If you’re reading this blog, it’s probably safe to say you have at least a few hourly employees within your company and it’s your job to calculate their time cards by hand. What’s more, you probably spend a decent amount of time worrying about those hourly employees receiving excessive overtime. After all, the Fair Labor Standards Act (FLSA) states that employees must receive overtime pay of at least one and a half times regular pay for an excess of 40 hours worked in a workweek. This can really add up in the long run financially, especially if your employees abuse the system. What’s more, there are certain laws and regulations that must be met when it comes to tracking your employees’ overtime pay, so you have to have records of all your employee time and attendance. This is why your business has to be prepared to track employee hours and pay based on hours worked. Before you go on manually calculating your employees’ paychecks, keep in mind the following:
1) Monitoring Overtime
Because of that pesky FLSA overtime law, you’re pretty much forced to pay overtime to employees who work more than the 40-hour-per-workweek threshold. That being said, you’re more than able to implement company rules that prohibit your employees from working overtime. Just make sure you’re tracking your hours closely and that you’re paying employees who break that rule the appropriate wages. By doing this, you’ll avoid any penalties that may arise down the road.
2) Pay Frequency
Keep in mind when calculating your time cards that overtime pay is based on the workweek, not pay frequency. It doesn’t matter whether you pay your employees every week, every other week, once a month, or in any other increment of time. The hours worked need to be considered for each given week, not the overall pay period. This is one of the easiest ways to accumulate fines when calculating your time cards manually.
3) Record Keeping
Regardless of whether your employees accrue overtime every once in a while or every week, you should always keep detailed records of your time card documents. These will be useful if a situation arises where somebody disputes an overtime calculation and payout. With a good system in place, you’ll be prepared the next time a disgruntled employee comes to you claiming they never received overtime pay.
4) Margin of Error
Any time manual calculations come into play, there is always a margin of error you have to be prepared for. After all, we’re humans and we make mistakes. The actual size of this margin of error varies widely depending on your exact timekeeping method and the number of employees at your organization. Handwritten timesheets are the easiest to miscalculate due to misinterpretations of the employee’s handwriting. What’s more, the larger a business is, the more time it takes to calculate time cards and, thus, the larger your margin of error will be.
5) Utilizing Software
Your best bet when calculating time cards manually is to use a software that automatically captures the employee’s punches as they occur. This way you can import all your punches from the software into an excel document and avoid any chance of mistyping numbers, thereby vastly reducing the margin of error. Once in an excel document, you can either add them up manually or, if you’re Microsoft savvy enough, run an addition formula.
6) Understand Local, State and Federal Laws
As a Payroll and HR Software company, we at Dominion have seen some pretty elaborate time policies. Because every company tracks time and attendance differently, the Department of Labor has, along with the FLSA, come up with many rules and regulations when it comes to tracking employee hours. For example, some companies offer their employees unpaid breaks, others offer paid breaks, and others still offer a combination of the two. Depending on your employees’ age or industry, the aforementioned laws may require certain kinds of breaks to be offered. Adding these policies into your organization will further complicate your calculations, but they’re necessary to avoid fines and penalties.
At the end of the day, with the right measures in place, manually calculating time cards can be an effective method of computing hours worked by your employees. That being said, do not underestimate the usefulness of an actual Time and Attendance software. The amount of time and money you can save makes it a worthwhile investment. Read up on The Top Reasons Why You Should Switch to an Automated Time & Attendance Software or request a personalized demo here.
Want to see how much money it's costing you to manually calculate time cards? Check out our free labor calculator below.