By Dave Schulz, National Account Manager, Softworks USA
I started my career in workforce management over 20 years ago, specifically in time & attendance. Initially, I worked for a company that built mechanical time clocks that added up the daily and weekly hours on timecards. My employer hadn’t yet gotten to a PC based solution. This is what time & attendance solutions were all about in those days. We sold them based on the fact that we could eliminate about 80% of the manual effort of adding up timecards along with the 1-3% error rate typically made during this manual process.
As far as time & attendance solutions went, these were seen as the two key benefits. They are still key benefits of a T&A solution, however back then employers viewed these devices purely as a way to save money. Compliance was not typically a part of the conversation.
Let’s step back and look at the origins of employment compliance. While many people in the 1800s were talking about an 8 hour work day, it was only being adopted in a few rare situations, such as the tradesmen in New Zealand during a building boom, or the ship builders in Boston in the 1840s when the shipping industry was taking off. The first major industrialist that instituted the 8 hour work day was Henry Ford on January 5, 1914. 100 years ago. At the same time, he more than doubled the daily pay of his workforce from $2.34 to $5 per day He believed that is was good for the employee, the company, and the economy. He was right. In 1926 he changed from a six day work week to 5 days, making Saturdays a day off. When it became obvious to other industrialists that this was working well for Ford and Ford’s profits were soaring, others started following this trend. Hence, the US Federal government made the 8 hour work day/40 work week law with the Federal Labor Standards Act in 1938. Soon after that, other nations began passing their own legislation regarding employment rules and regulations.
Today, legislative compliance may be the most important benefit that a T&A solution can deliver for some employers. This is especially true in “White Collar” businesses such as financial institutions, insurance companies, and other organizations with a lot of office staff. In the past, these organizations shied away from T&A systems because of the association with time clocks. Theirs was not a clocking culture. But today’s solutions offer many alternatives to time clocks, allowing a T&A solution to automate the time and attendance process for all employees in all corporate cultures. In regard to compliance, if you were to search the internet for Class Action Over Time Lawsuits, then add a letter in front of it like “A”, you will start finding very familiar names of companies that thought they were 100% compliant and then lost their multi-million dollar lawsuits. Companies like AT&T, Bank of America, CVS, Deloitte, Farmers Insurance, PWC, and Wells Fargo.
Compliance with government rules and regulations is an international issue. In the United Stated the rules are defined by the FLSA (Fair Labor Standards Act), in Canada it’s the ESA (Employment Standards Act), and in Europe it’s the WTD (Working Time Directive). However, compliance is not limited to large industrialized nations. I attended the Global Credit Union Conference last year in Ottawa. I found it interesting speaking about compliance issues with employers from Kenya, Ghana, Barbados, Tonga, and many other small nations around the world. Wherever you have employees, you have compliance issues to take into account.
One reason I often hear from some companies for not having an automated T&A system in place, is because it didn’t make the budget cut this year, again. Most T&A solutions still deliver the cost savings of replacing manual processes involved with time sheets or cards. Generally these solutions will pay for themselves in less than a year. For those employers that feel their manual system is adequate, they need to ask themselves what is the potential cost of not being compliant. The answer is it can be millions. I doubt if that number is anywhere in their annual budget. Why would any organization leave themselves open to the expense and negative publicity generated by not being compliant, especially when the solution will pay for itself in months?