Time Clock Rules For Hourly Employees (Best Compliance Tools)

time clock rules for hourly employees

Managing payroll can become challenging due to factors such as overtime, clocking in, rounding hours, and compliance with local regulations. 

Labor costs are one of the biggest expenses for businesses, and payroll errors can lead to severe consequences, including damage to the company’s reputation and finances. 

Therefore, managers must comply with state laws to follow time clock rules for hourly employees to ensure that every paycheck is processed precisely and accurately.

The federal government (through the U.S. Department of Labor) established the Fair Labor Standards Act (FLSA), which sets guidelines on time clock rules for hourly employees. 

To ensure compliance, here are a few things to consider:

Ensure that rest breaks count as work time in line with wage laws.

Time Clock Rules For Hourly Employees | Guide

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Which Employees’ Hours Do You Need To Track?
If you have hourly employees, tracking their hours is a must. However, things can get confusing regarding salaried employees, as some business owners may wonder if tracking their time is also necessary.

Whether or not you need to track the hours of your salaried employees depends on their exempt or non-exempt status

If they are exempt, meaning they are not eligible for overtime pay, there is no need to track their hours. 

However, suppose they are non-exempt, meaning they are eligible for overtime pay despite being paid a salary. In that case, it is necessary to maintain a record of their hours to calculate if and when they are due overtime pay.

With a clear understanding of which employees’ time to track, it’s time to dive into the essential time clock rules for hourly employees and non-exempt staff.

What Are The Common Time Clock Rules for Hourly Employees? 

Hourly employees are typically required to record the amount of time they work each day to ensure they are paid accurately for the hours they have worked. 

Time clock rules for hourly employees are regulations that employers must follow when tracking their employees’ time.

Here are some common time clock rules that employers typically follow for hourly employees:

1. Use Time Tracking Apps To Support Compliance

Use Time Tracking Apps To Support Compliance

One of the most important elements of time clock rules for hourly employees is keeping track of your employees’ working hours. Businesses can track employees’ hours manually, which can be time-consuming and lead to errors. 

So, you need to use a time management system to support your business in complying with time clock rules for hourly employees and non-exempt staff. 

These time tracking systems take over when an employee clocks in and clocks out, and usually automate large parts of the process. 

To keep track of employee hours, organizations use various types of tracking tools:

  • Time cards: Employees use time cards to clock in and out of work using a time clock.
  • Manual timer-based apps: Employees start and stop timers from tracking long working hours.
  • Online time clocks: Employees punch in and punch out using mobile or web-based browser applications. 
  • Hours calculator: Managers use a total hours calculator to evaluate the time worked after breaks, etc.
  • Time tracking software: It provides a complete solution to help manage employee time accurately. 

Optimizing your employees’ productivity is more than just monitoring their time. 

It involves effective scheduling, clear communication, and strategic planning. You can leverage tools like Buddy Punch time tracking software solution, which offers comprehensive features for managing and tracking your workforce remotely to achieve this. 

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With Buddy Punch, you can streamline workforce management and empower your team to perform at their best.

The time tracking app not only simplifies scheduling your hourly employees but also offers various options for tracking their hours. 

Employees can easily clock in using a GPS location tracker or a clock-in card. Their hours are automatically recorded on an editable timesheet, providing a seamless and accurate tracking system.

2. Bringing All Employee Attendance Data Under One Roof

Collecting, analyzing, and managing attendance data can be daunting, especially for businesses with a large and diverse workforce. 

That’s where the importance of bringing all employee attendance data under one roof comes into play.

When an employee works a set number of hours during an average work week, it’s critical to ensure that this information is correctly logged in a centralized system. 

Monitoring employee hours and collecting accurate data is an important part of complying with your state’s federal law and labor laws. 

Organizations can improve efficiency, accuracy, and compliance by consolidating all employee attendance data into a centralized system. 

A unified attendance management system like Buddy Punch provides a comprehensive view of employee attendance records, making it easier to identify patterns and trends, such as absenteeism or tardiness

Moreover, a centralized attendance management system helps to streamline administrative tasks, such as timekeeping, scheduling, and payroll processing. 

