Time Tracking Laws in the US
One of the most important federal laws that cover, among other things, record keeping and time tracking, is called The Fair Labor Standards Act or FLSA for short.
The Fair Labor Standards Act was introduced into U.S. law in 1938, and it protects non-exempt workers and imposes penalties on employers who participate in unfair wage practices. It covers things like:
Under the FLSA, workers should not receive a wage that is less than $7.25 per hour of work. The law came into effect on July 24, 2009. In the event that an employer is subject to both federal and state laws regulating minimum wage, the employer is required to pay whichever wage is higher to their employees.
If an employer violates this provision of the law, inadvertently or willfully, they can be taken to a civil court and fined for up to a $1,000 for each such violation.
FLSA non-exempt employees are entitled to overtime pay for every hour of work they put in that exceeds the regular 40 hours in a single workweek. The employer can determine the overtime pay rate, but it mustn’t be less than 1.5 times the established hourly rate.
FLSA doesn’t state that work during weekends or holidays is automatically considered overtime work. And, as such, it does not require employers to compensate their employees for overtime pay unless, of course, overtime work is performed on those days.
Employers who repeatedly infringe FLSA’s overtime provisions can be criminally prosecuted and forced to pay fines of up to $10,000.
Work hours are defined as the time an employee is required to spend performing work duties for an employer. This action can be performed either by being on work premises or simply on duty.
Employers are required under FLSA to outline and explain the requirements of the law to their employees, preferably by using an official poster. Employers also have to keep an accurate record of employee work hours and pay for no less than the preceding 3 years.
To comply with FLSA’s record keeping, an employee work record contains the following information:
- Full name of the employee.
- Address, along with ZIP code.
- Hourly pay rate.
- The total amount of daily or weekly earnings.
- Total overtime earnings for every workweek.
- All added bonuses or deductions from the employee's regular wage.
- Total wages that employees received for each pay period.
- Dates of payments and the pay period covered by every payment made by the employee.
Non-Exempt and Exempt Employees Under FLSA
Non-exempt workers or workers covered by FLSA have all the rights as pertained under this act. They are also entitled to a federal minimum wage and overtime pay, no less than 1.5 times their standard hourly rate.
Exempt employees are, in most cases, salaried employees paid over a certain threshold. They usually perform administrative, professional, and executive job roles.
To learn more about FLSA, and ascertain if your employees are non-exempt or exempt, check out the Department of Labor Fact Sheet.
Time Tracking Obligations of the Employer
When it comes to tracking time and work hours, employers are the ones that are responsible for it. They can instruct their employees to do it and relieve themselves of the burden. But ultimately, if any mistakes occur in the timekeeping process, the employers will be the ones facing penalties as regulated by either state or federal law (or, in some cases, both).
That’s why it’s important for employers to familiarize themselves with time tracking obligations and find the least time consuming method to track employee hours, such as using time tracking software like My Hours.
How to Track Work Hours?
There are many different ways employers can instruct their employees to track their work hours. From old-timey time cards to modern-day swipe cards, timesheets (both paper or digital), and even time tracking apps. No law in the United States requires employers to use a specific tracking method for employee work hours. All that the laws state is that you have to do it.
Now, what the law does state, is how long you have to keep those logs. And that “how long”, can be different depending on which state in the US a business is registered in. For example, in New York, employers have to keep employee records for at least 6 years, while in other states, that time might be closer to 3 years.
Also, in the case of pending lawsuits, employers have to keep the entirety of employee records, until the legal proceedings are over. This could take years and thus extend the minimum legal obligation for keeping records indefinitely.
How to Round Up Work Hours?
Accurately rounding up work hours is the employer's responsibility, and if not done correctly can lead to unwanted lawsuits for employers. The best way to do it is to follow the 7-minute rule. How does the 7-minute rule work? Well, it’s easy:
- If an employee clocks in at 09:07, the work time should be rounded down to 09:00.
- If an employee clocks in at 09:08, the work time should be rounded up to 09:15.
Another thing that employers should keep in mind is that rounding of work hours has to be either neutral or beneficial to the employee, as stated by the FLSA.
How to Calculate Overtime?
If not stated differently by a contract that employees signed with their employer, overtime is pretty easy to calculate. Under FLSA, overtime should be 1.5 times the regular hourly rate.
To make the process even easier, try using the free My Hours timesheet calculator.
Tracking Work Hours for Overtime-Exempt Employees
Workers that are exempt from overtime pay, and are not covered by the laws and regulations stated in FLSA, are usually employees that are paid on a salary basis.
The minimum amount of money exempt employees should receive to be excluded from FLSA and laws that regulate overtime pay is $455 per week or $1,820 per month.
It’s important to note that all hourly employees are non-exempt under FLSA, but at the same time, not every salaried employee is exempt. In short, salaried employees can be either exempt or non-exempt. Section 13(a)(1) of the FLSA regulates and explains further which employees who receive a salary are exempt and which are not.
So, how is tracking work hours for exempt workers different, and what rules should employers keep in mind? In essence, every employer should consider the following:
- Both exempt and non-exempt salaried employees are qualified to receive their base salary, regardless of the number of hours they’ve worked.
- Workers paid on a salary basis are required to finish their assigned tasks or duties, no matter how long they take (or how many work hours they have to invest).
- If a salaried employee is absent from work for less than half a day, their pay can not be lowered. Only a full day’s absence can be taken into account when thinking about lowering the pay of salaried employees.
How Does a Time Tracking App Help With Time Tracking?
Although not specified by either state or federal law, the best method for tracking work hours is by using a designated software or a time tracking app.
Yes paper or digital timesheets are both viable options as well, but they require the data to be entered manually, further eating up employee work hours and productivity. And, as opposed to software, manually keeping track of work hours is prone to human error and can be plagued by errors.
To be in compliance with the FLSA and protect their business from incurring penalties, employers have to keep accurate records of their employees' work hours for at least 3 years. Those records can be created manually or automatically and can be in paper or digital form.
With time tracking software, employers can ensure they comply with federal laws without having to invest additional time and resources into keeping accurate records.
No More Human Error
Unlike humans, apps are much less inclined to make mistakes. With a time tracking app, human error will become a thing of the past, allowing employers additional protection against both honest mistakes and employees who just want to “game the system.”
Easily Manage Remote Teams
With time tracking software, it has become much easier to manage remote workers and teams. This comes with huge benefits to employers, as they can now hire contractors from all around the world while ensuring they actually put in the work time they initially agreed to.