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Employers Using Inadequate Timekeeping Solutions Risk Big Legal Penalties

employee motivationBy Howard Tarnoff, Senior Vice President, Ceridian.

If you are an employer and you do not have an easy-to-use, transparent solution for how your employees account for overtime, you could be in big trouble. A recent Massachusetts Court of Appeals case (Vitali v. Reit Management) found that employers have a very high duty of responsibility when it comes to tracking employee overtime.

In the Massachusetts case, a company employee was entitled to take one hour off for lunch. On some days her workload required her to work during her lunch hour. Technically, that would be overtime, but she did not have a clear, unambiguous process for logging her extra time worked. In addition, when the company’s timekeeping solution was first introduced, it did not have a transparent, easy-to-use process for tracking overtime.

On appeal, the court found the employer liable for overtime pay. More importantly, the employer now faces a trial that could include class claims (from co-workers who also worked over lunch). Perhaps most costly, pursuant to the Massachusetts Wage Act the employer could also be found liable for treble damages and the employees’ attorneys’ fees.

What Is the Employer’s Responsibility?

This particular case surfaced some key employer requirements when it comes to accounting for employee overtime. According to the FLSA …

  • “[E]mployers, not employees, bear the ultimate responsibility for ensuring that employee time sheets are an accurate record of all hours worked by employees.” [Skelton v. American Intercontinental Univ. Online, 382 F. Supp. 2d 1068, 1071 (N.D. Ill. 2005). And,
  • “An employer’s duty under the FLSA to maintain accurate records of its employees’ hours is non-delegable [emphasis added].” [Kuebel v. Black & Decker Inc., 643 F 3d 352, 363 (2d Cir. 2011).

What Can Employers Do?

This case underscores some key actions employers can take to avoid the pitfalls of not tracking employees’ overtime.

  1. First and foremost, employers must make sure their timekeeping solutions are easy to use. In this particular instance, the timekeeping system was initially not implemented with a clear cut, simple solution for accounting for time worked over the lunch hour. Employers need to find a solution that can provide them with comprehensive functionality and an easy-to-use interface.
  2. Employers must also provide employees with clear written instructions regarding how to account for overtime pay.
  3. Finally, employers must also make certain they train their employees on how to use the company’s timekeeping system, particularly with regard to accounting for overtime.

If you are an employer and you do not have an adequate timekeeping solution for tracking employee overtime, you should explore what the HCM marketplace offers today and find the right one. If you’re interested in additional information about how a single application for human capital management can help your business, we are pleased to assist you in learning more.

Howard TarnoffHoward Tarnoff is Senior Vice President for Ceridian HCM, responsible for launching and overseeing the Award Winning Customer Success Program “XOXO” and other initiatives. With over 30 years of HCM experience, Howard is a highly sought after thought leader in the industry, especially for his insightful trend analysis. His deep domain expertise across multiple verticals, leadership experience and deep understanding of the HCM industry make him an invaluable asset to Ceridian. Follow him on Twitter @htarnoff.

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