It eliminates the need for manual data entry, reducing errors and saving time while providing real-time visibility into employee attendance records.

Additionally, having all attendance data in one place helps organizations comply with labor laws and regulations. 

Comply With Labor Laws Using Time Tracking Tools

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From monitoring overtime hours and combatting time theft to tracking meal breaks and ensuring full-time employees receive their regular pay rate, a robust time tracking platform can play a pivotal role in ensuring your organization complies with labor laws. 

Effective time tracking tools enable leaders to monitor overtime pay. Some of these even include time clock rounding, which lets employers set rounding rules to determine how on-call employee hours are going to be determined for a pay period.

3. Round Time To The Nearest Tracked Increment

When establishing time clock rules for hourly employees, the initial step is to select the time increment your company will use to track their working hours. 

Typically, businesses track time in increments of 10 or 15 minutes, as anything less can complicate the payroll process. 

Round Time To The Nearest Tracked Increment

However, it’s worth noting that not all employees clock in or clock out precisely on the 10 or 15-minute mark.

Employers can use rounding to simplify payroll calculations, and the Fair Labor Standards Act (FLSA) permits rounding of clock-in and clock-out times to the nearest tracked increment. 

For instance, if your company tracks time in 10-minute increments, any time between 5:01 and 5:04 will round down to 5:00 for payroll purposes. In contrast, any time between 5:05 and 5:09 will round up to 5:10.

For 15-minute increments, the rounding system is commonly called The 7-Minute Rule. Any time between 5:01 and 5:07.59 rounds down to 5:00, while any time between 5:08 and 5:14.59 rounds up to 5:15.

It’s crucial to establish a consistent rounding policy that doesn’t result in systematic underpayment of employees. 

The policy must be transparently communicated to employees, who should have access to their full, unrounded working hours. 

Employers must comply with the FLSA’s rounding regulations to avoid potential legal problems and penalties. 

The rounding practice should not unfairly benefit the employer or systematically underpay employees. 

Employers should verify that their rounding policy does not conflict with applicable state or local laws or regulations. 

4. Include Training And Travel Time

An essential regulation for hourly employees relates to training and travel time. 

As per the FLSA, employers must compensate their team members for specific nonproductive periods, including travel and training. 

Employers are obligated to pay their employees even if such nonproductive time falls outside their usual work schedule, such as traveling overnight for a work-related assignment. 

For instance, if an employee travels from 6 p.m. to 8 p.m. on a Sunday, the employer must compensate them for the time spent.

5. Rest Breaks Are Work Time

When incorporating rest breaks of 20 minutes or less into your team’s schedule, it’s important to note that you must compensate them for this downtime. 

It’s crucial to communicate to your team that they should not clock out for non-work intervals lasting 20 minutes or less, regardless of the reason for the break.

6. Employees Should Be Paid On Scheduled Days

A fundamental rule related to the time clock for hourly employees is that all team members must receive their pay on scheduled days. 

Businesses have the flexibility to determine their pay periods, but once established, they must follow them consistently.

Although the actual day of payment may vary slightly due to holidays or other interruptions, paying employees as close to the established payday is mandatory. 

For instance, if your business pays the team on the second and fourth Fridays of each month, but a holiday falls on the second Friday, you should try to complete the payroll and make it ready for distribution by Thursday before the holiday, or at the latest, by the following Monday.

What Are The State-Specific Time Clock Rules & Laws?

United States Map and Satellite Image
Source: Geology

The regulations regarding non-exempt employees earning breaks, when they should be on the clock, and rounding differ from state to state. 

Here are the direct sources of the federal time clock laws regarding time clock rules:

Here are some examples:

1. Washington

Source: World Atlas

Here are the time clock laws that apply in Washington state:

  • Employees are eligible for a ten-minute paid break after every four hours of work. Employees must remain clocked in during their break period, as it is compensated time.
  • Employees can also take 30-minute unpaid meal breaks if working more than five hours. Since this break is unpaid, employees must clock out. 
  • Although worker time clocks are not obligatory in Washington, they must possess the capability to comply with the 7-minute rule in case they are utilized and the business rounds off the clock-in times.
  • Deducting clocked-in time from an employee break is not permitted.

