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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. 

5 Surefire Ways (ASAP PAYROLL)

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.

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.

5 Surefire Ways (ASAP PAYROLL)

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.

5 Surefire Ways (ASAP PAYROLL)

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.