Time clock policy is an extremely tricky area for most employers. No matter what you do as an employer, it can be very difficult to get employees to follow the rules with respect to clocking in, clocking out, and clocking in and out at permissible times. What can you do to enforce your policies and avoid paying huge sums of money in overtime wages?
Rules Vary By State
In most states, it’s a blatant violation of wage and hour laws to deduct pay from an employee’s compensation as a penalty for improperly clocking in and out. Some employers try to impose a fine on employees in the form of charging for time required to fix errors on paychecks when the employee is at fault for the error. But how would you enforce it? Withhold a paycheck? That’s a big “no-no.”
While financial incentives might seem like a good way to make sure that employees are recording time accurately, it’s not a very cost effective strategy if you want to avoid getting hit with a wage and hour claim lawsuit.
Put very simply, withholding employee pay is typically a violation of both state and federal laws, so don’t use money as an incentive. Moreover, just firing an employee without thinking through the issues fully can open you up to a potential lawsuit.
What You’re Required to Do
First, almost every state has a list of time periods for which employees must be paid if they are clocked in.
What You Can Do
You can set in place a policy prohibiting work at times beyond the scope of what is mandated by state law. While you may adopt a policy of revising or correcting subsequent paychecks to make up for compensation included for unauthorized work, you may not ever withhold or delay a complete paycheck as a form of punishment.
Issue written warnings to employees that work during unauthorized hours. A write-up with the employee’s acknowledgment of receipt is very important. If a second violation occurs, you should give the employee a written termination warning.
Finally, you can adopt a policy that makes employees ineligible for future bonuses if they have not complied with time clock policies. This will only work, however, if everyone is held to the same standard.
What You Should Do
What you should do is adopt a very strong overtime policy in your employee handbook (which we discussed several weeks ago). The other thing you should do is contact our office ASAP. We can help you avoid the many pitfalls and traps involved in crafting policies that govern employees. Mistakes in this area can be particularly costly. So if you have an existing business or, even better, if you’re thinking of starting a business, do it right from the start.
The Parents Estate Planning Law Firm, PC
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