Congratulations! You found the most comprehensive guide to employee time clocks on the web.
Buying the right time clock for small business is critical. In this article, we’ll dive into everything you need to know about time clocks. Then we’ll explore a case study illustrating why you need a biometric time clock.
Following that, we will explain how the right time clock will increase retail profitability. Plus, we will debunk the most common myths about biometric employee time clocks, explain state laws, and tell you how to implement your system.
The final section describes how a good time and attendance system can eliminate obstacles to business growth.
How To Buy Time Clocks For Small Business In 2019
- Types of Employee Time Clocks
- Case Study: Preventing Employee Time Theft With a Biometric Time Clock
- How The Right Employee Time Clock Will Increase Retail Profitability
- Debunking Common Myths About Biometric Time Clocks
- The Benefits of Biometric Time Clocks
- How Biometric Time Clocks Empower Entrepreneurs
- State Biometric Laws
- How To Implement a Biometric Clock And Automated Timekeeping
- How Your Employee Timekeeping System Can Solve 6 Obstacles To Business Growth
How To Buy A Time Clock For Small Business
Understanding Time Clock Categories
Let’s start at a high level and outline the categories of time clocks. Knowing what is available is the first step in understanding what you need.
Time clocks for small business come in a wide range of types and styles. Small businesses use them to track time and attendance data. Time clocks allow employees to “clock in” and “clock out” from their work schedule. Employee time clocks track employee starting and ending shift times. They also track start and end times for breaks and meals.
Time clocks are important for small business because they help keep accurate records. They also protect against potential lawsuits and payroll audits. Time clocks are essential in an automated system and can save more money than they cost.
Here’s a review of the types of employee time clocks for small business:
Card Punch Time Clocks
We are only including a review of punch clocks as a warning. If you are still using a card punch system, the rest of this article is especially important for you.
Card punch technology is old-school. Card punch is an original hardware solution that got its start in the late 1800s. It requires employees to fill out a physical card and store it in a filing system.
To clock in, employees find their card, insert it into the clock, and receive a physical stamp of the time. There are many problems with this kind of system. We don’t need to review them here; they are out of date and inefficient by today’s standards.
If you have a punch card system it’s time to upgrade. If you don’t, we won’t explain any further because new technologies offer so much more. You don’t want a punch card system.
Let’s move on…
Biometric Time Clocks
A biometric time clock is a hardware device. The hardware uses biometrics to confirm an employee’s identity. Common biometrics include fingerprints, palm-prints, iris scans, facial recognition, and voice recognition.
Software powers a biometric clock and is usually very smart about keeping time stats. Biometric clocks automate the process of clocking in or out based on your most recent action.
They are often connected to an access point such as a door or gate. Activating the clock opens the door which helps avoid missed “punches.” Employees record entering and leaving an area, indicating their current status.
Biometrics are leading-edge technology and can be expensive. Yet, their efficient ability to confirm identity can offset the cost.
How Does A Biometric Time Clock Help My Company?
Biometric employee time clocks are catching on with small business for many reasons. For starters, they are easy to set up and operate.
One of the key advantages of a biometric time clock is that there are no passwords to forget or fobs to lose. Employees use their physical attributes to confirm their identity. The simple act of touching the device records the time and assigns it to that specific employee. This helps reduce errors and technical support requirements.
Speed is another advantage. Biometric clocks operate fast and can reduce bottlenecks at shift start and end times.
Biometric clocks also help protect a small business from buddy punching. Clocks that need biometric input confirm the right person is clocking in. No more sharing a fob with a co-worker to punch in early.
The savings in buddy punching alone justifies the cost of a biometric clock. If you have a problem with buddy punching, a biometric clock is the best way to go.
What Are The Cons Of Biometric Time Clocks?
There aren’t too many drawbacks to using biometric clocks. They are gaining popularity for good reasons.
One drawback is that biometrics demand employees interact with the physical hardware. Granted, this is a key selling point of biometric clocks. But if you have mobile employees, it won’t solve your entire problem.
Another thing to consider is the environment. Biometrics need clean hands and dust-free environments. If your employees work in dirty or abrasive conditions, consider a different solution…
Who Uses Biometric Time Clocks?
Hospitality industries use biometrics to manage large staffs and frequent shift changes. This includes hotels, convention centers, and traditional office environments. Quick access and no need for fobs or cards makes clocking in and clocking out faster for large groups.
Biometrics are also gaining popularity in the healthcare and patient care industries. Biometrics help meet regulatory requirements. Biometrics can help assure qualified personnel are in the right place at the right time.
Hospitals use biometric employee time clocks to confirm identity. Concern for security and accuracy is a key factor for this type of workplace. Large numbers of employees and varying shift routines are also considerations for any hospital. If your company is a healthcare provider, TimeWorksTouch is a great option.
Web-based Time Clocks
Web-based time clocks provide access to clock in features through a web browser on a computer. Small business employees can clock in from any desktop on the internet.
Employees login through a secure web page. Each employee has a unique identity for login. Employees enter starting and ending times for their work period.
Web clocks usually run in the background while an employee works. Employees must start or stop the clock for breaks or end-of-work periods.
How Does A Web-based Time Clock Help My Company?
Web clocks have a lot of advantages for a small company. The first is convenience. Web clocks are convenient because you can access them from any connected computer.
Convenience provides more options for employee work routines. Employees can work from home, at remote locations, or in flexible locations at the office.
Another advantage is cost. Web clocks are software-based and run in the cloud. Web clocks are available to large groups of employees at little incremental cost.
Cloud-based web clocks provide central oversight, too. Employees can log in from almost anywhere. Managers can view statistics and run reports from a central login. This is true for many modern time and attendance clocks, but particularly so for web clocks.
The most popular advantage for a small business is mobility. Web clocks offer mobility options for distributed workgroups. If your company has employees working from home offices, the web clock solution is for you.
What Are The Cons of Web-based Time Clocks?
One drawback of web-based time clocks is that employees sometimes forget to clock out. This is common for many kinds of time clocks, but a particular problem for web-based time clocks. Employees must build reminders into their routine to ensure accurate clock in/out times.
