The Cost of Bad Timekeeping

shutterstock_370243547

Effectively keeping track of employees relates to virtually every business. But with COVID-19 forcing many companies to implement a remote workforce for the first time, the issue has moved to the forefront of our minds. As we all adjust to a new normal, it’s important to understand how to protect your business and employees from timekeeping inaccuracies. These guidelines will be valuable even after the world returns to normal operations.

Often companies are more outdated than they realize 

As technology evolves, businesses will need to adapt to stay ahead of unpredictable circumstances. Unfortunately, in the U.S. alone, 38% of businesses use outdated timekeeping methods such as punch cards, paper timesheets and timecards. This is a common trend throughout the world, with countries like technologically-advanced Canada reporting 58% of businesses using these outdated methods.

This creates a significant gap in protection for both employers and employees. For instance, this gives business owners the opportunity to retroactively remove time from employee timesheets after they’ve been submitted. Those small adjustments could potentially cost employees between $1,400 and $6,000 every year.

On the flip side, employees have been known to frequently commit time theft. Many workers admit to “buddy punching” to allow coworkers to get paid even if they’re not on site. This costs businesses around the world millions of dollars in inaccurate or falsified timekeeping reports every year.

This is why implementing biometric timekeeping is so important. Advancements in this area include technology like facial recognition, fingerprint scanning, or even microchipping. These modern methods of keeping track of employees will save employers and employees money, while increasing productivity and accountability.

When you have a global or even remote workforce, it’s critical to implement a system to enable company growth. These timekeeping technologies are useful for both hourly and salaried employees. It will ensure that your people aren’t over/under working, and protect you from wage and hour lawsuits.

Navigating Compliance for Timekeeping

In the U.S., 43% of business owners don’t know about the Fair Labor Standards Act (FLSA). This law was passed in 1938 to protect workers with a standard 40-hour work week and a minimum wage, among other legislation.

Many of the same rules apply across the world. For example, a recent court ruling in the EU has made timekeeping mandatory for all companies.

“In order to ensure the effectiveness of the rights provided for in the Working Time Directive and the Charter, the (EU) Member States must require employers to set up an objective, reliable and accessible system enabling the duration of time worked each day by each worker to be measured. Each country will be free to define how to implement such a system”, the European Court of Justice (ECJ) said in a statement following the ruling.

Some employees now utilize these compliance violations to file lawsuits, which have risen by 417% since 1997. In the U.S. alone, the total amount of back wages and fines recovered by the US Department of Labor for minimum wage and overtime violations is well over $2 billion. This is a compliance error you literally cannot afford to make. For companies experiencing global expansion, it will be even more important to understand the laws and regulations of each country you operate in.

A big part of protecting your business is keeping good records. Did you know that US business owners are required to keep timesheets for two years? And that payroll records need to be kept for three years? If you’re still using outdated methods like punch cards or paper timesheets, this can be a hassle to store and keep track of. Updating your systems and relying on global compliance experts will save you time, money and effort in the long run.

If you’re looking for an HR software to better manage your remote workforce, see how we can help.

Subscribe to our Newsletter

Get the latest news and insights on global HR, Payroll, HR Technology and Workforce management

Share this post with your friends

Share on facebook
Share on google
Share on twitter
Share on linkedin