5 Surefire Ways to Reduce Unplanned Overtime and Save Your Labor Budget

Good systems solve business problems, including unplanned overtime. Does your company have an unplanned overtime problem? If so, you’re not alone.

Unplanned Overtime Kills Labor Budgets

Costly unplanned overtime eats into profits for many U.S. employers. A recent Deloitte study of over 800 companies revealed an average of 31 unplanned overtime hours each week per company.  According to the Bureau of Labor Statistics, the average U.S. employee works about four hours of overtime each week which is roughly 200 hours per year. 

Let’s do the math on the BLS numbers. If the average time-and-a-half wage at your company is $20 per hour, that’s $4,000 in annual overtime per employee. If you have 25 employees, it adds up to $100,000. Ouch!

Automated Timekeeping is the Solution

An automated timekeeping system is specialized software that tracks employee time. Employees use a physical time clock, online portal or mobile app to punch in and out for shifts. The software manages employee authentication, captures punches and tracks hours on ‘virtual’ timecards. Automated timekeeping systems provide time tracking data to payroll to make payroll processing easier and more accurate. Integration with a payroll system allows a time and attendance system to provide accurate time and attendance data to payroll without any manual intervention.

Automated timekeeping solves a whole bunch of business problems, but we will focus on just one: budget-killing unplanned overtime. 

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Let’s dive into 5 surefire ways automated timekeeping reduces unplanned overtime to save your labor budget:

1.) Automated timekeeping gives you an accurate picture of employee work hours.

Manual timekeeping systems like spreadsheets and paper timecards are wildly inaccurate. The American Payroll Association estimates that the rate of human error in timecard preparation is between 1% and 8%. Employees can’t recall shift start and end times after the fact and often round up in their favor. It’s human nature. Or they make math errors when tallying hours. 

Employees aren’t the only ones who make errors. Managers make mistakes when entering timecard data into spreadsheets or filling in missed punches. Multiple studies, including one by PriceWaterhouseCoopers reveals an average spreadsheet error rate of 90% or more. 

Bottom line? You can’t reduce unplanned overtime until you have accurate hours data.

2.) Cloud-based timekeeping fully integrated with your payroll platform prevents overtime fraud.

We talked about inadvertent errors in #1. Here, we are talking about employees who deliberately add overtime hours to their timecard. Another study by the American Payroll Association found that 75% of companies experience some form of timecard fraud. In a survey of service sector workers, the employees themselves reported an average of 4.5 hours stolen each week. If some of your employees seem to rack up more overtime than others, it could be due to timecard padding.

There have been egregious cases of overtime fraud in both public and private organizations. A few years ago, for example, the U.S Inspector General uncovered time theft at Amtrak of such magnitude that it would bankrupt most private sector companies. To illustrate the scope of the fraud, consider that a group of employees doctored timesheets to show 1,357 days in which they worked more than 24 regular and overtime hours.

While it’s not likely your employees are as brazen as the Amtrak time thieves, it is a cautionary tale that exposes the vulnerabilities of manual timesheets.

How do you protect your labor budget from overtime fraud? The answer is with a cloud-based time and attendance system. A cloud-based system captures the punches and tracks the hours, completely eliminating employee-managed paper timecards or Excel spreadsheets. And it gets better: with integration, your timekeeping system delivers employee hours directly into your payroll system. So, it’s easier for them and easier for you!

3.) Manager alerts keep you informed when employees reach overtime status so you can stay on top of it.

Imagine if a supervisor received an alert when a team member was nearing the end of straight-time hours. The manager could quickly look at the time system app on their mobile phone and see which employees were under 40 weekly hours. 

Would overtime warnings help your managers? Many companies that use automated timekeeping with manager alerts find that pending overtime warnings help supervisors make staffing adjustments before time-and-a-half kicks in. Consider also that a manager could use a mobile timekeeping app whether or not he/she was at the office. 

Just as importantly, the warnings would work just as well for mobile or remote employees. Certainly, manager alerts are especially useful for geographically dispersed teams.