Another common drawback is identity confirmation. But this is an inherent problem in virtual commuting. Web-based time clocks can’t confirm identity. Small companies must trust that employees are reporting accurate work hours.
These are minor drawbacks to the convenience of web-based time and attendance. The low cost is a significant advantage.
Who Uses Web-based Time Clocks?
Small companies who have distributed workforces use web-based time and attendance.
Telecommuting companies with remote employees such as a software company use web-based clocks. Employees who work from home are able to clock in from their desktops. Decentralized workgroups include small manufacturing companies that rely on home-based employees.
The software company Automattic has over 230 employees working in 29 countries. Every one of them works from a home office. If your company is like Automattic, WebClock is a good solution for you.
Proximity-based Time Clocks
A proximity-based time clock is a hardware clock that uses a card or fob. The timer activates when the employee places their fob or card near the device.
Employers assign a specific card or fob to each employee. These objects are sometimes called a ‘prox card.’ Employees keep these identifiers on their person and use them to activate the time clock.
The prox card identifies the employee and logs them into the system. There may also be a manual button to confirm whether the employee is clocking in or out.
Proximity-based employee time clocks are convenient and quick.
How Does a Proximity Time Clock Help My Company?
Proximity time clocks are among the most popular of time and attendance hardware. They are convenient for small businesses with large groups of employees. They are fast, and won’t hold up the line during rush hour.
Proximity time clocks are also very accurate. They are software-driven and record data by physical proximity to a unique device.
Proximity clocks are easier to set up than you would imagine. They can be set up in many locations and provide centralized management.
Proximity time clocks offer a higher level of security. Fobs and prox cards are unique to each employee. Employers can deactivate a card if a loss occurs. Deactivated cards cannot access the system, which prevents buddy punching or other fraud.
What Are The Cons of Proximity Time Clocks?
One of the drawbacks of proximity employee time clocks is the potential for buddy punching. Prox cards and fobs shared with other employees offer a quick way to punch in for a buddy.
Another drawback is prox card loss. When employees lose a fob or forget their card at home, the system fails. Card loss is an added expense that many companies pass on to the employee. Many systems allow for pin-based login when this occurs, which helps in cases of card loss.
Who Uses Proximity Time Clocks?
Small companies who have large workgroups or many access points to their business.
Fob-based clock systems allow many employees to clock in from any location at the office. Convenience makes it easy and quick to avoid bottlenecks.
Manufacturing companies use these systems to add security and fraud prevention. White collar office environments use proximity cards to measure attendance for salaried employees.
Card Swipe Time Clocks
Card swipe clocks are hardware terminals that use magnetic cards to register access. Employees use a magnetic swipe card, like a credit card, to clock in or clock out.
Employers assign a unique card to each employee. Employees use the cards to access the clock. Often there are buttons on the device to indicate clock in or clock out. Swipe clocks are easy to use and convenient.
How Does a Card Swipe Time Clock Help My Company?
Swipe card employee time clocks are effective for small companies. They use a convenient card that can double as a badge or be carried in a wallet or purse.
Swipe cards help assure security and provide accurate clock in and clock out data.
What Are The Cons of Card Swipe Time Clocks?
Drawbacks are like those of the prox cards. Misplaced or lost cards can cause disruption to the system. Magnetic strips can become dirty, damaged or worn.
These are minor drawbacks, each with simple solutions including replacement or simple cleaning.
Who Uses Card Swipe Time Clocks?
Like prox cards, swipe systems can provide small companies with a secure solution. A small company can use them to manage employees, track time, and collect accurate data.
Restaurants use swipe card technology to manage shift employees. The self-help nature of swipe cards allows employees to enter shifts at random times. Overlaps and shift changes are easy to manage and don’t create bottlenecks.
Key Code Time Clocks
A key code time clock is a hardware device for punching into work. Key code time clocks use a PIN for access. PIN or Personal Identification Number is a four or six-digit numerical code.
Employers give employees a PIN to use for clock in and clock out. Employees enter the PIN to log into the system. Buttons indicate clock in or clock out.
How Does a Key Code Time Clock Help My Company?
PIN-based clock ins are secure. Using a key code based time and attendance system is an easy way to add security. Small business can take advantage of quick and convenient access while maintaining accuracy.
Employers don’t have to worry about lost fobs or prox cards. As a small business, you won’t have to purchase fobs for employees. This is a saved expense for smaller businesses. If cost is a consideration, PIN systems are something to look into.
What Are The Cons of Key-Code Time Clocks?
Employees forget PINs, which causes a complete breakdown of the system. There isn’t a backup if an employee forgets a PIN. This isn’t the end of the world; employers can reassign a PIN. But lost time and effort can add up if you have a forgetful crew.
PIN-based time and attendance can be a little slower than prox cards. Employees have to stop and enter data to access the system. This can slow down lines at shift changes. If you have large workgroups, try adding devices to speed up traffic.
Who Uses Key Code Time Clocks?
Many small businesses use key code systems for time and attendance tracking. The lower expense is appealing for companies on a budget.
Smaller restaurants, patient care facilities, and offices with small workgroups use key code employee time clocks.
Mobile Time Clocks
Mobile employee time clocks are software solutions that run on a smartphone or tablet. Mobile smartphone clocks often integrate with GPS for location-specific tracking.
Mobile time and attendance is a fast-growing area of workforce management. It is inexpensive and easy to adopt.
Employees can use their own smartphones to access the system. Employers can access reports from anywhere.
How Does a Mobile Time Clock Help My Company?
Mobile timekeeping is all about remote convenience and accuracy. Small companies with remote and mobile workforces can track accurate time without restrictions.
Managers can approve time cards on the run. GPS allows managers to confirm locations. Self-service gives employees more freedom to take part in management tasks like shift-trading.
Software-only timekeeping makes mobile an inexpensive solution. Employees aren’t tied to a physical hardware station and can log in from anywhere. This is handy on construction projects, delivery assignments, and service visits.
Mobile timekeeping allows your small business to track your workforce wherever they are.
What Are The Cons of Mobile Time Clocks?
The drawbacks of mobile employee time clocks for small business are inherent in mobile workforce management. It’s hard to say there is a specific drawback of using a mobile app to track time. Anytime you have employees out on the road, you are going to run into issues with security.