2. Oregon

oregon county map
Source: World Atlas

Here are some of the Oregon time clock laws:

  • When employees work for a duration of two to six hours, they are entitled to one ten-minute paid rest break.
  • Moreover, additional rest breaks are granted after working for six, ten, and fourteen hours. Since these breaks are compensated, employees must not clock out during these periods.
  • Oregon law mandates employees to take one 30-minute unpaid meal break after working six hours and another after completing 14 hours of work. Employees must clock out during meal breaks since they are not compensated.

3. California

california county map
Source: World Atlas

Here are some time clock rules for hourly employees in California:

  • All shifts over three and a half hours require ten-minute paid rest breaks.
  • A 30-minute meal break is needed for shifts over six hours and is optional for a shift between five and more hours.
  • On-duty meal breaks are allowed, but only if the employee agrees to them, the nature of the job prevents an employee from leaving, or the employees are paid in full during their mealtime and thus do not clock out. 
Do Salaried Employees Have to Clock In in California?

In California, salaried exempt workers are not obligated to clock in or keep track of their working hours since their exemption from the FLSA regulations means their pay remains constant, regardless of the number of hours worked. 

Nevertheless, according to the SHRM, all non-exempt employees in California, including salaried non-exempt employees, must accurately record the hours worked. 

Although clocking in is not mandatory, maintaining a record of worked hours is essential.

4. New York

new york county map
Source: World Atlas

Here are the clock-in rules in New York:

  • Employees have the right to an off-the-clock, unpaid 30-minute lunch break. Additionally, for shifts that begin between 1:00 PM and 6:00 AM and exceed six hours, they are entitled to a 45-minute meal break.
  • Employees are allowed an additional unpaid, off-the-click meal break if their workday starts before 11 AM and ends after 7 PM.
  • Extra rest breaks are not allowed legally.

5. Pennsylvania

Source: World Atlas

Finally, Pennsylvania clock-in laws include the following:

  • Adult employees are not required to take meal breaks but may be provided with the option. If an offered break lasts less than 20 minutes, it must be paid, and the employee should remain clocked in.
  • If the break is longer than 20 minutes, employers can pay their employees during the break. Therefore, it is at the employer’s discretion to decide whether the break is considered on-the-clock time.

6. Michigan

michigan county map
Source: World Atlas

Here are some key time clock rules for hourly employees in Michigan:

  • All hours worked must be tracked and recorded, including overtime hours.
  • Overtime pay must be provided for all hours worked over 40 in a workweek.
  • Employers must maintain accurate records of employee hours worked, including time cards and other relevant documentation, for at least three years.
  • Employers must provide employees with access to their time records and allow them to review and dispute any discrepancies.
  • Non-exempt employees must receive payment at a rate of 1.5 times their regular pay for any hours worked beyond the initial 40 in a given workweek. For instance, if an employee earns $10 per hour, they should be paid $15 per hour for any additional hours worked beyond the 40-hour limit.

7. Colorado

Source: World Atlas

Here are the time clock rules in Colorado:

  • If an employee works more than 12 hours in a day or 12 consecutive hours in a workday, they must receive double their regular hourly rate for all hours worked over 12.
  • Employers must pay their employees for any unused vacation time or PTO (paid time off) that they have earned when they leave their job.
  • Employers must give employees a 30-minute break every five hours worked in the manufacturing, mechanical, or mining industries.

What is the Difference Between Salaried Employees and Hourly Employees?

The main difference between salaried employees and hourly employees is the method by which they are paid. Let’s dive more into it.

Hourly Employees

Hourly employees are individuals whose wages are determined by the number of hours worked. This compensation method can lead to paying variations from week to week. 

