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Beware time clock ’rounding’ errors; push for an upgrade

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in Human Resources

Issue: The legal and financial hazards of an improperly programmed time clock.

Risk: Thousands in back pay and government penalties, in addition to unwanted publicity.

Action: Audit your timekeeping system; make sure it doesn't always round up or down in the organization's favor.

If your organization uses a time clock, you probably haven't thought about whether it's programmed accurately. But a seemingly small hiccup in "rounding" hourly employees' work time could cost big bucks.

Federal law says your time clock can round off employees' hours as long as that doesn't result in underpaying them. You can round to the nearest minute, five minutes or even up to 15 minutes at the beginning and the end of shifts.

Key point: The system can't consistently round in the employer's favor. That means the clock can't be programmed to round forward at the beginning of shifts and backward at the end.

While a general rounding practice may work to your advantage on occasion and to employees' advantage on others, the general idea is that, over time, the rounding will average out. Regularly rounding in your favor can be an expensive mistake.

Recent case: A security employee at a North Carolina hospital complained to the U.S. Labor Department about the hospital's timekeeping system. So, the agency performed an audit and ordered the hospital to pay $50,000 to security-department employees. But when the hospital checked its timecard records of all hourly employees, it found the problem was more widespread.

The hospital discovered that the time clock was programmed incorrectly to round off time to the nearest half-hour. So, employees who clocked in 15 minutes early for their shifts (or 15 minutes after their shifts ended) weren't paid for the extra time. Result: Labor ordered the hospital to pay $1.3 million to 3,500 employees.

Time for a digital machine? To guard against such mistakes, check your time clock for accuracy, and consider replacing it with a digital version.

Digital time clocks calculate time worked to the nearest hundredths of an hour. To clock in, employees enter an individual code and press a button. To learn more, go to www.timeclocksolutions.com, www.shopclock.com or www.pcclocks.com.

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