Buddy punching is always a concern. Mobile apps don’t always have a good answer to this persistent problem. GPS tracking provides a partial solution, assuring that the device is on site. This helps reduce buddy punching problems but doesn’t completely prevent them.
Who Uses Mobile Time Clocks?
Small businesses who have remote employees use mobile employee time clocks.
Construction companies with on-site crews use mobile time clocks. It’s easy to track a small group of employees on a remote project with mobile. Clock in, breaks, lunchtime, and clock out are all covered with mobile timekeeping.
Delivery companies can use mobile employee time clocks to manage delivery employees. Clocking in at the start of a delivery and then clocking out when finished can all happen on the road.
Small businesses who provide house calls can use mobile to streamline time tracking. Companies who perform service visits to remote locations can track time on location. Small businesses with remote or mobile employees should consider TimeWorksPlus Mobile.
It’s important to mention another hardware option, though this isn’t a conventional time clock. In pre-mobile phone days, landline telephones provided an alternative to punch clocks. Employees call a phone number and follow recorded prompts. Businesses with a telephone system stretched their infrastructure budget by utilizing their phone system for employee punch in and out.
Some companies still use these systems. If you use landlines and don’t have reliable internet connectivity, this is an option to consider.
Time Clocks for Industrial, Construction, and Agricultural Workplaces
Many workplace environments require special time clock hardware. Are you in construction, mining, landscaping, manufacturing, or agriculture? Fortunately, time clock manufacturers serve your needs with clocks designed for these types of workplaces.
TimeWorksTUFF, for example, is a biometric clock for outdoor and industrial use. TimeWorksTUFF has a dust/shock/water-resistant shell. You can collect punches offline with a DC power adapter.
Case Study: How To End Employee Time Theft
Here is a first-person account of a business owner who solved an expensive problem with a biometric time clock.
Time Theft: “It was happening a lot more than I thought.”
I manage a small business of 15 employees, and when I started reading about employee time theft, my first reaction was to assure myself that it wasn’t happening here.
“Not my employees,” I said to myself. I trust them. They’re really good people. I had no reason to believe that one of the biggest factors in our struggle to grow the company was our own employees cheating on their time cards. As it turns out, it can be a pretty big problem, and it happens both intentionally, and unknowingly.
Becoming Aware: “My first time getting the ball rolling.”
When the issue of time theft first came to my attention, I was at a conference dedicated to serving the time and attendance needs of small businesses like mine.
For the most part, attendees were HR managers or accountants for brick-and-mortar retail stores in shopping plazas and malls across the United States.
Presenters came from a wide range of time and attendance solution providers including software and SaaS providers, as well as hardware manufacturers who sell things like biometric time clocks, mobile clocks, and other timekeeping related electronics.
There were a lot of people from what they call the “hospitality” industry, which includes hotel and resort managers, and a surprising number of event planners and travel and vacation organizers.
There were also strong contingents representing national restaurant chains and local mom-and-pop food services. An eclectic mix with one thing in common; we all have a large percentage of employees we pay by the hour.
Buddy Punching: “It hurts more than a light tap on the shoulder.”
The issue of “buddy punching” came up in a session I attended. I whispered to my companion that “we used to do that in high school.” He wasn’t amused.
As it turns out, it’s no joking matter; according to research by the American Payroll Association, buddy punching is affecting about 75% of our nation’s small businesses.
And though I couldn’t believe it at the time, a survey of actual employees found that, on average, companies are losing about 4.5 hours per week, per employee.
I reached for my phone and tapped on the calculator to run a rough estimate of what this could mean for my business. I have 15 employees, total. Eleven of them are hourly. I took a conservative route and assumed that 75 percent of my employees could be buddy punching, and did the math.
The Math: here’s what I did to calculate for my business:
First, I multiplied the number of employees I have on my hourly payroll by 75% to determine the number I could expect might be buddy punching:
11 x .75 = 8.25 employees
This gave me a number of 8.25. To keep things simple, and to err on the side of conservative estimates, I rounded down to 8 for my next calculation.
Next, I multiplied the number of employees (8) by the average number of hours reported stolen per week in the report cited in my conference session: 4.5 hours.
8 x 4.5 = 36 hours
Thirty-six. Let that sink in for a minute. I did, and the more it sunk in, the more I wanted to jump out of my seat and run back to the office to figure out how to make it stop.
According to market research, my company is losing 36 hours per week to buddy punching, alone. My initial thought was that this amounted to an entirely new employee joining our company—something we have not been able to justify because of our budget constraints. According to my phone, which I double-checked, I had already hired this person and didn’t even know it.
“Hang tight; it gets worse…”
As I sat there pondering the long-term benefits of hiring a new employee, or saving 36 hours per week, the presenter shifted to the topic of early punch-in, and late punch-out.
An early clock in is something we have considered, and late clocking is always a concern, but I had no idea how much this was already affecting my business.
With only 11 employees on our time system, the numbers started adding up pretty quickly. I looked around the room and wondered how many of my new hotel friends or restaurant owners would multiply my calculations by tens, or even hundreds.
I watched as smartphones around the room began reporting numbers that, by the looks on many faces, were not in harmony with our small business scheduling budgets.
In the hospitality industry, for example, a single mid-sized hotel can easily employ over 50 employees working hourly to perform tasks such as housekeeping, laundry, room service, and security.
If each employee at a hotel clocks in just five minutes early each day, that can result in a budget overreach of four hours per week, or roughly 208 hours per year. If those employees are earning $8 per hour, that means about $1,664 in unaccounted time per year.
Not a Lot, But it all adds up.
The conversation quickly turned to the number of clock-ins, and clock-outs that can occur during the day.
Employees are arriving to work, taking a morning break, leaving for lunch, clocking in and out for an afternoon break, and leaving at the end of the day. That’s a lot of ins and outs.
Suddenly a few minutes here-and-there turned into vast amounts of unaccounted time being leaked away like the buckets of water quietly draining away through that leaky faucet I still haven’t fixed in my guest bathroom.
