Why it is Important for Nonprofits to Track Their Employees’ Time

Why non profits should track time worked

Nonprofits are generally run and operated by great Humanitarians that are looking to make a change in the world. Some of these organizations have employees and do not properly track their time worked. This, in return, can have a negative impact on nonprofit organizations when it comes to payroll budgets, time savings, and other key factors that help organizations to stay operating.

In this article, we will go over why it is important for nonprofit organizations to properly track their employees' time to avoid legal issues, and how an employee time clock may help you.

Documentation of employee hours worked is the law

This may come as a surprise to some, but keeping proper documentation of hours worked by employees is actually the law. The federal Fair Labor Standards Act (FLSA) requires employers to keep records of time worked.

According to buckleybeal.com, there has been a record-high number of wage and hour lawsuits being filed. According to a recent survey, the tally of new Fair Labor Standards Act (FLSA) cases has risen above 7,700, a new record.

What if you have exempt or non-exempt employees? Well, I am happy you asked because there is a difference. If you have a non-exempt (hourly employee), the U.S. Department of Labor (DOL) requires a minimum recording of employee time cards for at least 3 years for each employee. So this means that you are required by law to track and maintain hourly employees’ time for three years for all hourly waged employees. If you are interested in learning more regarding exempt and nonexempt employees visit the Department of Labor website.

Hold employees and workers accountable for their time

Unfortunately, time theft is a very serious issue in today’s workplace. Employees may be cheating on their timesheets to have more money on their paycheck. This obviously has a negative impact on a nonprofit’s payroll budget.

A report by epaysystems.com states time theft is costing U.S. employers more than $400 billion in lost productivity every year. This is a lot of money in lost wages for employers to hemorrhage which could very well put them out of business.  

Without having an employee time clock, many companies and organizations are increasing their risk of being taken advantage of, employees stealing time from the company and payroll mistakes.

Keep payroll within budget   

The American Payroll Association reports that time theft can cost small businesses and organizations up to 7% of their gross yearly payroll.  Again, this is a factor that could and can be a deciding factor in shutting down an organization due to lack of funds to continue operating.

This falls back on the topic of how important it is to track employees’ hours worked accurately. In addition to accurate time tracking which will allow payroll to stay within budget, it also allows money to be dispersed elsewhere for an organization to grow and be successful.

Accurate payroll will also protect you against audits and false claims by employees when it comes to ‘he said she said’ regarding hours worked.

Employee time clocks help nonprofits track paid time off

Paid time off (PTO) is at times confusing and tricky to track if done manually. Every organization is different in size, but it is possible for numerous employees to want to take time off on the same dates. This can leave a business or organization short-handed with staff because PTO was not properly documented to know who was supposed to be working or not.

Here are the 4 most common paid time off situations: 

  • Holiday
  • Vacation
  • Personal
  • Sick

Paid time off is usually used on an as-needed basis when the appropriate time arises. Some nonprofit organizations may have a set amount that is given each year for employees or it may be set up where employees have to accrue their PTO.

Using an employee time clock system to track hours worked

A Modern time clock system gives organizations an accurate and seamless way to track employees’ hours worked. OnTheClock is a complete cloud-based time clock that tracks employee punch times to the exact minute for an accurate time card report.

Need to know some benefits to have for an online time clock system? Well, here you go:

  • Saves time on payroll
  • Decreases payroll expenses
  • Provides accurately documented time cards
  • Reduces the chance of an audit from the Department of Labor (DOL)
  • Know who is punched in and out at all times

It is important to research and sign up with a time clock service that best fits your nonprofit's needs. Read customer reviews, see if a mobile app is available, make sure it has automatic time card calculation, see if it offers a free trial, offers discounts for nonprofits, and the ability to integrate with your payroll provider.

I encourage you to contact OnTheClock if you have further questions regarding the implementation of a modern time clock. Feel free to call 888-753-5999 or email support@ontheclock.com.     

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