Most employers would not even think about tracking time for salaried(exempt) employees. The general consensus amongst business owners and payroll experts is that salaried employees hours should not be tracked. Get the popcorn out, I’m about to lay out an entirely new set of rules for you. According to the Bureau Of Labor Statistics, nearly 59% of Americans are hourly, the remaining 41% are salaried. In this article, we will explore the various reasons why you should at least consider logging salaried/exempt hours.
First Off, How To Decide To Pay Salary VS Hourly
One of the primary deciding factors is whether the position is full or part time. Businesses like to have a clear expectation of what expenses they will pay each month. If part time, hourly pay is generally the clear choice as worked hours may fluctuate from week to week. When designating a position as salaried, the employer can expect a fixed payroll budget for a fixed amount of worked hours. Even if the employee works extra hours, the bill remains the same. At first glance this seems to be only in the company's interest, however typically salaried employees yearly pay is equal to(or greater than) their hourly counterparts. Another benefit for the salaried employee is that they enjoy a consistent paycheck, even if the weekly hours vary. There are also DOL mandates that govern pay status, positions such as executive, administrative and professional may require a salaried position. Lastly, some employers simply do not want to deal with a time clock. So salaried positions look very appealing to them.
Time theft is committed by all employees, the statistics are the same for salaried and hourly alike. Yes, I said time “theft”. If you have employees that agree to work a certain amount of time but do not actually put in the hours [and get paid for those hours], this is basically stealing time[money] from the company. According to studies by the APA, time theft translated to about a 7% overpayment in gross payroll in U.S. companies. Most likely your salaried employees signed an employment contract. This contract typically lays out the terms of employment, including the hours the employee is expected to work each week and the company's responsibility to compensate for the hours worked. If an employee is arriving late to work, or taking long lunch breaks they are most likely breaching the contract. If the employee is breaching the contract, you should consider this time theft. Using a time tracking system would mostly eliminate these issues.
Were All One Team - Increase Morale And Camaraderie
Many times hourly employees may have a jaded view towards their salaried teammates. Wondering why they are the only ones who are punching the clock. This is understandable, as historically the time clock has created a separation in companies that is undeniable. The old Management VS Labor stigma is alive and well even in our current times. One of the main proponents of this the vision of that is the old school time clock mounted on the wall. There are those who punch in and out and those who do not, which one are you? Adding a policy that all employees hours are tracked helps remove this struggle, it helps everyone know that they are all on the same team.
Tracking PTO For Salaried Employees
Salaried employees receive PTO (Paid Time Off) in various categories such as vacation, sick, personal and holiday hours. These are days and hours that the company has agreed to pay the employee that fall outside of the normal work schedule. Generally, if a salaried employee takes more time off than the allotted(or accrued) hours agreed upon, then the hours are deducted from the employee's payroll. For instance, if Jennifer’s company allots her 5 days off for vacation time then she may take 5 business days off and her payroll will not be affected. However, if Jennifer wants to take 7 days off for an extended vacation there needs to be an adjustment to her payroll per the agreement. So, at some point Jennifer’s paycheck would reflect the 2 days of extended vacation as 2 days not worked. I suggest you reference this DOL page when deciding on your salaried employee PTO policy, as there are rules to follow.
Job & Project Costing
Many companies bill their customers based on time spent on individual jobs or projects. For instance, ACME Engineering (a fictitious mechanical engineering firm) has many engineers who work on various projects for many customers. Every month ACME’s customers are billed for the work their engineers have performed. This is a good fit for time tracking, specifically job and project hours tracking. Using a system to track hours allows accurate and fast reports for invoicing ACME’s customers.
Unified Payroll Processing
Both salaried and hourly employees get paid using the same payroll department or if outsourced, payroll provider. Hourly employee hours and PTO are sent to payroll and the end result is the employee gets paid for the hours worked, taking into account any unpaid PTO hours. But how would you transmit unpaid PTO hours for salaried employees? Generally, this involves sending an email or some other manual communication outside of your normal hourly employees hours report. If you could send a single salaried and hourly report to payroll, this would be must faster and much more accurate.
How Can All This Be Accomplished?
Using an employee time clock like OnTheClock allows you to track all employee time, salaried or hourly. This will help unite your team as one focused productivity machine. All employees will be accountable for their time, and all employees will feel that things are fair. PTO tracking and payroll are consolidated into one system, saving you time and reducing errors.