Is Time & Attendance Overrated?

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Written by Justin Williams – Former Managing Director of Channel for SwipeClock

“Who looks outside, dreams; who looks inside, awakes.” – Carl Jung

As Managing Director of Channel for SwipeClock, I have the fortunate privilege of speaking with many of our payroll or PEO partners.  These partners, who we commonly refer to as PEO providers (Professional Employer Organizations), work with various businesses to provide employee benefits, payroll processing, HR administration, workers compensation coverage and various other valuable services through a business-to-business relationship called “co-employment.”

When talking about their clients and who they service, inevitably there is always a certain percentage of their overall client base that is not taking advantage of a Time & Attendance solution. When asking the question why, I always seem to get the same response that “Everyone is on salary,” or that “Employees are paid a fixed daily rate,” or last but not least “Our clients pay everyone on commission.”

So let’s talk about the facts here and why I can think of 3 reasons alone that justify the investment in a Time & Attendance solution.

Reason #1: It is in the best interest of the employer to have records of all employees’ time worked. Not having records jeopardizes the financial wellbeing of the business in the event that a defense is required against any wage and hour audit or claim.

Reason #2: The federal Fair Labor Standards Act (FLSA), along with other federal and state wage laws, requires employers to record hours worked, wages paid, and other conditions of employment. Time records must show the date and time a workweek starts, the number of hours worked each day, and the total hours worked during the week, including the starting and quitting times for each employee. If they don’t believe you just send them a copy of the latest e-CFR 29 CFR Part 516 which is current as of February 3, 2017.

Reason #3: The American Payroll Association estimates that 75% of companies lose money from “buddy punching” or manually adjusted timesheets. Employees reported stealing roughly 4.5 hours/week – the equivalent of 6 weeks vacation. In total, “buddy punching” or manual manipulation of time sheets accounts for approximately 2.2% of gross payroll.

I think it goes without saying at this point that we should all know the law requires timekeeping for all non-exempt employees. That being said, you can almost guarantee that not all your employees will meet the qualifications to be classified as “exempt.”

Therein lies the problem – a problem so serious that the financial ramifications can be quite severe. If an employee was classified incorrectly and should have been classified as non-exempt, they can later make a claim that overtime pay is owed. Please refer back to Reasons 1 & 2 as to why it is important to keep track of all employee time worked.

Facts about Payroll:

– Payroll accounts for up to 50-60% of a business’ operating expenses
– Companies want to ensure that payroll dollars aren’t being wasted
– They want the highest return possible on the investment they are going to make

Now let’s talk about the savings that a time and attendance solution provides. I think we all know a company who has 15 employees, let’s assume the average wage of $30.00 with 50 hours being the average work week. The company runs their payroll weekly. The average time to calculate is about six minutes each day filling out time cards when they could otherwise be working. Let’s assume there are payroll errors and assign a 3% variable.

Below are the costs incurred by the business because they don’t have a time and attendance solution:

– Amount of money spent annually on payroll errors = $35,100
– Lost Employee Time (Annually) = $11,700
– Calculating Payroll Costs (Annually) = $2,730.00
– Total Costs = $49,530
– Total Savings by adoption of a Time & Attendance Solution = $49,530

Immediate Benefits of a Time & Attendance Solution combined with Payroll:

– Spend Less Time on Payroll
– Prevent Buddy Punching and other Time Theft
– Prevent Human Error in Bookkeeping
– Keep Employees Informed
– Spend Less Time and Resources on Paperwork
– Stay on the Right Side of the Law
– Central Database for all Employee Information

Businesses that aren’t taking advantage of a Time & Attendance solution should seriously consider switching from manual tracking to an automated, cloud-based timekeeping system. Long gone are the days where manual entry can be counted on as an effective way to maintain records. The time spent in tracking manually only increases the potential for errors such as illegibility, falsifications of hours, etc.

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