Tracking time for your hourly employees is a foregone conclusion for most business owners (or should be). If you’re paying an employee by the hour, that employee should be accountable and paid accurately for the hours he or she is logging.
Contrary to cultural norms, the decision to classify an employee as salaried versus hourly isn’t necessarily driven by tenure or employee accountability. Many positions are protected by the FLSA when it comes to a determination of exempt versus nonexempt status. Meaning, the classification is often out of an employer’s hands-on pain of potential lawsuits and hefty fines.
Overtime pay is typically the main driving factor for these determinations. For most positions, the FLSA mandates that any employee earning less than $11.38 per hour ($23,600 annually) can’t be classified as exempt and must be made hourly. There are also special rules for salespeople, developers, and technical positions. For tech jobs, it’s $27.63 per hour or an annual salary of $57,470.
Other positions are mandated by the FLSA as salaried based on skill sets and specialized knowledge: Jobs that require discretion and independent judgment in an office setting; include duties that involve supervision of at least two employees; include the ability to hire, fire or promote other employees; or require specialized education and expertise (e.g., lawyers, teachers, doctors) must be salaried.
Even among positions not within the scope of the FLSA’s mandate, the decision to classify an employee as exempt versus nonexempt isn’t always motivated by the employee’s work ethic. It might be primarily driven by a desire to appeal to the employee as part of an original job offer, accommodate an employee whose work schedule shifts dramatically from week to week, or as part of an unwritten (but real) office code.
Since the decision to make an employee salaried rests on many different factors (and very few involving the employee’s personal qualities) it makes sense to institute safeguards for employee accountability company-wide.
And even when the decision to classify an employee as salaried does make sense based on evidence that the employee is a self-starter, honest, accountable, and capable of working to get the job done rather than watching the clock to jet out the door as soon as the shift is over, accountability and transparency can still yield huge dividends for business owners.
How It Can Be Done
Benefits of Tracking Time for Salaried Employees
While not always true, salaried employees tend to earn more money per hour than their hourly counterparts--which is all the more reason to have insight into where those dollars are going. If your managing editor, salaried at $60,000 annually, is consistently taking hour-long lunch breaks while keeping a 40-hour a week schedule, that translates to $28.85 slipping out the door on a daily basis, or $6,924 lost annually. And that’s just one employee.
Adding an extra measure of accountability through a time tracking system--particularly when that system is paired with GPS tracking--is typically enough to dissuade most employees from fudging on their hours or spending company hours engaging in personal activities. When your off-site boss can easily glance at the record of your hours and see that you spent an hour at Chipotle five days that week, it’s a lot harder to mentally justify the excursion.
Preparation for Change
Many business owners found themselves in a panic in 2015 when proposed changes to federal overtime regulations were announced that would increase the threshold for exempt employees from $23,600 to somewhere north of $50,000--a huge leap. Without an accurate idea of how many hours workers who fell in the sweet spot between $23,660 and $50,000 were actually logging each week, the panic was understandable. At time-and-a-half, overtime is one of the heftiest bottom-line business expenses, and effectively doubling the pool of employees that would qualify for overtime could be disastrous.
By tracking salaried employees’ time, employers aren’t left in the dark when it comes to knowing who typically works more than 40 hours per week (and whether that’s 42 hours or 70) and what actions need to be taken to avoid a huge increase in costs, whether that’s hiring a lower-level position to relieve some of the more rote tasks those higher-paid positions have on their plates, to adding a new app to automate processes or outsourcing some tasks.
Accurate Insight and Resource Allocation
Do you have an accurate picture of which projects or clients are getting the lion’s share of your employees’ hours? Not likely, unless you’re tracking in real time to see where you’re getting bogged down, where you’re getting the most bang for your buck, and where you might need to allocate more resources.
Employee feedback and managerial feedback is one piece of the pie, but it’s notoriously difficult to get an accurate picture of where hours are actually going based on this feedback alone. For instance, a task that an employee estimates took him or her “15 minutes” might not include the 2-hour-long brainstorm that involved 10 other employees, the development work that went into creating the final result on the website, or the time the employee spent answering emails related to the project.
New Inroads to Flexibility
Does an employee need a day off at the end of the week after pulling four all-nighters? The proof is now in the pudding, for employee and employer alike. Allowing for flexible schedules, work from home situations or rewards in terms of well-deserved time off or an extra day of vacation are now completely justifiable.
Employers know all too well what it’s like to hear how tired employees are at the end of a work week--but it’s often impossible to tell whether that’s due to a typical workweek and external factors, or a truly Sisyphean push to complete a project or task. With a time tracking system, it’s far easier to accommodate requests for flexibility and perks like well-deserved time off.
While salaried employees may initially bristle at the idea of being asked to track their time--or view the move as a “big brother” initiative, the benefits to employee and employer alike in terms of additional flexibility, visibility, and accountability typically outweigh this initial annoyance and help keep you and your employees (salaried and hourly alike) on the same page.
Jennifer Hetherington is a marketing expert with 15 years experience achieving innovative and data-driven marketing initiatives in eCommerce, B2C, and B2B. With a master's in social psychology, Jennifer has a heart for people and a track record of developing and leading high-performance marketing teams. Outside the office, Jennifer enjoys hiking Idaho’s trails, especially the Sawtooths. You'll find her hitting the weights at her home gym and running the occasional 5K race, usually in support of a great cause like her charity of choice, the Ronald McDonald House.