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And Another Thing...

Client Question: I was told I can’t have my salaried employees punch a time clock, is that true?

Answer: Many people believe it is against the Fair Labor Standard Act regulations to have a salaried exempt employee punch a time clock. However that is not the case. According to a May 2004 letter written by Department of Labor Office of Enforcement FLSA Team, “The minimum FLSA recordkeeping requirements for such employees are found in regulations 29 CFR 516.3, These regulations do not limit an employer’s ability to track working time. Consequently, it is not a violation of the FLSA or its implementing regulations for your employer to track your working time, even if you are an exempt employee. See, e.g., Douglas v. Argo-Tech Corp., 113 F. 3d 67 (6th Cir. 1997)” (Click here for full letter). However, there is some risk involved. An employer that treats a salaried/exempt employee as an hourly/non-exempt employee risks the possibility that the affected employee could make a claim for overtime wages as an hourly/non-exempt employee. With the above noted we recommend each situation be evaluated individually to fully consider your circumstances

That being said, it is a subject truly worth analyzing before putting such a process into practice at your company. Consider why you are thinking about making this change. Do you have a few bad characters that are not meeting expectations and following your company’s norms? Taking the opportunity to meet and explain their deficiency may solve the issue. Or are you looking to add a level of security? Having exempt employees punch a time clock may be useful for attendance, and for safety and security– knowing who is in the building and when is often important.

Be aware also that having salaried employees punch a time clock could lead to misuse of time keeping information in payroll administration. For example, a salaried employee should not be docked pay for clocking in late or clocking out early. This is the kind of misuse of time keeping information that could provide the basis for the employee to claim they are being paid hourly not salary, opening the employer up to claims of misclassification under FLSA statutes. If it is determined an employee was misclassified, employers would be liable for overtime wages of salaried employees as well as any relevant penalties.

Outside of the legal HR issues there is the consideration of the soft side – many HR experts and employees agree that salaried exempt employees may feel micro managed and dispirited if asked to punch a time clock. Applying parity and reason to policy and procedure bodes well for acceptance and compliance. For example if it is truly for the safety and security of the staff/facility, be sure to follow through – have all staff, from President to Intern use the system.

In summary: if you intend to use a time clock or security check in for your exempt employees be sure you have 1) evaluated your circumstances as they relate to FSLA Rules and Regulations, 2) developed a well thought out policy and procedure, 3) proactively communicate same with employees and 4) monitor to insure the policy and procedure are consistently applied.

Questions about how to correctly classify your employees?

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