You’ve probably heard the old adage that “nothing in life is certain but death and taxes.
The most recent recession has had greater implications for the organizations than any other event in the last 50 years. The recovery has been slow, with widespread uncertainty adding to the problem. Additionally, recent legislation around healthcare, minimum wage increases and FLSA compliance is likely to add to the financial woes of organizations.
Affordable Care Act
President Obama’s Affordable Care Act has already led to a lot of changes for enterprises, but with major provisions of this act scheduled to take effect in 2014, more juggling is in store for employers with large numbers of part-time and low-paid employees.
According to a survey from Mercer Consulting, most companies believe operating costs will increase by about 5%. To minimize the impact of the changes, many companies plan to change their workforce strategy and reclassify full-time employees as part-time employees, or rely more on part-time employees for getting things done. As many as 32% of the companies surveyed by Mercer are considering limiting schedules of hourly workers to less than 30 hours per week—the set limit at which they would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker, beginning in 2014. Such a decision would require them to closely track employee attendance and work schedules with complete accuracy, or risk facing stiff penalties.
Proposed Minimum Wage Increase
Obama has proposed to raise the minimum hourly wage to $9 per hour in 2015, up from the current $7.25, and index it to inflation. The change has the potential to affect the wages of close to 15 million Americans. Many small and medium sized businesses will be affected by this sweeping change. Many states already have rates above this minimum rate but may be forced to increase it further under pressure from worker unions.
Employer groups are opposed to the change, as it will increase operating costs significantly, directly affecting margins. Consequently, jobs may be cut—analysts project as many as 467,500 positions will be eliminated. Costs resulting from labor lawsuits, bad PR and damaged reputations could be substantial.
Increasing Focus on FLSA Compliance
The Fair Labor Standards Act (FLSA) has always been difficult for organizations to accommodate. According to the Department of Labor, 7 in 10 companies are non-compliant with Wage and Hour Division (WHD) regulations. Wage and hour related litigations are at an all-time peak—in the 12-month period ending Mar 31, 2012, 7,064 FLSA cases were filed in federal court compared to a mere 2,035 filed during 2002. The marked increase in lawsuits can be attributed to the weak economy and tightening of laws around wages, overtime and medical benefits. Also, the WHD has placed additional importance on complaint investigations over the last couple of years.
How Time and Attendance Tracking Can Help
Labor costs contribute to as much as 60% to overall costs for most organizations. The sheer size of this expenditure calls for effective time management. Organizations must have better systems in place to track employee activities, and account for their time and attendance.
Not only will greater visibility into work force productivity help companies redirect increasingly expensive resources to higher-value tasks, more accurate, automated time and attendance tracking will streamline payroll processes and simplify FLSA compliance, cutting associated costs significantly. With less time spent on tedious, manual tasks like collecting and processing timesheets or gathering and analyzing data for compliance audits, companies can save money and have funds available for increased wages and healthcare costs.
Organizations can benefit by centralizing time and attendance tracking in the following ways:
- Better accuracy and automation to reduce time-consuming manual tasks.
- Centralized, detailed reporting and analytics to satisfy compliance audits.
- Better scheduling and visibility into staffing to reduce overtime and operating costs.
- Efficient data analysis for better labor cost management.