I considered the comparison for a second; every time I walk past the guest bathroom, I am reminded that I have a small leak in the faucet, but because it is only a small, silent drip, I often think “I’ll get to that on the weekend,” but never do.
The faucet has been leaking now for the better part of a year, and I am suddenly aware that I am losing a lot of water without even realizing it.
Losing Battle: “What is the cost?”
So I ran the numbers on my own business. It looked like this…
I have eleven employees, and each of them has an opportunity to record a clock in or clock out on eight occasions:
- Clock in to start their day.
- Clock out for morning break.
- Clock in after morning break.
- Clock out for lunch.
- Clock in after lunch.
- Clock out for afternoon break.
- Clock in after afternoon break.
- Clock out at the end of the day.
This means there is a potential for each employee to clock in or out by 5 extra minutes, eight times each day, resulting in a potential advantage of 40 minutes each day. If they stretch that to 10 minutes, it can be 80 minutes of unplanned overtime, for a total of nearly 1.5 hours each day.
Granted, most workers aren’t going to take advantage of both ends of a break, potentially reducing their break time to only a few minutes. However, savvy employees will absolutely take advantage of the opportunity to get a few extra minutes.
The impact can be more than just unplanned overtime; there are also overtime implications for time-and-a-half calculations, as well as FLSA, ACA, and other regulatory restrictions that could have you paying even more, or possibly losing floor time at the expense of running over budget.
For my business, I multiplied 11 hourly employees by a conservative potential of 40 minutes per day (11 multiplied by 8 opportunities), and then divided by 60 (the number of minutes in an hour) to get a whopping 7.3 hours each day:
(11 employees x (8 punch in/out opportunities of 5 minutes)) / 60 minutes = 7.3 hours each day.
7.3 hours each day works out to 36.5 hours each week or the rough equivalent of (another) full-time employee.
If you’re keeping track, that’s two full-time employees I could have hired if I had a better way to manage time theft, buddy punching, and early and late punch ins and punch outs. And those are conservative estimates for my small team of eight.
If you are a company with 10, 20, or 50 employees, we’re talking significant unplanned overtime. The American Payroll Associate estimates this could account for as much as 30 percent of your bottom line. Money walking out the door means you’ll continue your struggle, as we have. Talk about an eye-opener.
An Easy Fix: A Biometric Time Clock And Automated Timekeeping System
Over the course of the ensuing question and answer period, I researched how other small businesses are solving the problem of employee time theft.
The easy answer seems to be “biometric employee time clocks for small business.”
I was always under the impression that biometrics were for the big guys, and have associated the thumbprint reading technology with big offices, big budgets, and big brother.
To my pleasant surprise, a few vendors in the audience had plenty of answers to dispel our collective concern about budgets and implementation.
Biometric Clocks: A Primer For Small Business Owners
When it comes to solving the problems of things like buddy punching and skimming a few minutes here and there, biometric employee time clocks have a lot of answers that make solving these problems nearly as easy as plugging in a toaster.
There are several varieties of biometric clocks. Most require an employee to confirm their identity with a fingerprint or handprint.
Some of the more futuristic versions perform a quick iris scan, and the leading-edge tech is doing full facial recognition, very similar to what Apple’s popular iPhone X can do. Full facial recognition is a little farther out for our small business budgets, but it’s certainly on the way.
Fingerprint technology is in wide usage, is easy to install and set up, and solves a lot of our problems without the high-tech intimidation I originally associated with such a James Bondian device.
Another great advantage is that several companies providing the biometric clock in solutions have designed their products to integrate with popular time and attendance solutions offered by leading providers such as SwipeClock.
Keeping Time: How Biometrics Will Help Our Small Business
We’re combining SwipeClock’s TimeWorksTouch with the TimeWorksPlus timekeeping system. This will make buddy punching a realistic impossibility.
Employees will be required to confirm their identity with their own fingerprint, and won’t be able to punch in for a late buddy.
This single solution alone promises to save our company the cost of one whole full-time employee.
We’ll make up the cost of purchasing and installing the new hardware in less than two months, and employees will now be personally accountable for their time. Happily, this will eliminate the ethical dilemma of how to respond when your buddy asks you to punch in for them; it literally can’t happen, so our employees are happy it won’t even come up.
Early and late punch-ins are also reduced to our own tolerances based on the software we have selected. SwipeClock allows us to set parameters on how early, or late, an employee can punch in.
Since we have eliminated buddy punching, employees are now responsible for regulating their own time in and out and are not allowed by the system to punch in any earlier than their prescribed start time.
Likewise, late punch outs are flagged, warnings are provided, and we feel like we have a better handle on unplanned overtime.
We’ve even discovered that implementing biometric time clocks will help with missed punches. Because we are tracking specific individual employees with biometrics, our SwipeClock system can filter punch in and punch out options based on conditional logic.
For instance, if an employee has punched out for a break, the system knows their only option is to punch in from the break. This helps reduce punching errors and helps assure our employees that they are getting their time recorded correctly.
Mobile Too: Biometrics Help Assure That The Right People Are In The Right Place
Occasionally we have employees working at remote locations. Retail stores and restaurants don’t have this problem as much as construction companies, hotels, and other location-based hospitality businesses such as event management and planning.
It’s particularly nice to have mobile biometric time and attendance solutions that can help us manage employees remotely without having to question time and attendance records.
Biometric time clocking certainly goes a long way toward establishing and maintaining employee trust and allows our employees the confidence to know they won’t have to follow up or scrutinize record keeping to make sure they are being paid fairly for their work.
Security Concerns: Assuring Our Employees That They Are Safe
One of the concerns that caught my eye was when a manager in the hospitality industry, a hotel HR manager, expressed concern that personal employee information such as fingerprints would be discoverable on remote devices.
A knowledgeable vendor in the room confirmed what several others mentioned; biometric data is kept in an unrecognizable algorithm, so there aren’t actually any pictures of employee fingerprints, iris, or facial data that can be copied and used.
The information is locked in the system and stored in a code that only the system can recognize. If the data were to somehow find its way outside of the system, it would be completely unrecognizable, and inherently unusable.
