How to Avoid Non-Exempt Employee Compliance Issues

WurkNow Team
WurkNow Team
April 13, 2023

Any staffing agency offering MSP services or commercial/industrial employers juggling staffing suppliers knows the time-consuming tasks that come with their largest expense: payroll. Because temporary, hourly-based labor is often required, employees are often placed by multiple staffing suppliers. This poses many common compliance risks and challenges to both staffing agencies and employers.

Whether it’s tracking hours, maintaining breaks and schedules, or managing overtime, failing to comply can lead to non-compliance and fines. Implementing an effective timekeeping and job order management system will help you avoid compliance issues that become more challenging to keep up with as the business world moves faster and more regulated.

Common Compliance Issues in Staffing

Although regulations vary by state, common issues are prevalent with overtime pay, lunch and breaks, accurate record keeping, and employee classification throughout commercial/industrial staffing.

Overtime Pay & Wage Theft

For temps and other hourly workers, overtime is required when non-exempt employees work over 40 hours in a workweek – in total, even across multiple employers. Once that threshold is crossed, payment must increase to 1.5× the typical hourly wage. Failure to pay overtime is considered wage theft, as outlined in the Fair Labor Standards Act.

When staffing agencies and employers use outdated methods, overtime can go unrealized and unpaid, which can lead to fines and lawsuits. Over 40% of all legal cases involving wages and hours are due to overtime infringement.

This is caused mostly by a lack of communication between staffing agencies and employers and can be avoided by using a universal time clock.

Lunches & Breaks

Non-compliance with lunches and breaks often occurs because employers are not effectively monitoring employee timekeeping and employees work through them, possibly without even realizing. Failure to provide adequate breaks isn’t just illegal but it also leads to occupational safety hazards and heightened exhaustion and dissatisfaction among employees.

Accurate Record Keeping

There’s an enormous amount of record keeping involved in payroll. Failure to manage hours, breaks, overtime, and varying work orders leads to excessive administrative work – especially for those hiring employees working at multiple companies.

Furthermore, outdated record keeping methods are vulnerable to being taken advantage of by employees, as with buddy punching where employees punch out for their “buddies” (and vice versa) so they can get paid for not working. Effective time keeping software avoids all of the above.

Employee Classifications

Another problem comes with misclassification of exempt and non-exempt employees. Salaried workers are “exempt” from having to be paid overtime if they work over 40 hours in a week, though their employers can choose to pay them extra. Non-exempt employees must be paid for overtime so staffing agencies and employers must properly recognize each employee’s status.

How to Mitigate Compliance Issues

Using the right timekeeping and job management software significantly reduces the above-mentioned compliance issues.

Especially in the commercial and industrial staffing world, top-notch timekeeping software seamlessly manages all employees even as they work across multiple employers to provide a clear and robust picture of wages and hours. Automated reporting and scheduling eliminate the possibility of anyone gaming the system with buddy punching.

If you’re looking for a solution that offers state-of-the-art timekeeping and job order management software, consider WurkNow with real-time tracking, shift-scheduling features, consolidated time cards, and universal time clock. Speak with one of our timekeeping and job order management experts for a demo or quote today.

Contact us to learn more about timekeeping software

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