Time and attendance management is a source of frustration for many small and mid-size businesses (SMBs). Whether fixing incorrectly entered timesheets, deciphering employee handwriting, or tracking down missing ones, HR personnel routinely spend hours manually managing time and attendance processes, using inefficient methods and outdated systems. Unfortunately, they spend even more time assessing suspected instances of time theft, including employees padding their timesheets with extra hours they haven’t worked or “buddy punching” — when employees punch in for an absent co-worker.
While many employees regard timesheets as little more than a necessary nuisance, inaccurate time and leave can have significant ramifications for a business or organization. Incorrect timesheets can result in wage underpayments or overpayments, as well as potentially expose your company to regulatory action or litigation.
A professional employer organization (PEO) can reduce your administrative workload through human resource information systems (HRIS) to automate and optimize processes, ensure compliance with laws and regulations, manage overtime, identify and prevent time theft, and manage PTO programs effectively.
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Reducing your administrative workload
Many SMBs are still hampered by manual timesheet processing and reconciliation. Rather than complete more complex, value-added tasks like training and developing leadership pipelines, they’re stuck deciphering whether an employee entered a “4” or a “9” on a timesheet or tracking down timesheets from delinquent filers.
PEOs can help streamline this process by leveraging HRIS systems to establish employee self-service (ESS) portals for your business. Employees can complete their timesheets electronically (no more deciphering illegible handwriting!) and receive automated notices when timesheets are overdue.
These systems also usually allow you to establish supervisor approver controls. An employee submits a timesheet electronically, which is then sent to their supervisor for review. A timesheet is not considered submitted until the supervisor has reviewed and signed off on it, helping mitigate the risk of inaccuracies and time theft.
Ensuring regulatory and legal compliance
Employers may run afoul of regulatory and legal issues as a result of improper time and attendance practices. One of the most common examples involves the federal Fair Labor Standards Act (FLSA), which requires, among other mandates, that employers retain records of how an employee was paid. Failing to do so can result in penalties and fines.
The FLSA also sets the federal minimum wage and overtime standard. Improperly completed or inaccurately entered timesheets can result in employees being paid less or more than they’ve earned. Underpaying workers can result in civil penalties not only for your business but in some states for individuals involved in underpayments as well.
Overpayments are another complex issue. In addition to impairing your cash flow, overpayments can present recovery challenges. While many states allow employers to recoup overpaid wages, some states restrict recovery methods, amounts, and timing.
The best way to avoid underpayments, overpayments, and other burdensome regulatory issues is by digitizing and automating your time and attendance processes, implementing strong internal controls, and working with a PEO to help you address time and attendance regulatory requirements.
Managing overtime costs
Another major headache for SMBs is managing overtime costs. Throughout their professional career, your average HR staff person has spent too much time:
- Re-evaluating which employees are overtime-exempt or non-exempt based on changing regulatory standards
- Determining overtime regulations in states where your remote or commuter employees may live
- Figuring out whether an employee’s overtime hours have been approved or received prior approval
- Ascertaining whether departments have the authority to offer overtime hours
- Addressing legal issues stemming from efforts to deny unapproved overtime hours
- Dealing with internal blowback from their finance department about excessive overtime costs
Leveraging an ESS portal, you can ensure employees can’t punch in without prior authorization from their supervisors. Further, your HRIS can provide you with granular data about your organization’s overtime usage, helping you identify periods and areas of unnecessary and excessive overtime and rein it in. A PEO can help you establish these systems, as well as help you determine whether you can accomplish as much or more with flexible work schedules rather than overtime.
Time theft
Time theft, whether involving employees padding their timesheets or buddy punching, can be costly. One study shows that employees steal, on average, approximately 4.5 hours per week from their employer. The numbers can be much higher when employees are overtime-eligible. Every minute your employees aren’t working costs your business money, and while your HR team may be hard at work trying to root out instances of time theft, they often don’t have the tools they need.
Streamlining manual processes and outdated systems with a single, unified system and strong internal controls can foster greater employee accountability and help you dramatically reduce the risk of time theft.
PTO management
Another familiar and time-consuming task HR professionals must address is an employee’s request for updated paid time off leave balances. When your HR staff continues to manage timesheets by hand, they must spend considerable time recalculating these balances — time they could and should be spent on more strategic work.
An electronic timekeeping system will automatically recalculate an employee’s leave balances based on their timesheet entries. The employee can simply log in and see the information any time they want, rather than tying up your HR team at random intervals.
Partnering with a PEO on time and attendance management can be tremendously beneficial to your SMB, regardless of size or industry. A recently released study indicated that SMBs can enjoy a 27.2 percent return on investment through cost savings when helping businesses streamline, automate, and optimize standard processes.
One of the biggest value adds PEOs offer is technology, such as comprehensive HRIS solutions that many small businesses cannot afford alone. When SMBs need time and attendance management support, they can leverage a PEO’s HRIS and the invaluable strategic guidance that skilled PEO staff can bring to bear concerning internal time and leave policies and controls and compliance issues.
If you’re looking to modernize your time and attendance management, partner with a PEO.