4.) Punch lockout prohibits employees from clocking in too early.

Schedule enforcement is critical for large workgroups. If you aren’t watching, some employees will punch in a few minutes early. It happens to every employer. The unauthorized work time compounds, eventually adding mountains of unplanned overtime to your payroll. Full-time employees who punch in early can easily move into overtime by weeks’ end. 

An intelligent clock with punch lockout can save your company a lot of money. Intelligent clocks sync to employee schedules. They have schedule enforcement features including punch lockout. Punch lockout prohibits an employee from clocking in before their shift starts. (Remember, though, you can’t require an employee to work off the clock.)

5.) Scheduling rules notify you when you try to schedule an employee for overtime.

This software feature prevents overtime at the source: employee shift planning. Automated time and attendance systems have configurable rules to guide schedules. When a manager tries to schedule an employee past 40 hours, the scheduling tool can send an overtime warning. This allows the manager to schedule another employee who hasn’t maxed out their straight-time hours.

This is especially helpful for large teams and shifts of varying lengths. Managers don’t have to repeatedly tally hours for each employee in various scheduling scenarios because the system tracks it automatically. The software can also suggest employees who are available and not at risk of overtime

If business demand requires overtime, the manager can make a conscious decision about how to allocate it–not allow it to accrue unknowingly through uninformed shift planning.

In summary, prevent payroll bloat by matching employee scheduling to demand and distributing hours evenly among team members.

Let’s review the 5 overtime solutions that can make you the budget hero:

  1. Automated Timekeeping
  2. Cloud-Based Access with Payroll Integration
  3. Manager Alerts and Notifications
  4. Punch Lockout for Schedule Enforcement
  5. Scheduling Rules

Guess what? ASAP Payroll Solutions has affordable Time and Attendance with all of these features!

Are you ready to save your labor budget from overtime?  Request a quote here, or call (317) 887-2727 to get started.

Overview of Hourly Work and Overtime Regulations in Indiana

Indiana has several state-specific labor laws that are different from those outlined in FALSA (Fair Labor Standards Act). These laws are applicable only when they offer greater protections or rights than federal laws. A worker will go with the law that’s more favorable to them. Most of the time, Indiana employees find the federal level’s wage and hour laws advantageous.

Minimum Wage in Indiana

The minimum wage law in Indiana requires most employees within the state to earn at least $7.25. This is the same rate outlined in the federal laws and may cover a section of workers exempted by FLSA. According to the state law, workers aged 19 or younger are entitled to a training wage of $4.25 per hour within their first 90 days at work.

The minimum wage also covers tipped workers, and employers are required to grant them an hourly base rate of $2.13. If a combination of this amount and what they earn in tips doesn’t reach the $7.25 per hour threshold, you, the employer, will make up the difference.

Notably, you don’t have to raise your staff’s hourly rate unless the contract requires you to do so or there’s a change in the federal or state minimum wage laws.

Exceptions for The Minimum Wage

Minimum wage laws have several specific excerptions. Professional, administrative, and executive workers get a salary, so they are exempt from the regulations. However, this applies to those who earn at least $455 per week. Other great examples include hospital interns, student nurses, some agricultural workers, and minors aged 15 and below.

Overtime in Indiana

Indiana state laws grant most hourly workers the right to a special rate for their overtime pay for the hours beyond 40 hours per week. The Fair Labor Standards Act defines this as any seven successive workdays.

In most states, the laws outline a daily overtime limit that requires employers to provide overtime pay for employees who have worked for more than the stated limit. However, regulations regarding overtime in Indiana don’t specify a daily limit.

Indiana’s Overtime Minimum Wage

The minimum wage for overtime in Indiana is usually one and a half times the amount the worker earns as their standard hourly wage. Based on the minimum wage rate of $7.25 for every regular hour worked, the minimum amount an employee makes per hour as overtime pay should be $10.88. Any amount beyond the minimum hourly wage should be multiplied by 1.5.

Notably, the state laws have special overtime regulations for service or retail businesses, transportation workers, hospital facilities, and personnel who earn based on a piece-by-piece approach.