However, business fair workweek initiatives have been implemented to establish a more stable paycheck for hourly employees. 

To ensure accurate payment of wages, businesses must track the hours worked by their employees. The recording of employee working hours is usually accomplished using a precise time clock software or system.

Salaried Employees

Salaried employees are individuals who receive a fixed annual salary. These positions typically include high-ranking roles like general managers or executive chefs within a business setting. 

Typically, salaried employees work around 40 hours per week, although, in some industries, this could often be much more. 

However, being a salaried employee does not mean they are exempt from logging work hours or ineligible for overtime pay.

Best Apps For Time Clock Rules | Top 3 Options

Several time clock apps can help you manage employee time and comply with time clock rules. 

Here are some of the best options:

1. Buddy Punch | Best For Overall Employee Management

buddy punch homescreen landing page

Buddy Punch is a powerful time tracking tool that provides businesses with an easy and effective way to monitor employee work hours and comply with clocking rules. 

This innovative cloud-based solution enables businesses to streamline their time and attendance management processes

Buddy PunchTechnical Details
Customer TypeSmall Business
Medium Business
Large Enterprises
Devices SupportedWindows

Buddy Punch offers features such as time tracking, paid time off (PTO) tracking, and reporting, an all-in-one platform. 

time card buddy punch

This time tracking platform will provide a clear view of how employee work hours break down and enable you to track time accurately across your organization. 

Buddy Punch makes this possible with a useful dashboard if you want to monitor productivity in real time. This lets you see exactly when team members clock in and out daily.

Buddy Punch offers various customization options that enable businesses to tailor the software to their unique requirements. 

This includes customizing time tracking fields, such as billable and non-billable tasks, hourly rates, and employee names, to suit the business’s specific needs.

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2. Hubstaff | Best for Remote Teams

Hubstaff homescreen

Hubstaff is another time tracking software that helps businesses to manage their remote teams effectively. 

Team leaders and managers can use this real-time employee time tracking platform to monitor employee productivity and flag issues.

Hubstaff Technical Details
Customer TypeFreelancers
Small Business
Medium Business
Large Enterprises
Support24/7 Live chat representative
Devices SupportedWindows

All timesheet data can get automatically fed into your go-to accounting system for payroll processing. Hubstaff also comes with employee scheduling and productivity tools.

Hubstaff is particularly useful for businesses with remote employees or contractors, as it allows them to monitor the work and ensure everyone is on track.

The software allows employees to track their time using desktop, web, or mobile applications. This means they can log their time no matter where they are working from, providing greater flexibility for employees and employers.

Hubstaff also enables businesses to create and assign tasks, set deadlines, and monitor progress. This helps ensure everyone is on the same page and that projects are completed on time.

 Hubstaff offers a range of features, including,

  • Online Time Reporting,
  • Automated Payroll & Invoicing
  • GPS Location Tracking,
  • Employee Productivity Monitoring,
  • Employee Scheduling,
  • And so on

3. QuickBooks Time | Best For Easy Project Management

QuickBooks Time homescreen

QuickBooks Time is a dependable and efficient time tracking software that can help you achieve your goals.

Its intuitive user interface and extensive features make it an ideal solution for businesses of all sizes looking to simplify their project management.

QuickBooks TimeTechnical Details
Customer TypeSmall Business
Medium Business
Large Enterprises
DeploymentCloud-based, or Web-Based
Devices SupportedAndroid

QuickBooks Time can track employee time and generate time card reports in a flash. 

With plenty of payroll and HR integrations, QuickBooks Time can seamlessly fit into your technology stack and become an integral part of your operations. 

The platform also offers in-built team scheduling and messaging tools to accelerate productivity.

QuickBooks Time has a variety of features that include but are not limited to:

  • Time Tracking
  • Staff Scheduling and Messaging
  • Time Card Reports
  • Payroll and Human Resources Integrations

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For free trial, no credit card required.

If you feel that Buddy Punch could be the right fit for your business, sign up for a free trial. You can also book a one-on-one demo, or view a pre-recorded demo video.

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