Salaried employees are generally paid a set wage each pay date and are therefore usually not required to use a time clock. To keep track of hourly employees’ time, employers often have them use a time clock. The Federal Labor Standards Act (FLSA) sets the federal wage laws including time-keeping. Some states set their own wage laws as well. If the two laws conflict with each other, the one that benefits the employee the most should be used.
The FLSA does not require an employer to use a particular time-keeping system. He can use whichever system he wants as long as it is correct and complete. However, many employers with hourly workers often use a time clock to record the hours. The time clock helps to ensure that the employee clocks in at the actual time he arrives to work, takes breaks, and leaves for the day. It also helps to reduce falsification of time because, once punched, the time clock imprints the time on the card.
The FLSA permits employers to round employees’ time up and down to the closest quarter hour. For instance, if the employee clocks in at 8:06 a.m. and leaves at 5:09 p.m., the time should be rounded down to 8 a.m. and rounded up to 5:15 p.m., respectively. The employer is in violation of the minimum wage and overtime income criteria if he consistently rounds down. In rounding up and down, the employee may have slightly more or fewer minutes.
If the employee gains overtime because of rounding, the employer must pay him the overtime at his overtime rate. For instance, say the employee’s time card for Monday to Friday shows in–7:50 a.m., lunch in–12 p.m., lunch out–1 p.m., and out–5:09 p.m. The employee has a total of 9.50 hours for each day. Subtract one hour for unpaid lunch, equaling 8.50 hours for each day. The employee should be paid for 30 minutes of overtime for each day, resulting from rounding.
The United States Department of Labor notes that employers should retain time cards, or any other method on which wage computation is based, for at least two years. The employer must allow the Wage and Hour Division to inspect these records if they require it.
Generally, the employer devises his own time clocks rules as well. There is often a strict warning in the company’s policy manual regarding falsifying time cards, which is grounds for immediate termination.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.