Overtime Exceptions in Indiana

Whether state-specific or federal, overtime laws are designed to protect workers from exploitation by unethical employers. Those paid on an hourly basis or workers in blue-collar environments are the greatest beneficiaries of these laws. These industries’ nature and limits on working hours by certain careers create lots of specific exemptions to overtime eligibility.

Administrators, executives, and other workers whose weekly income is at least $455 aren’t entitled to overtime pay under FLSA Section 13(a)(1). The law also exempts external salespeople and some IT-related professionals that work on their own hours.

Independent contractors who aren’t legal employees, some transportation personnel, a section of live-in workers like housekeepers, and particular farm and agricultural staff are also not covered.

The Bottom Line

Understandably, it may be challenging to compute accurate amounts for both regular hours and overtime. Fortunately, you can simplify the job by partnering with a knowledgeable team from ASAP Payroll Service with the right skills and tools for accurate payrolls, enhanced timekeeping, and improved productivity.

Request a quote for our customized solutions and comprehensive services to enhance your business.

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Tips to Help you Create a Time & Attendance Policy For Your Business

Absenteeism in the workplace is a real issue and can have serious monetary and productivity effects on your business if not tackled. A time & attendance policy, which is a set of rules and guidelines that defines employees’ responsibility concerning work time and attendance, is imperative for running your business successfully. It often includes clear and consistent expectations for employees regarding clock-in and clock-out times, tardiness, and absenteeism and how violations will be handled or otherwise disciplined by the company.

If you’re a small business owner, an attendance policy might seem unnecessary; shouldn’t everyone be aware of their responsibilities? Absolutely, but having an attendance policy keeps everyone on the same page, supports a professional work environment, levels the playing field for all employees, encourages productivity, and can protect you and your business from possible litigation, among other benefits. Even if attendance isn’t a current issue in your company, such a policy will improve communication with your employees and keep your business organized.

Now that you know why you need an attendance policy, here are some tips to help you create the perfect one for your workplace:

Study the Impact of Absenteeism on Your Business

The first step to creating the perfect attendance policy is gathering past attendance data and studying how different absences have affected your business’s performance. Determine whether your company’s current absenteeism rate is above or below average and decide how to address your findings with the new policy.

Examine Your Current Work Culture

Your employees’ attendance is part of your company culture. This includes your preferred way of working, beliefs, overall values like the importance of punctuality, what constitutes zero tolerances, cultural factors like family-first priorities, shared expectations, and so on. By defining the kind of work culture you want, you will create an attendance policy that reflects that. Be sure to talk with your shift leaders and managers about their expectations for employee attendance and how they’re currently dealing with absenteeism, and then find common grounds to make a business-wide policy so you don’t send mixed messages.

Define Work Hours

How many days of the week should your employees be at work, should they clock in and out, are there a specific number of hours they should be working? By laying out a basic attendance policy, employees will know what kind of attendance is expected from them during a typical workweek. This is particularly essential in this age of remote working as it outlines when employees should be online and for how long.

Create Relevant Definitions

Clearly explain each term used in the policy to avoid any possible confusion or employees claiming that they didn’t know. Start by defining the following terms with regards to your business’s situation:

  • Tardiness
  • Absenteeism
  • Approved vs unexcused absence
  • Exempt and non-exempt employees
  • Sick day vs personal leave
  • FMLA protected leave

Consult With Your Employees

The perfect attendance policy feels like a team effort. Once you’ve put together your first draft, set a meeting with your employees to discuss any concerns and possible adjustments. Does the policy seem fair, realistic, and objective? Incorporating employee feedback into the policy will increase its chances of success.

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Include Realistic Disciplinary Actions

Clearly state what happens if an employee violates the time & attendance policy. Your disciplinary actions should be impartial, fair, and applied even-handedly across the workforce. Keep in mind that employees can be late or absent for one reason or the other; therefore, enacting a zero-tolerance attendance policy will only lead to high turnover, which will also be costly to your business. The best cause of action is to match disciplinary actions to how each scenario affects productivity.