Our employees will be relieved to know that we will have added an additional step to secure their personal data while opening up more ways for them to feel assured that their personal time and attendance records are more accurate, personal, and verifiable.
Final caveat: since new state and local labor laws are popping up all the time, all small business owners like myself should definitely review the regulations that affect their specific location before purchasing any type of employee biometric clock system.
I have recently learned, for instance, that some states do not allow the capture and use of fingerprints. Check with your local government to make sure the biometric technology you choose is approved for use in your area.
How a Biometric Time Clock Will Increase Your Retail Profitability In 2019
Employee time theft is one of the most common problems for retail businesses. This section reinforces the previous section with a focus on retail businesses.
Time Theft is an Avoidable Expense
When it comes to retail employee fraud, inventory shrinkage seems to get the most attention. But for many retail businesses, time theft is even more widespread and costly. Simply put, time theft occurs when an employee is paid for time he or she didn’t actually work.
Accidentally on Purpose?
Time card falsification can be inadvertent; Ryan accidentally enters 9:00 as his clock-in time when he actually starts working at 9:03. And time theft can be infuriatingly flagrant; Ashley punches in for Jessica who doesn’t show up until three hours into the shift. (Fire them both!) Of course, the Ashley/Jessica buddy punching scheme obviously inflates labor costs significantly, but a careless 3-5 minute padding committed by a larger percentage of employees may be even costlier, though perhaps more forgivable.
Manual Timekeeping Systems Are Fraught With Error
What if your timekeeping system requires employees to recall previous shift punch times after the fact and manually enter them on a time card? In the end-of-pay-period scramble to submit time cards, do you really think your employees err in your favor when guesstimating shift start and end times? It’s hard for most busy people to recall what they ate for lunch yesterday let alone when they clocked out last Thursday. An outdated employee time and attendance system that requires employees to fill out either a physical or digital time card is an unnecessary time-waster and a relic of workplaces of the last century. (Come to think of it, last millennium.)
Do All The Dishonest Employees Work For You?
Wage theft is so prevalent in SMBs that business consultants routinely recommend that small employers take it into account when planning labor budgets.
According to an anonymous study conducted by corporate investigative firm Kessler International: of 500 employees working in common retail and service industries, over 30% admitted to misrepresenting time worked at their place of employment.
It’s not hard to imagine that some who are guilty don’t admit it even in an anonymous survey. So if you fire both Ashley and Jessica, the two employees you replace them with may be just as likely to buddy punch for each other once they work a few shifts together and become friends. Unfortunately, hiring only employees who are honest 100% of the time is impossible in an imperfect world.
What are the ways employees willfully commit time fraud?
- Intentionally clocking in early
- Intentionally clocking out late
- Not clocking out for unpaid breaks and meals
- Buddy punching
When you are paying workers for time they didn’t actually work, you are unnecessarily inflating what is already your biggest expense—your cost of labor. In addition, labor costs can be unnecessarily high due to human error.
How are labor costs inflated non-intentionally?
- Inability to accurately recall previous shift times after the fact
- Miscalculations when supervisors reconcile time cards
- Human error when HR managers calculate accruals
- Human error in manually entering employee hours in the payroll system
Do The Math And Cry
So what’s the financial damage if a typical percentage of your retail employees are padding their time cards or buddy punching? Estimates of the total amount of time employers routinely overpay workers range from 2-4 hours a week per employee. For our example, let’s assume that you are paying an extra three hours a week per employee. If the average hourly wage in your company is $12, and you have 30 employees, the grand total is $56,160 dollars in overpayment each year.
If you have employees who leave the business on the clock to travel to another location, make deliveries, pick up supplies, or run miscellaneous errands, you are even more vulnerable to time theft.
Here’s Your Company Card—Have Fun!
Making it easy for your employees to falsify time cards makes about as much sense as leaving your stores unlocked at night or giving each employee a company credit card.
The Problems With Swipe Cards
Swipe cards were supposed to solve the problem of employee time theft but proved to be woefully inadequate. They get lost. They get bent. They get dirty. They can be lent and borrowed. When an employee complains that the machine won’t take his swipe, you are back to the shaky ground of trusting him to honestly report his hours.
Increase Profits, Not Overhead
Retail businesses have many different challenges, but shrinking profit margins seems to concern most every owner. One of the golden questions often asked is “How can I increase my profits without raising my overhead?” By adopting SwipeClock biometric employee time clocks at all of your retail locations, you can reduce the big chunk of your overhead that is your payroll expense—and increase your profits without even touching any of your other fixed or variable costs.
Worried That Your Employees Can Protest Due to Privacy Laws?
First off, most people have already accepted the fact that Google knows when you brushed your teeth this morning and has probably already asked you to leave a review of your toothpaste. That said, note that many states have restricted the type of biometric information that an employer can require. Before purchasing a biometric system, make sure you know the laws that affect you. See the section on state laws ahead.
Employers who train their employees when introducing a biometric time clock at their workplace will explain the mechanisms that protect them from the misuse of their data. We can help you with an effective implementation plan that will include employee education about the safeguards in place to protect their information. At SwipeClock, we have discovered that most retail employers who have adopted biometric time clocks in the past few years received less employee resistance than expected and were able to adequately address their workers’ concerns.
Hopefully, we have successfully made the case that biometric employee time clocks lower labor costs for retail SMBs. We will now describe some additional benefits that biometric employee time and attendance systems will bring to your organization. Keep in mind that this is not an exhaustive list.
Biometric Time And Attendance Systems Increase Efficiency
Many small businesses have implemented smartly designed technology to improve efficiency in areas of operation such as merchant transactions, inventory management, and CRM systems. Strangely enough, however, many HR departments are using outdated systems for employee time and attendance tracking. Let’s look at a typical journey for one time card in such a system. Each employee enters his or her shift start, shift end, and break times for each shift of the pay period onto his or her time card. When time cards are due at the end of the pay period, a manager views and approves each employee’s time card. If there are errors, the manager has to track down the information to make corrections.
When the time card is submitted to HR, an HR team member manually enters the data into the payroll system. At least three different people touch each (physical or online) time card in order for the payroll system to generate a paycheck for each employee. Imagine if each customer sale was as cumbersome as this. And each step of this manual journey provides an opportunity for error.
