The old-fashioned time clock system that requires punching in and out with a paper card is by no means high tech, but it is affordable and still available today. (Photo: Shutterstock)

Under the federal Fair Labor Standards Act (FLSA), all employers with sales of $500,000 a year or more are required to keep records of the time all their employees work. Failure to do so can result in significant penalties. Regulations aside, accurately tracking worker time and attendance is obviously in the best interests of your business.

However, tracking and recording employee time can be more of a challenge than you might expect, with overtime rules, labor laws related to clocking in and out, and all the different time tracking options available today. Here we have compiled some tips to help you simplify the process of tracking your employees' time.

Overtime rules

When overtime is not carefully managed, it can increase your labor costs significantly. Under federal law, all hourly employees who work more than 40 hours per week are entitled to one and a half times their regular pay rate for the overtime hours they work.

Related: Joint employment, overtime and other wage-and-hour issues to watch

It may be necessary to incur overtime expenses to meet your production demands. However, it is vital to have accurate overtime records to help you stay on top of costs and to protect your company in case an employee claims to be owed overtime compensation. To stay on solid ground, you need to have detailed, accurate overtime records that are easily accessible.

Time clock rules

In administering FLSA, the U.S. Department of Labor (DOL) does not require any particular form of recordkeeping, and time clocks are not required. For all employees subject to minimum wage or minimum wage and overtime provisions, employers must keep a record of:

• Employee name, home address, occupation, sex, and birth date if under 19 years of age
• Day and hour when workweek begins
• Total hours worked each workday and each workweek
• Regular hourly pay rate for any week in which overtime is worked
• Total daily or weekly straight time earnings
• Total overtime pay for each workweek
• Total wages for each pay period
• Deductions from or additions to wages
• Pay period covered and date of payment

Finding the best system for keeping track of employee hours and overtime may require some careful consideration. Factors to consider may include the size of your workforce, your comfort level with technology, and how carefully you need to monitor your employees. The following are some clocking in and out options available today.

Punch-clock system

The old-fashioned time clock system that requires punching in and out with a paper card is by no means high tech, but it is affordable and still available today. However, more advanced systems that use computing to organize your data and generate reports are likely to be more cost-effective in the long run.

Proximity clocking

This type of system uses “proxy cards” assigned specifically to individual employees. Each of these cards contains a radiofrequency identification (RFID) chip, a capacitator, and an antenna. The card is placed near a scanner linked to a clock to record the employee's arrival time. RFID cards can also be used to restrict access to certain areas, depending on the level of security your company requires. The downside is that, unlike fingerprints, RFID cards can be lost or stolen.

Biometric clocking

Buddy punching (one employee clocking in for another) can be a real issue affecting production and costs. Biometric clocking completely resolves this issue. It uses facial recognition or fingerprints to verify identity and clock employees in.

PC clocking

A desktop or laptop can be used as a tool for clocking in and out. This can be set up in a couple of different ways:

Scanning device: A device can be connected to the computer that reads a card, key fob, or fingerprint. This type of system is typically best for in-office use, but the devices can be costly.

Cloud-based system: Employees can check in and out on a web-based interface, preferably as part of an integrated payroll and workforce management system.

Mobile phone clocking

If you have employees who work remotely or have appointments out of the office or out of town, mobile phone tracking may be an excellent option for your company. Employees simply clock in via an app on their cell phones. Mobile managers may want to use a supervisor mode to clock employees in and out. These systems can be optimized with geo-fencing and facial biometric punches to help ensure that the correct employees are clocking in on site.

Monitoring your time-tracking system

Once you decide on the best type of system for your employees to clock in and out, the next thing is to ensure the system is being used daily and continuously monitored for errors. It is vital to have someone responsible for overseeing your data archives, whether it consists of a pile of timecards, spreadsheets, or a cloud-based database. Employee time records must remain secure and preferably backed up, to protect your company under federal regulations and labor laws.

Read more: 

• 5 wage and hour compliance issues that could cost employers
• Gig work, data privacy and other workplace trends to watch
• The 2017 see-saw overtime rules

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Michelle Lanter Smith is the chief marketing officer of EPAY Systems, where she oversees the company's go-to-market strategy, customer success and technical support operations. Michelle brings 20-plus years of leadership experience in driving revenue growth for high tech and service-driven firms.