Employee Schedules are not Payroll: Payroll Must Always be Paid from a Time and Attendance System

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We previously discussed that employee scheduling is hard, time consuming, and costly to a business. Where possible, businesses should use software tools to automate labor scheduling – saving time and money while improving profits makes a lot of sense! Once the employee schedule or the theoretical labor schedule, is complete, it is posted for all employees to see.

What’s the Difference Between Schedules and Timecards?

The time and attendance system is one crucial aspect of managing labor. This system tracks the “actual schedule” worked by staff members. Each employee should have their own “timecard”, although computer systems have improved these paper systems over the years. At a bare minimum, this can be a paper card which has the time and date the employee arrived and the time and date the employee left, printed or stamped on the card. At many businesses, the Point Of Sale (POS) system or Property Management System (PMS) has a built-in time and attendance system which may be sufficient. More sophisticated time and attendance systems are available from payroll vendors, Human Resource (HR) software vendors, and best-of-breed labor management providers like TimeForge.
As each day of the theoretical labor schedule progresses, the following cycle likely occurs:

  • An employee arrives at the business
  • Before beginning any work, the employee clocks-in (or punches-in) to a time and attendance system, and management must be mindful of early and late clock-ins, and buddy-punching.
  • The employee performs their work
  • The employee may be given break periods, or meal breaks, some of which may be paid or required by law. These breaks should be recorded for Labor & Industries Audits (L&I Audits), corporate compliance, and to secure against potential labor lawsuits.
  • The employee clocks-out (or punches-out), declaring any tips (if necessary), from a time and attendance system
  • The employee leaves the business
Example: Shelf stockers at a grocery store are paid $8.50 per hour, and work an average of 35 hours per week. The store uses a standard time clock system to allow the twenty stocking employees to punch in and punch out. On average, the employees clock in ten minutes early at least twice a week, and clock out eight minutes late at least twice per week. The Human Resources department rounds paychecks to the nearest quarter hour, resulting in one extra hour per week for each staff member. With twenty shelf stockers, the theoretical payroll is $5,950 per week. However, employees who are “gaming the system” have caused this grocer to pay $6,120 per week, an annual increase of more than $9,000!

Use Timecards for Payroll, Schedules to Plan Labor Costs

It is important to pay payroll expenses from the time and attendance system, and not the theoretical labor schedule. If management pays the employee directly from the theoretical labor schedule and the employee arrived later than scheduled, then the business is paying too much to the employee – reducing profit. If the employee arrived earlier than the theoretical labor schedule suggested, the business will not lose any money by paying from the schedule – however, a number of regulations are violated by not paying the employee for actual time worked. Employees, in all industries, are notorious for arriving to work 15-minutes earlier than scheduled, or leaving 10-minutes later than scheduled, requiring that employers pay appropriately for worked time. To ensure compliance with regulations and to reduce the loss in profits, the correct way to pay employees is with the clock in / clock out times from the time and attendance system.

Example: Using TimeForge, employees from a country club can clock-in and clock-out from an Internet-connected computer at the store. Each employee is given a username and password for security, or alternatively given a biometric clock or fingerprint scanner. In addition to punching in and out, the employee can view upcoming schedules, request time off, change work preferences, swap shifts with other employees, find out when other staff members work, and view messages sent to them by management. After clocking in with TimeForge, remote managers (such as corporate, district, or regional level managers) can easily log in to TimeForge and view which employees are currently “on the clock” and how long they have been clocked in.

Is employee scheduling complex at your business? Are you making the best possible labor schedule? How much time is thrown away while making a schedule every year? Did you know that TimeForge can reduce turnover, improve retention and increase profits through employee scheduling at your business? Sign up today for a free trial!

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