assure our employees that they are getting their time recorded correctly.
Mobile Too: Biometrics Help Assure That The Right People Are In The Right Place
Occasionally we have employees working at remote locations. Retail stores and restaurants don’t have this problem as much as construction companies, hotels, and other location-based hospitality businesses such as event management and planning.
It’s particularly nice to have mobile biometric time and attendance solutions that can help us manage employees remotely without having to question time and attendance records.
Biometric tracking goes a long way toward improving employee trust. Our team knows they won’t have to scrutinize records to make sure they are being paid fairly.
Security Concerns: Assuring Our Employees That They Are Safe
One of the concerns that caught my eye was when a hotel HR manager expressed concern that fingerprints would be discoverable on remote devices.
A knowledgeable vendor in the room confirmed what several others mentioned; biometric data is kept in an unrecognizable algorithm. There aren’t actually any pictures of employee fingerprints, iris, or facial data that can be copied and used.
The information is locked and stored in a code that only the system can recognize. If the data were to somehow find its way outside of the system, it would be completely unrecognizable, and inherently unusable.
Final caveat: since new state and local labor laws are popping up all the time, all business owners like myself should definitely review the regulations that affect their specific location before purchasing any type of biometric system.
I have recently learned, for instance, that some states do not allow the capture and use of fingerprints. Check with your local government to make sure the biometric technology you choose is approved for use in your area.
Where Do I Buy Time Clocks For Small Business?
Ready to buy new timekeeping hardware for your company?
Swipeclock is one of the few vendors that offers clocks integrated with timekeeping software. We have a variety of intelligent clocks including Vision, Vision+ and Touch. Plus, our support team has extensive workforce management expertise. This ensures our clients get the most out of our products.
For example, our clients love the ’employee-aware’ AI feature. It gives you time tracking superpowers unheard of with old-fashioned punch card clocks. It uses the employee’s current state to prevent punch mistakes. It also enforces schedules, tracks meals/breaks, tracks job codes, and provides overtime alerts.
WorkforceHub, our HRMS (Human Resources Management System) syncs with our intelligent clocks. WorkforceHUB unifies all of your HR functions.
How Do I Start Tracking Employee Time Right Now?
In addition to intelligent time clocks, we have an affordable HR system, WorkforceHub, that tracks time, work schedules and PTO.
We hope this guide has been helpful. To learn more, visit WorkforceHub time clocks. We would love to help you choose the best timekeeping hardware and software for your organization.
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