SwipeClock biometric employee time clocks automatically capture employee punches to the minute. The data is then automatically synced with TimeWorksPlus or your employee timekeeping and payroll system. Human error is removed from the equation and your HR team suddenly has 20 more hours a week. And your supervisors will not miss all that time card detective work.
Retail employers are subject to minimum wage, overtime, family leave, predictive scheduling, and extra hours for part-time employees. Accurately tracking hours, schedules, PTO, and overtime is priority one when complying with the various labor laws—FLSA, ACA, FMLA—and any local or state-level laws that apply.
For some retail employers who adopted a biometric time and attendance system, the compliance benefits were the greatest motivator, even more persuasive than the reduction in labor expenses that resulted from the implementation. Accurate employee schedule information that can be readily accessed and validated is your protection against a labor violation resulting from either an audit or employee dispute.
Biometric Time Clocks Increase Employee Accountability And Empowerment
Retail employees who are required to use a biometric time clock know that they will get paid for every minute worked. That type of assurance is valuable for those employees you want to keep; the ones who understand that accountability works both ways.
A biometric time clock allows you to recognize your prompt employees who arrive on time, punch out for unpaid breaks and meals, and clock out when authorized. Giving credit where credit is due improves employee morale and lowers turnover.
Any employer who has been in business for a while knows how employee attrition significantly increases labor expenses. In addition, biometric employee time clocks capture actual time worked for precise overtime and PTO calculations, both of which can be an administrative headache and compliance vulnerability.
In summary, small retail employers have much to gain financially from implementing a biometric time and attendance system, but the improvements to workflow, compliance security, employee accountability, and a reduction in time spent on non-billable activities are just as compelling.
Debunking 4 Myths About Biometric Time Clocks
Myth 1: Enrollment in a Biometric Clock is Difficult And Time Consuming
Often it is assumed that biometric clocks must take longer to enroll employees than regular punch time clocks.
However, that is not the case.
Biometric enrollment is a one-time activity.
It can be handled remotely and employees are enrolled the first time they punch into a biometric clock.
Biometric clocks don’t take any longer to enroll employees than regular employee time clocks.
Myth 2: Biometric Clocks Store Employee Fingerprints
Most biometric clocks do not store an employee’s fingerprint on file.
Biometric finger clocks do scan an employees finger surface.
The software uses a hash or a pattern to identify specific features.
After the initial scan, the software uses a hash to identify the finger’s identifying features.
It then deletes the employees fingerprint.
No fingerprints are kept on file.
The pattern, or hash, used to identify each employee cannot be used to recreate a fingerprint.
Myth 3: Biometric Clocks Don’t Work in Wet or Dirty Locations
This may have been true fifteen years ago, but biometric technology has improved significantly.
The latest hand geometry scanners can identify employees with dirty hands as they do not look at surface features for identification.
They also help with the identification of older employees, whose skin may be more elastic and harder to identify with finger scans.
Myth 4: Employee Fingerprints Can be Shared With Law Enforcement or Other Government Agencies
As biometric time clock systems do not store employee fingerprints, they also cannot be used to share employee fingerprints with other entities.
Furthermore, biometric employee time clocks are closed systems.
Employers should protect employee information and only allow the information in a biometric time clock can only be obtained through a warrant.
It is important that employers who use biometric time clocks should be transparent with employees around who has access within and without the organization to employee biometric data.
While employees should be concerned about keeping their private information safe, the risk is not with biometric clocks, but with credit and other personal information that is shared too freely.
Biometric Employee Time Clocks Do:
- Individually identify employee who are registered by the employer
- Track employee shifts to the minute
- Eliminate Buddy Punching
- Keep exact records of time and attendance
- Calculate employee time
Biometric Employee Time Clocks Don’t:
- Store an employee’s fingerprint
- Share fingerprint information with the government or police
- Link to other platforms such as social media for employee monitoring
- Identify individuals not registered in the timekeeping system
Biometric Clocks Synced to Timekeeping Software Empowers Entrepreneurs
In this section, we focus on the benefits to entrepreneurs.
Biometric clocks reduce the time it takes for payroll staff to process payroll. This can free up Human Resources employees to work on employee development, better training, and other activities.
Timekeeping software provides an employee self service portal (ESS), which allows employees to access their information. It reduces the cost and use of paper and the effect of the timekeeping on the environment.
Biometric timekeeping helps to change poor employee behavior by accurately tracking bad habits. It provides means for employers to be more transparent with employees and to stay in compliance with labor laws.
Lastly, biometric clocks eliminate time theft, both unintentional and intentional theft such as buddy punching.
Biometric time and attendance systems save employers and are affordable for small businesses.
To recap: here are 9 benefits of biometric clocks synced to timekeeping software:
- Automates payroll
- Reduces human error
- Decreases the time payroll employees spend processing payroll
- Provides an employee self service portal
- Helps employers to go green
- Changes employee behavior
- Increases employer transparency
- Simplifies compliance
- Eliminates time theft
Biometric Time Clocks Reduce The Time it Takes to Process Payroll
The average payroll clerk spends 7 minutes per timecard to process payroll. This includes verifying information, inputting it into the system, and computing payroll totals.
It also includes computing shift differentials and department totals. In addition, lost and damaged cards take time to reconstruct and track down.
This is valuable time that your payroll employees could be spending on other activities. In addition, biometric timekeeping will track paid time off, sick leave, and other employee time.
Biometric Timekeeping Simplifies Compliance With Employment Laws
In Oregon one business owner paid $30,000 for a $20 employment law error.
Compliance can be expensive!
On the federal level, laws such as the Affordable Care Act, the Family Medical Leave Act, and other labor laws require employers to keep accurate records.
The Fair Labor Standards Act (FLSA) requires that employers maintain correct records around employee pay and hours worked.
The Department of Labor assumes employer guilt if the employer fails to provide adequate records to show compliance with federal employment laws.
In 2017, the DOL recovered over 1.6 million dollars in back wages from employers who were unable to show compliance with the law.
Manual time cards make it nearly impossible for employers to maintain the required records to show compliance.