Comply With Employment Laws

Different regions have different employment laws that employers must comply with, and they’re often related to:

  • Paid sick leave
  • Workers’ compensation
  • Fair Labor Standards Act (FLSA)
  • Americans with Disabilities Act (ADA)
  • Family and Medical Leave Act (FMLA), etc

It’s important to review your attendance policy and ensure it adheres to all national, state, and local employment laws and regulations. Failure to do so will expose you and your business to all kinds of legal liabilities.


Your time & attendance policy is only as good as your implementation of it. If there are any violations, enforce the consequences fairly and consistently among all employees. That being said, it’s important to remember that your employees are human. Having an empathetic outlook when creating and enforcing attendance policy will encourage fairness, thus creating a timekeeping system that works for everyone.

At ASAP Payroll, we help small businesses navigate issues relating to time and attendance, payroll, paying and filing taxes, human resource management, and more. We will provide you with a customized solution that best suits your business’s needs. Contact us today for a free quote and remember to sign up for our newsletter to get information and insights that will help you achieve maximum productivity and ROI.

Regulations and Best Practices Regarding Time Clock Rounding: Everything You Need to Know

Organizations depend on human beings for labor and running operations. They, therefore, understand the imperfect human nature of starting work at 8:16 am instead of 8:00 am or extending the normal working hours.  That said, time clock rounding is a set of rules that guide organizations on managing labor hours concerning payroll. These regulations guide the accounting or payroll manager on how to apply the time variations. The understanding of rounding rules can shield an organization from lawsuits related to disputed labor hours.

Here are the key aspects you need to know.

Regulations of Time Clock Rounding

It’s legal to do time clock rounding in Indiana; however, no organization is allowed to exceed 15 minutes rounding. No organization should therefore round-off, 25 minutes, 30 minutes, or an hour of an employee’s time.

It’s also within the law to make an internal time-clock rounding policy. Nonetheless, it’s advisable to utilize the existing guidelines to minimize errors and potential disparities. The common time clock rounding options include:

15-minute Rounding

15-minute rounding is the maximum allowance under federal law. For that reason, many organizations have adopted this system in their payroll.

An organization must apply the 7-minute rule to make the 15-minute rule legally valid. For each quarter(15-minute mark), the 7-minute mark is the boundary. For example, if an employee clocks at 0807 hours, then round off to 0800 hours.

On the other hand, if your employee clocks in between 0808 hours to 0823 hours, round off to 0815 hours. Times that range between 38-52 minutes should be rounded off to 45 minutes.

6-minute Rounding

Another alternative is a 1/10th of an hour or 6-minute rounding off. If an employee clocks in at 9:04, then the appropriate round-off time is 9:06. For clarity, the hour clock starts between the 58th minute of the previous hour and the third minute of the current hour.

5-minute Rounding

You can also opt for 5-minute rounding that utilizes 2 ½ minutes breaks. At 9:02 am, the system rounds off to 9:00 am. From 9:03 am, it rounds off to 9:05 am.

Best Practices for Time Clock Rounding

1. Audit Your Policy Regularly

It’s prudent to check the policy regularly to ensure it’s serving the interest of the organization. Check whether the employees are happy with the policy. If you receive constant complaints from the workforce, it’s time to audit it.

If 5-minute rounding is not working for your workforce, you can shift to 15,6 or any other rounding that is suitable and acceptable.

A point to note: It’s advisable to refer to the Fair Labor Standard Act in terms of working hours, overtime rates, and working days.

2. Nurture Transparency and Communication

Implementing time clock rounding can face resistance depending on the approach that organizations use. Regular communication with your workforce has the potential to diffuse a toxic work atmosphere.

You should therefore take time to explain the policy. Employees may interpret the policy as unfair or a method of taking away their hours. That said, constant and open communication can improve the acceptability of the policy.

3. Analyze the Opportunity Cost

An organization can suffer a loss using time clock rounding during calculations resulting from overtime rates. As such, it’s prudent to assess whether the current clock rounding has created a surge in total overtime expense.

