For many businesses in tourism, hospitality, and retail, summer brings a significant surge in customers and the need for more staff. Managing this seasonal workforce efficiently can be a major challenge. As a business owner or HR manager, you're at the helm, ensuring that everything from payroll to employee classification is handled correctly. This guide will help you navigate common payroll mistakes and provide practical tips to manage your summer staff effectively, keeping your operations smooth as the season heats up.
Job Classification Mistakes
The job classification guidelines of the U.S. Department of Labor (DOL) determine the minimum wage, overtime rules, eligibility for benefits, and workers' compensation coverage. This DOL manual, published in 2018, is the current version. Companies may be fined by state or federal regulators or both for making mistakes when classifying workers.
Be extra careful about classifying workers as independent contractors. The U.S. Department of Labor introduced a new rule effective March 11, 2024, to better define the classification of workers as employees or independent contractors under the Fair Labor Standards Act. This rule, which rescinds a 2021 guideline, reinstates a multifactor analysis to combat misclassification issues, ensuring workers receive appropriate wages and protections. The law makes most workers employees and not independent contractors, including freelance workers from the “gig” economy.
Special Rules for Exempt Employees
A worker who is exempt from overtime rules of the Fair Labor Standards Act (FLSA), such as a highly paid, salaried employee, may be subject to special rules. For example, an exempt worker who comes into the office for part of a day is considered to have worked the full day.
Cheating Employees Out of Overtime
Companies must be careful about asking workers to work off the clock. Examples are not letting employees clock in before changing into their uniforms or preparing their workstations. These unpaid minutes are illegal and may also cause overtime pay to kick in if, when added to the workweek hours, they take an employee to a total greater than the standard 40 hours for regular pay.
Not Accounting for Tips Properly and Minimum Wage
Any employee receiving more than $30 monthly in gratuities is a “tipped” employee. Employers may use tips to meet minimum wage requirements. Challenges arise when tip pools are used to share tips among workers. Managers are prohibited from taking some tips from workers they supervise.
Employers who take a tip credit must limit the tip pool to only those who customarily receive tips. However, employers who don’t take a tip credit and pay the full minimum wage are allowed to share tips with other back-of-house staff.
Failure to Keep Accurate Records
Efficient payroll systems create accurate payroll records that employers must keep for at least three years. These records include employee information such as full legal name, date of hire, pay rates, raises, and termination date (if any). Employers must also keep timecards and work schedules.
Calculation Mistakes
It is wise to regularly conduct a payroll audit as part of seasonal workforce strategies to double-check the calculations. Things you want to look for include:
- Job misclassifications
- Inaccurate tracking of paid time off
- Off-the-clock unpaid work
- Deductions from pay for uniforms
Time and Attendance Tracking Errors
Businesses must have an effective, accurate system to follow best practices on time and attendance. Using a manual system for employee time-tracking increases the risk of human errors and the possibility of timesheet fraud, such as employees punching in other workers who are late to work.
Biometric time clocks help eliminate some forms of timesheet fraud. One drawback is that there may be delays and wasted time at the start of a shift while the long line of arriving employees is clocking in.
One technical solution for summer payroll management is to use a system that allows clocking in and out using a mobile phone with biometric identification and geofencing. Geofencing uses the GPS system to log where the mobile phone is located when an employee clocks in or out for work. When a company has many seasonal workers, these systems are more efficient and make it easier to manage the workforce.
Poorly Handling Absenteeism
It is important that a company has written policies in the employee handbook regarding taking time off for various reasons, including illness, emergencies, vacations, appointments, bereavement, children’s needs, religious holidays, volunteerism, elder care, family care, pet care, or childcare.
Not having a formal, written policy that addresses these various issues is a mistake. Without a certain written policy applied fairly and equally to all employees, a business may face accusations of unfairness or, worse, discrimination. This may cause a dysfunctional workplace and lead to legal problems.
Lacking Flexibility
Most companies benefit from allowing employees to have a reasonable work-life balance. Written rules are in place, so everyone knows the standard policies, and flexibility is a key component.
Implementing best practices for time and attendance management is crucial for avoiding common payroll errors that can arise with a seasonal summer workforce. Effective strategies include using reliable time-tracking technology, establishing clear communication policies, and ensuring compliance with labor laws.
Implementing these best practices is crucial for effective summer workforce management. For those looking to streamline their time and attendance management, Payday offers cutting-edge solutions that ensure compliance and operational efficiency. Explore our services today to enhance your payroll processes for a seamless summer season.