In addition to federal laws, an increasing number of states and cities are passing additional employment laws.
Many of these laws require additional paid sick leave or paid family leave.
Employers must aware paid leave to employees based on hours worked.
Additionally, employers must track and report accrual, eligibility to use, and usage of these paid hours.
In addition, secure scheduling laws create expensive penalty pay when schedules are changed, updated or shifts are cancelled.
With SwipeClock’s biometric clocks, the rules for compliance can be programmed in so that managers are notified when changes to employees schedules will require penalty pay.
Biometric clocks accurately track these working hours and employers can report accrual and usage to employees through the employee portal.
Employers Should be Aware of State Laws Around Biometrics
Currently, there are four states that have biometric laws; Illinois, New York, Texas, and Washington.
The Illinois Biometric Privacy Act
The Illinois Biometric Privacy Act or BIPA, was the cause of dozens of lawsuits in 2017.
BIPA requires certain notifications and consent around biometric use.
It allows for private right of actions, aka lawsuits, to force compliance with the law.
As a result, employers small and large are being sued by current and former employees for non-compliance.
It’s important for employers to understand that BIPA doesn’t prohibit the use or collection of biometric data.
However, it does require individuals be notified regarding the use of biometric data.
Employers can maintain compliance with BIPA by informing employees that biometric data is going to be collected.
They should explain the nature of the biometric data and how it works.
The purpose should also be explained so employees understand that biometric employee time clocks will only use biometric identifiers to identify an employee for time worked and not for other purposes.
Employers should notify employees regarding the length of time their data will be used and stored.
Usually this will be only for the length of the employment.
Biometric data should be deleted when the employee is terminated and deleted from the timekeeping system.
In Illinois, biometric data cannot be sold, leased or used for profit in any manner.
It cannot be shared without the employees consent unless its required by law or a search warrant requires it.
By sharing this information and obtaining employee consent, employers comply with Illinois BIPA law and can continue to use biometric employee time clocks.
New York Labor Laws Governs Employee Fingerprints
New York Labor Law prohibits an employer from requiring an employees fingerprint unless it is required by law.
As a result, employers who wish to implement biometric employee time clocks can risk penalties if a fingerprint time clock is used.
There are two main ways that employers can implement a biometric time clock in New York and be compliant with the law.
First, employers can utilize a fingerprint biometric clock, but it must be on a voluntary basis.
If 100% of the employees “volunteer” to use the clock- NY Labor Department doesn’t consider it to be voluntary.
Employment cannot require the use of the biometric clock and employees cannot be rewarded for using it or punished for choosing not to use it.
Employees involved in time theft are most likely to choose not to use a biometric time clock.
Second, employers can require the use of a biometric clock that does not scan the surface of the fingers or hands.
This means that a hand geometry time clock can be enforced by New York employers.
A hand geometry clock measures the fingers and width of the hand, but does not scan any surface information.
Texas Biometric Privacy Law: How Employers Can Stay Compliant
How does Texas law apply to employers?
In Texas, biometric information cannot be sold, leased, shared, or disclosed for commercial purposes unless disclosure is made to the individual.
Employers who use biometric information must inform employees of the use and nature of the biometric data.
This notice must include when and how the data will be shared with other.
It must also include a retention and destruction period.
Additionally, employers must protect biometric data with at least the same level of security that other sensitive information is kept and protected.
Texas’s law governs the actual biometric identifiers, but does not cover systems that use other indicators from which the actual biometric identifier cannot be recreated.
Time Clocks that store a hash of the employees fingerprint or a mathematical sequence do not fall under Texas law because the actual biometric data is not being stored.
In this case the actual fingerprint is not being stored. Only the hash of the employees fingerprint is kept and a fingerprint cannot be recreated from that hash.
Can Washington Employers Use Biometric Timekeeping?
Biometric data in Washington is protected against use in commercial purposes.
What does that mean for employers?
Washington defines commercial purposes as using them for the purpose of selling or marketing goods and services.
According to Littler, a attorney website, that means that employer time clocks do not apply under the law.
In addition, the law does not include hand geometry as part of a defined biometric identifier.
As a result, employers in Washington can use biometric time clocks and still be compliant with Washington law, but they can never sell or profit from that information.
Employers using hand geometry clocks also fall outside the law.
How to Implement a Biometric Time Clock And Timekeeping Software
Here is a step-by-step guide to implementation.
1. Get Feedback From All Departments
Talk to your IT Department, supervisors, managers, and payroll department.
These folks are on the ground and know what they need to be more effective.
They can also help to champion the new system and explain its benefits to employees.
2. Educate Employees About Reducing Labor Costs
Many employees don’t realize how the cost of labor affects business decisions.
Explain to the employees some of the options and benefits that they will see from automated timekeeping.
Share with them how unearned wages subtract from other benefit programs or increase layoffs during difficult economic times.
Help them to understand how managing correct labor costs affects the employers ability to stay profitable or to grow.
3. Inform Employees About Biometric Clocks And Answer Concerns
Some employees have heard rumors or myths about how biometric clocks make it easy for “big brother” to monitor employees.
Dispel these concerns by explaining what information is captures, how the software identifies employees, and where information is stored.
Educate employees about the privacy of their information and that it will not be sold or shared with other entities.
4. Document Your Policy About How Biometric Information is Captured And Stored
A maintained, written policy, can reassure employees. Include your policy in your employee handbook.
Employees can read and review how their employer uses biometric data.
They can read the security policy and who in the company can access the information.
This can provide an assurance that the use of their biometric information won’t change in the future.
It also provides them a way to go back and review the policy if additional questions arise.
5. Test, Train, And Document
Make sure that everyone is trained on the new system and understands how to use it.
Consider running the new system parallel to the old system for a payroll cycle or two.
This gives everyone a chance to get used to the new system and comfortable with it.
Make sure to write down the steps for the administrative actions.
This helps as you get new employees and will help if administrators of the system are on vacation or leave the company.
6. Review And Revise as Needed
After you’ve been using the biometric time clock system for several months, and on an annual basis, check for areas of bottle-necking.
You may need to add more terminals or to provide additional training to employees.
Make sure that employees understand how to use the employee portal.
