For people managers, there are many similarities between managing hourly employees and salaried employees. You want to support individual growth, create good team morale, and help people hit their goals, to name a few. Everyone plays an important role in accomplishing team goals, regardless of how they are paid.
Make timekeeping effortless for you and your team with the time tracking tool anyone can use.
That said, navigating the do's and don'ts of supervising hourly employees does involve some unique challenges — especially if some or all of your team members work remotely. Discover answers to some common concerns for small businesses, and find out what you need to know to confidently and effectively manage your hourly employees and help them track their time.
Determining Which Employees Should Be Hourly
First of all, let's go over some things to consider when determining which of your employees, either remote or in-office, should be hourly or salaried. A variety of factors should be considered, but one major consideration is your company’s obligations under the federal Fair Labor Standards Act (FLSA) and state wage and hour laws. These laws determine which employees are required to be paid minimum wage and overtime, and require employers to keep time records for such employees to ensure that they are properly paid.
If an employee’s job duties specifically qualify as exempt under these laws, and certain other requirements are met (including a minimum salary threshold), then minimum wage and overtime requirements do not apply if you choose to pay the employee on a salary basis. You may still choose to pay the employee by the hour for business reasons, but you may then be required to pay minimum wage and overtime, depending on the exemption you're claiming.
Some common exempt positions for small businesses and startups under the FLSA include:
Managers who regularly supervise two or more full-time equivalent employees and oversee a department or subdivision of the organization
Office or other white collar employees whose primary duty is related to the management or general business operations of the company and includes discretion and independent judgment with regards to matters of significance
Professionals working in a field that requires an extensive course specialized intellectual instruction in order to practice their occupation, such as lawyers and accountants
Most jobs outside of these categories are non-exempt and must be paid minimum wage and overtime (though there are other exceptions). Employers typically pay non-exempt employees by the hour due to these requirements, although it is generally permitted to pay non-exempt employees a salary — so long as the minimum wage and overtime obligations are met and detailed time records are maintained. Download our free ebook, Exempt or Non-Exempt? Some Common FLSA Exemptions Explained, for more on this aspect of FLSA compliance.
Once you sort out your exempt and non-exempt team members, it’s important to learn how to most effectively manage your employees who work in hourly roles.
The Do's: Time Tracking Best Practices for Hourly Employees
Time tracking is a key task that managers of hourly workers need to stay on top of. As a manager, you'll want to establish clear policies and procedures, and help your employees develop good timekeeping habits. Here are a few best practices to keep in mind.
Clearly Communicate the Timekeeping Policy
Things will be much easier on you and your hourly employees if you provide them with easy-to-follow instructions regarding keeping track of their hours. Provide training on how to record their work time and when to submit their timesheets. Make sure that all hourly employees know that properly recording and submitting their hours is an essential job function.
Clarify the Overtime Approval Procedure
Let employees know what they should do if they find themselves facing a possible need to work overtime. Many companies don’t allow hourly employees to work overtime that hasn't been pre-approved, so be sure they know how to request approval. Make it easy for them to find out exactly who is authorized to approve overtime and how to apply. And be sure to pay for all hours worked, even if they were not properly approved — it’s against the law to refuse to pay for time worked or coerce an employee to underreport their time.
Simplify the Time Tracking Process for Employees
Things can get really confusing if there are different timekeeping systems for on-site employees versus those who work remotely or travel for work. Reduce stress with a timekeeping solution like Justworks Hours that's simple for your employees to use, no matter when or where they work. Employees can clock in and clock out via computer, tablet, mobile phone, or Slack so it’s ideal for hybrid teams.
Establish a Clear Break Policy
Many states and localities have laws requiring meal and rest breaks for hourly workers. Get up to speed on the meal and rest break laws where your employees work, and educate your team about the importance of taking those breaks. In addition, make sure your team members are clocking out for all their breaks — provided that they're fully relieved from all of their duties — so their time cards are accurate! If an employee works through their break, this time must be recorded as working time and paid accordingly. A time tracking solution with a mobile app, like Justworks Hours, helps make this really simple.
Schedule Time to Review Time Records
Avoid last minute payroll preparation stress by setting aside time in your schedule to review employee time records far enough in advance of the deadline to follow up as needed. This way, you’ll be able to make sure that everyone’s time records have been submitted and to review them to see if they appear to be correct while there is still time to make adjustments.
Remember that You're Responsible for Accuracy
Helping your employees develop good habits about tracking their time is great, but let's face it, people make mistakes sometimes. What if someone makes an error on their time card, or forgets to submit their timesheet? As an employer, it's ultimately your responsibility to track your team's hours and to pay them on time.
You'll need to take steps to reasonably determine what days and hours the employee worked so that your records are correct and your employees get paid. A few ways to do this are to refer to the employee’s scheduled work time, contact their manager for more information on the employee’s work schedule, or reach out to the employee directly so they can tell you what hours they worked. Do not reduce your employee’s hours unless they confirm (preferably in writing) that there was an error.
The Don'ts of Hourly Employee Management
When managing hourly employees, there are also some pitfalls you'll want to avoid. Here are a few tips to consider.
Don't Use Language that Devalues Hourly Jobs
As a manager, you have a big impact on the culture of your team. It’s important to consistently reinforce the value of all jobs through your language choices. For example, don’t refer to some positions as “hourly” and others as “professional,” as if an hourly job isn’t actually a professional role (it is!). Such language can negatively impact morale and team cohesiveness.
Don’t Allow Off-the-Clock Work
Employees sometimes want to stay late to finish a project or work through their lunch break or over the weekend to get ahead of an upcoming deadline. That kind of initiative can be great, but it’s important for you to be aware of the FLSA and state-law requirements. Any time hourly employees are working, they must be paid for doing so. Set clear expectations to ensure that all time is being recorded, and maintain an open line of communication regarding any obligations that cannot be completed during their regularly scheduled work time.
Don't Dock Pay From Hourly Employees
Employers sometimes make the mistake of seeking to “dock” pay from hourly employees as a form of discipline. For example, a manager might tell an employee who is 15 minutes late that they are going to dock them an hour of pay for being tardy. This is not okay — again, remember the FLSA: employees must be paid for all time worked and any deductions from wages are heavily regulated by state law.
Making Sense of Managing Hourly Employees
Clearly there are many factors that go into effectively managing hourly employees, from both a time tracking perspective and a people management perspective. If you're feeling overwhelmed, remember that there are helpful tools that can make your job easier.
Justworks Hours is a great time tracking solution that can make time and attendance simpler for you and your team, including remote employees. And when you combine Justworks Hours with the Justworks platform, your time cards are connected seamlessly with payroll. Plus you'll get access to HR tools and expert support to help with many of your people management tasks.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.