Ignoring Labor Regulations Will Result in Heavy Fines

Posted on Nov 13, 2008 by apresley in Articles

In many locales, labor laws for the service industry severely limit the number of hours that a non-exempt employee can work.  Hours worked can be limited by the industry, age, job description (position worked), hourly rate, holiday, length of shift, or even the day of the week.  If your business works with service unions, these rules can become even more complicated, requiring that managers spend time tracking breaks and meal periods and indicating whether or not employees wanted to take their break.  Some states and insurance companies perform regular Labor & Industries audits, imposing heavy fines or insurance premium increases for non-compliant businesses.

Example: A sandwich restaurant in California employs three sandwich specialists, all of which are scheduled to work less than 8 hours a day, six days of the upcoming work week.  On the first day of the schedule one of the employees fails to show up for work and is terminated by management.  The remaining two employees must work work the additional 28 hours at the business to cover the terminated employee.  Neither employee receives a day off during the work week.  Under California law, each of the employees must be paid 1.5x overtime for more than 8 hours of work in a given day, and 1.5x overtime for more than 40 hours per work week.  Additionally, the two sandwich specialists will receive 1.5x – 2.0x overtime on the 7th day of their work week, as neither employee will receive a break this week.  Failing to pay these increased wages is grounds for a lawsuit and an investigation by the state.  Insufficient staffing may cost this California business several thousand dollars – in a single week!

Careful managers schedule around these frequently changing and complicated rules, ensuring that their business is compliant with all applicable labor regulations.  However, businesses can inadvertently land themselves in hot-water when employees fail to show up, quit, or are terminated for otherwise legitimate reasons.  Inexperienced managers, overburdened by other areas of schedule creation can forget about these rules, which are not core to the “making money” aspect of their business.  Stiff fines and lawsuits are the result of failing to be in compliance.

In uncertain economic times managers must be able to schedule labor correctly in a consistent manner, keep employees happy, and reduce fines imposed by legislative authorities, such as the Department of Labor.  Businesses should seek to use cost-effective computer systems, such as TimeForge, to ensure that proper scheduling techniques are utilized.  Effective scheduling software will be able to schedule meal and break periods, accurately calculate overtime costs, and archive previous schedules for managerial review.

Example: The general manager at a car wash business needs to ensure that one manager is always on duty, as well as a number of attendants to apply soap to the vehicles before vehicles enter the automated car wash machinery.  Each attendant is required to receive a number of breaks during their shift, and this particular business prefers to hire employees who are minors to fill “holes” in the schedule.  During a normal work day, between five and seven employees are working.  By not carefully scheduling the break and meal periods and minor rules, the manager may end up with a shortage of staff as multiple employees take breaks (or leave for the day) at the same time and minor employees leave for home.  During the labor shortage, customers will not be serviced appropriately.  Alternatively, the manager may choose not to send employees homes or allow breaks to proceed – grounds for heavy fines, a lawsuit, and/or increased insurance premiums.

Labor & Industries (L&I) audits are common in some US states (California, Washington, Oregon, and New York are especially common) in restaurant, food-service, retail, construction, and hospitality-related industries.  These audits are performed by the state or by insurance companies to verify that the business has complied with all applicable regulations.  Audits focus on unpaid overtime, minors working too late or too early, break and meal periods that are not properly documented, and other violations.  Rule infractions can be punished with stiff fines and/or insurance premium increases.

Make sure that all employees are aware of the applicable rules for the city, county, and state / province.  Follow federal / national rules (where applicable), corporate rules, and insurance regulations (if applicable).  Where possible, automated scheduling systems should be utilized to enforce these rules reducing the administrative burden placed on managers – allowing management to work on other pressing issues such as training, customer service, and management tasks which cannot be automated by cost-effective technology solutions.

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

Posted on Aug 15, 2008 by apresley in Articles

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 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 login 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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Labor and Industries Audits Made Easy

Posted on Dec 02, 2007 by apresley in TimeForge Features

In many states, the Department of Labor and Industries (L&I) performs routine audits of retail, grocery, contracting, and food-service businesses to determine if the establishment is following all federal, state, and local laws governing overtime, underage workers, and workers compensation. Like any audit, failing an L&I audit may result in heavy fines and significantly reduce profits. L&I audits may also be performed by your insurance company rather than a state agency.

Labor & Industries auditors will review your payroll, accounting, and schedules for compliance – a daunting task if your employee schedule records are kept in request books, various availability sheets, sticky-notes, scraps of paper, and Excel spreadsheets. However, with TimeForge.com, an L&I audit is simple. Historical records are always available and can be recalled by simply logging into TimeForge and running the appropriate report on any past, present or future schedule. Schedules are archived forever. Requests are stored forever. Audits are now simple!

How long does it take to make an employee schedule? It should take less than 5 minutes! Did you know that labor costs could be as much as 30% of your expenses? TimeForge can help streamline and minimize labor costs through effective labor scheduling at your restaurant, bar, or club.

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