How An Employee Time Clock App Solves 6 Obstacles To Business Growth
Businesses who implement a time clock pair the hardware with timekeeping software. The latest iteration of time and attendance software is the time clock app.
Timekeeping apps are popular with companies of all sizes. Using a mobile time clock app comes naturally to any employee with a smartphone. They are affordable and require little training.
On the fence about whether to get an employee time clock app? You’re not alone. Despite irrefutable benefits, many small businesses don’t use one.
What’s stopping you?
Perhaps you think you don’t have enough employees. Maybe you are afraid your team will be insulted if you make them use one.
Are you so busy you can’t think about one more thing? Worried that adopting a new system will be more hassle than it’s worth?
Let’s discuss how an affordable time clock app will solve rather than create problems.
This section describes an app that does timekeeping, scheduling and Paid Time Off (PTO).
The Fastest and Cheapest Way to Improve Efficiency
Will it really help you run your business more efficiently? When it comes to ROI, no business management app comes close.
Improved labor management is a big deal. Labor is your biggest expense.
Let’s look at the problems an employee time clock app will solve.
1. We Have Too Much Vacation Request Confusion
Confusion surrounding time off is a common problem. Without a formal system, you are at risk for double booking. Or forgetting someone’s request.
A time clock app with PTO tracking is the answer.
Your team members request time off in the app. You can see all the requested dates together, side by side.
It puts everyone on a level playing field if you have a first-come-first-served time off policy. It removes any actual or perceived inequity.
You’ll never have to remember which requests you have approved. It shows the dates the requests were submitted. Transparency solves a lot of problems.
2. I Use Guesswork in Client Billing
A time clock app can track and allocate your employees’ time by project, team, client, etc. If you’re in field service or construction, you can view billable time at a glance. Bill clients based on accurate employee hours per project or job site.
3. Preparing Payroll Takes Too Long
Whether you pay your employees weekly, bi-weekly, or monthly, payroll is relentless. It seems to roll around quicker each pay period.
If you dread it, it’s probably because you track it with spreadsheets.
Tracking and entering employee time in spreadsheets doesn’t make sense anymore. Using a simple employee time clock app is a game changer.
4. My Operating Expenses Keep Rising
Most operating expenses are fixed. Leasing office space, for instance. Administrative costs, however, are variable.
Inefficiency costs you big time. When it comes to employee timekeeping and payroll, a time clock app can improve efficiency dramatically. Improved efficiency saves money in several ways.
Let’s break it down.
What’s your time worth? If you don’t handle your payroll, what’s your payroll manager’s time worth?
There are dozens of employee time clock apps that cost less than $8/employee per month. Even at $8 per user—which is on the high end for basic apps—a business with 10 employees would spend $80 per month.
How many hours do you (or your payroll manager) spend each month preparing payroll? This includes gathering timesheets, correcting errors like missed punches, and calculating PTO. Plus figuring withholdings and submitting payroll taxes.
According to the Bureau of Labor Statistics (BLS), payroll and timekeeping clerks make a median hourly wage of $21 (2017 data).
Regardless of who does what, let’s suppose, in total, your team spends 15 hours a month on payroll. Let’s value this time at $21/hr (the BLS’ median wage for a payroll manager). That totals $315 in labor. $235 more than an app that costs $80 a month!
The savings in admin time alone is a compelling argument for an employee timekeeping app.
And what about the opportunity cost? If you could reclaim those hours, what could you do? Find new clients? Research your competitors? Rethink your business model? Clean your office? Go to the gym?
5. Late Time Cards Are Driving Me Crazy
Time to ditch paper time cards. You don’t need the hassle. Employees forget to fill them out. You have to track them down. They are vulnerable to math errors.
A web-based time clock app replaces time cards. You can see each employee’s online time card in the app.
Approve them with a click. Import them into payroll. Make it home for dinner.
6. I Worry That I’m Overpaying For Labor
There is at least a 2%-3% error rate in manual data entry and calculation. When an app does the calculating, you protect your payroll from human error. It also prevents time card padding. Do you have a problem with employees adding extra minutes here and there?
Look for an employee time clock app with schedule lockout. Once you create a shift schedule, the web clock won’t allow employees to punch in early or punch out late.
Automated employee time tracking reduces unnecessary payroll bloat due to errors or time theft.
How Do I Start Tracking Employee Time Right Now?
TimeWorksExpress is a simple and affordable time clock app. It tracks employee time, scheduling and time-off management.
- Go to TimeWorksExpress Free Trial
- Enter your name and email
- Receive an email invitation
- Click on the link in the email
- Create a password
That’s it! You have a TimeWorksExpress account. You are ready to start tracking employee time. Today.
Enter your employees. TimeWorksExpress will send them an email invite. Create a schedule in less than two minutes. Your employees can punch in for their next shift.
TimeWorksExpress is your employee time clock app for:
- Tracking your employees’ time and attendance
- Approving time cards and preparing them for payroll
- Creating and posting your employees’ weekly schedules
- Tracking PTO and allowing employees to check their balances
- Managing employee time off requests
- Controlling labor costs with clock lockout tools
Where Do I Buy Time Clocks For Small Business?
SwipeClock is one of the few workforce management vendors that offers time clocks integrated with timekeeping software. We have a variety of time clocks including TimeWorksTuff discussed previously.
TimeWorksTouch, our state-of-the-industry biometric clock eliminates employee time theft. And it provides a host of additional benefits.
Our clients love the ’employee-aware’ AI feature. When used with TimeWorksPlus, you have time tracking superpowers unheard of when old-fashioned punch card clocks were introduced.
The system uses the employee’s current state to prevent punch mistakes. It also enforces schedules, tracks meals/breaks, tracks job codes, and provides overtime alerts. When combined with TimeSimplicity, our scheduling solution, you have advanced employee shift scheduling linked to employee time tracking.
WorkforceHUB, our all-in-one Human Resources solution, syncs with TimeWorksTouch. WorkforceHUB unifies all of your HR functions. Manage your workforce with proven solutions from SwipeClock.
By Liz Strikwerda, Cary Snowden, and Annemaria Duran
Last updated August 12, 2019