One method of solving this impasse is by discounting employees’ favor during check-in and favor of an employer during check-out. Whereas the benefit of time rounding is payroll optimization, it could also increase legal liability, which is an additional threat to an organization. That said, a regular audit is critical.

Use ASAP Payroll for Your HR Needs

Any organization requires sound and quality systems to get the best out of employees and promote transparency. Time clock rounding is one of the contentious issues that require an accurate and agreeable approach.

To that end, it pays to work with a resourceful payroll firm like ASAP Payroll. By working with us, you’ll get access to timekeeping solutions, performance tracking, applicant tracking systems, among others.

Contact us today to transform your HR function.

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Best Practices for Remote Employee Timekeeping

The coronavirus situation has affected the global economy and shattered lives. But it has facilitated one notable change that has transformed markets across sectors. Organizations are now more enthusiastic about remote work, and millions of staff now complete their tasks from their living rooms.

Some of the world’s leading entities now work with full-time remote staff, including social giants Facebook and Twitter. Even companies that weren’t open to the idea, now acknowledge the massive impact of digital migration and remote work tech solutions.  Even with the right technology and a large team, it’s still not easy to achieve your efficiency and remote timekeeping goals. But, you’ll always stay on track if you follow the following remote employee timekeeping best practices:

Plan First, Action Next

Before assigning the different remote tasks, it’s crucial to create an effective plan of replicating the office experience in productivity and time efficiency. You may create a document highlighting what’s expected from each team member while working from home. Also, come up with a practical means of tracking the progress of different tracks then create a strategy for remote problem-solving.

While creating a plan, ensure your employees don’t feel too restricted. Give them the space to discover other things on their own. For instance, if you have teams in different time zones, create a plan to keep them in sync without taking up too much of their personal time.

Encourage Staff to Switch Off from Work

When working from home, remote employees are likely to lose track of time. Since the house now also serves as an office, they may have the urge to continue working until late at night. To avoid this, create and maintain a fixed number of working hours to keep a healthy work-life balance.

Encouraging them to switch off their work chat and email means they’ll never feel exhausted when they begin working on the next day’s tasks. They’ll stay productive and efficient and save lots of time.

Communication Rituals

Developing a more efficient and centralized communication system within the organization can mimic regular rituals that you’d have in your headquarters. This gives a feeling of camaraderie that all staff members are around are working towards the same goals. As a result, they’ll be committed to complete their part of the task in good time, or probably earlier, so that they can take care of other personal business.

One common ritual among organizations is leaving a “Hi” on the company’s general chat platform when they check in. This brings the everyday experience into the digital space, giving staff the feeling that everyone’s reporting to work and handling their tasks. Another communication ritual is that every remote employee submits regular updates on their tasks’ progress at specified milestones.

Provide The Right Tools for Recording and Tracking Time

Instead of being the overseer of their timekeeping efficiency, it would also help to be part of the solution. You can avail electronic timesheets and spreadsheets or have them send their work hours via email to their supervisors, but these approaches are outdated and will waste even more time.

Various time-tracking and efficiency tools are available on the web, and providing them to your staff would benefit you in different ways. For instance, ASAP’s payroll tracking system eliminates assumptions regarding your staff’s actual hours, allowing you to track the hours by phone or computer from any location.

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Monitor Projects

It’s not easy to track projects and know what’s being handled when a worker is away from your headquarters. But if you want your projects to be easier to follow, project monitoring software would come in handy.

These tools allow everyone to see what everyone is currently working on, completed projects, and those still in progress. You can also monitor how long your staff are taking to complete their tasks. If anyone is taking more time, ensure they understand your expectations.

Of course, addressing all these while focusing on core business isn’t easy. That’s why you need a professional specialized in payroll, human capital management, and time and attendance. ASAP Payroll has been an industry leader in this, providing custom solutions and comprehensive services since 1989.

Reach out to us to get your free quote, or sign up for our newsletter.