U.S. Organizations Need a Laser Focus on Accurate Time Tracking for Regulatory Compliance
Times are soon going to get a little bit more challenging for organizations. They’ll be faced with several new labor regulations that are likely to come into effect, and will need to be aware of steps to take to comply. While many might see the new requirements are an additional burden, the right way to look at it is as an opportunity to increase quality and productivity, and to create a happier workforce. The first step is to streamline the employee time tracking process so that organizations can reduce administrative overhead, increase accuracy, decrease errors, get paychecks out in a timely fashion, and ensure regulatory compliance.
Here are a few things to be aware of:
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Minimum wage increases
There is an ongoing debate about whether the federal minimum wage should be raised and by how much, and what the possible effect of that increase would be on the economy. There are a great many organizations in industries such as hospitality, fast food, and retail that prefer to stick to the existing minimum wage. They see the proposed increase as a challenge that could increase operating costs, affect margins, and force cost-cutting and layoffs.
A PNC Economic Outlook survey, however, shows that 75% of small- and middle-market business owners said raising the federal minimum wage would have little or no impact on them because their pay rates are already higher in order to be competitive in their labor market. On a related note, some people believe that the impact on businesses could be minimized by the fact that various states and localities already have higher minimum wage laws on the books than the federal rate proposals. Clearly, there is yet to be a consensus on this topic.
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Affordable Care Act
The Affordable Care Act (ACA) requires businesses with over 100 full-time equivalent employees (FTEs) to provide affordable healthcare insurance coverage. Currently, any FTE clocking in over 30 hours per week (though there are efforts to move this to 40 hours) on average falls under the provision of this law. Companies surveyed by Mercer Consulting are of the opinion that this will increase operating costs by between 1% – 5%. To minimize the effect of the ACA on their business, many organizations plan to amend their workforce strategy by limiting the number of people working more than 30 hours a week, and to more accurately track employee work times so that they are sure of who requires ACA coverage.
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White collar overtime exemptions
President Obama has directed the Department of Labor (DoL) to revise the Fair Labor Standards Act’s (FLSA) white collar exemptions, as it is believed that these pay requirements have not kept up with the times for this class of workers. The proposed regulations would increase the number of people who qualify for paid overtime, and would be an added liability on the already stretched finances of organizations.
Currently, salaried workers who make less than $455 per week must be compensated at the rate of time-and-a-half for any overtime incurred. President Obama’s directive would significantly increase that pay level, thus changing the definitions about which workers are exempt from overtime pay. While the actual salary threshold and a timeline are not fixed, this change has the potential to affect a large number of organizations.
So, what should organizations do?
Organizations that want to make the most of their workforce and comply with these new business rules and regulatory changes should start by looking at how they can optimize the tracking of their exempt and non-exempt employee work time.
In addition to the benefit of greatly improved regulatory compliance, organizations that make it a high priority to centralize their time and attendance tracking can also benefit from:
- More accurate time tracking and automation of pay rules
- Improved scheduling and increased visibility into staffing levels
- Reduced overtime and labor costs
- Advanced analytics with audit trail capability in case of any litigation
