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Tag: calculate payroll

What is the 7-Minute Rule for Payroll, and is it Legal?

The 7-minute rule is a guideline created by the Fair Labor Standards Act for employers to round employee time correctly for payroll. Time-rounding is actually fairly popular. According to recent studies, about 55% of employers round employee timesheets up and down for payroll purposes. People have reported that it makes their process a little easier because they can see an overview estimation of employee hours. It also prevents early clock-ins and simplifies their invoicing practices. Despite these benefits, there are also some drawbacks. 

Let’s dive into how the 7-minute rule works:

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7 Steps to Implementing Time Tracking Software

Remember punching a timecard when you got to work? If so, you probably also remember forgetting to do it or even the horror of losing that precious card altogether. Incredibly, some of us still have those antiquated systems in our workplace. Recent studies say that a whopping 38% of US employers still use them, but paper timesheets are outdated for a reason. They’re often submitted late. Time padding and buddy punching habits abound. Miscalculations at payroll time are common when relying on this practice. In fact, the IRS reports that U.S. companies pay billions in penalties each year due to payroll mistakes. Therefore, in order to save costs associated with payroll it’s time to enter the wonderful world of cloud-based/online time tracking software.

If you’re using paper timesheets or punch cards, it’s not difficult to make the switch to online time tracking. It’s also a lot less expensive than you might think. In fact, it could save you money by virtually eliminating the types of issues we mentioned above. We’ll show you how easy it is to find a solution for your needs and how to successfully introduce the changes to your team. Now come inside and take a seat in that comfy chair over there. We’ll walk you through it.

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Piece-Rate Pay: Should You Do it?

As a business owner, you have the choice to compensate your employees utilizing a number of different methods, as long as you meet federal and state law requirements. One option employers can give their workers is called “piece-rate” pay. Piece-rate compensation allows the employee to earn pay based on the units created rather than the hours they worked.  

If you’re thinking about paying your workers using a piece-rate system, here’s some things you should consider:

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Calculating Overtime for an Alternative Workweek Schedule in California

Overtime rules in the United States are generally simple. According to the Fair Labor Standards Act, non-exempt employees who work over 40 hours a week earn 1.5x their normal rate of pay for overtime hours. If employees earn multiple pay rates during their shifts (perhaps due to different positions they may have within a company), business owners must calculate their regular rate of pay for overtime and pay their workers accordingly. If you’re in a state like California, overtime becomes a little more complicated. Employees in California earn daily overtime and may even earn double time depending on how many hours they work. Not only that, but other overtime rules apply when employees are on an Alternative Workweek Schedule. 

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What to Do When You Overpay Employees

Frustrated business owner looking at his computer

It’s easy to mistype data when you’re manually entering time records into a payroll system by hand. If you’ve made payroll mistakes in the past, you’re not alone. Studies by the American Payroll Association show us that approximately 40% of business owners make payroll mistakes annually. This results in an average of $845 in IRS penalties every year. In order to avoid this, many business owners have invested in online time tracking services that calculate records automatically. This type of software transfers your employees’ time records to payroll and accounting software platforms with ease, avoiding the need to enter time manually. If you’re manually entering data every pay cycle and you’ve made a payroll mistake, you might wonder how to handle it and, more importantly, when you need to handle it. We can help.

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Finding the Right Payroll Expert

People lined up in a line with a finger pointed directly at one person

Running a business takes a lot of time and energy. For small businesses, doing your own billing and payroll might be the way to go, but what about a growing business? When business is booming, you don’t want to spend time keeping your books up to date, processing payroll, entering tax write -offs, or searching for missing tax information. You want to focus on the future of your business, rather than dealing with paperwork. This is why business owners are hiring payroll experts to take care of their financial needs. 

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7 Reasons Why You Should Hire a Payroll Expert

a woman doing the "thumbs up" symbol towards the camera.

Payroll is one of the most important aspects of business– it builds financial stability among employees and boosts team morale. Many businesses, especially small businesses, tend to take payroll into their own hands and avoid outsourcing payroll. Managers and business owners spend hours calculating everything themselves, often times juggling other roles in the business at the same time. Taking care of your own payroll works when your business is just starting out, but this should be avoided when the business grows.

Once business is booming, it’s wise to bring in a payroll expert to make sure that you save yourself time, headaches, and money. This will allow you to focus on the growth of the business rather than worrying about whether or not your employees are going to get paid on time. Additionally, without a payroll expert, there’s a chance that you can make a mistake. Mistakes can lead your business to legal penalties, so getting some help might not be a bad idea.

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Is it Legal to Automatically Deduct Employee Lunch Time?

A man and a woman drinking coffee

Lunchtime can be a tricky thing to track. Some employees forget to clock out, adding minutes to their paychecks daily, while others forget to clock back into work once they return. This leads to inaccurate timestamps and, even worse, inaccurate payroll. You will end up either overpaying employees or underpaying employees, which can lead to issues down the line. In order to keep timestamps more accurate, some employers choose to implement automatic lunch deductions for hourly employees. This ensures that employees get lunch breaks deducted, no matter the circumstance. This is great for employers who want to avoid overpaying employees, but many people still have questions about the legality of lunch deductions. 

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Why Rounding Payroll Hours is a Bad Idea


A lot of employees ask “Is rounding payroll hours even legal?”, and the answer is yes. The Fair Labor Standards Act (FLSA) states that you must pay your employees for all hours worked. According to DOL, however, employers are allowed to round hours. Under the FLSA, you are allowed to round employee’s time in 15 minute increments or to the nearest quarter hour. When rounding time you just have to ensure that you are not violating FLSA regulations for minimum wage and overtime pay.

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How Rounding Works in Payroll and Overtime

Round to the nearest 15 minutes

For the longest time, why anyone would use rounding in payroll calculations was beyond me. Since rounding is meant to even out in the end, what is the point? I don’t like unanswered questions hanging around, so I decided to do some digging. I still don’t think rounding is a brilliant idea, but at least I understand why it’s used. Essentially, rounding in the morning benefits the occasional late employee while rounding in the evening benefits the employer. I’ll explain how this works.

Before I start, I wanted to mention that we have a bunch of free business math calculators that could be helpful if you’re calculating by hand.

First of all, it’s important to understand how rounding is supposed to work in order to be compliant with the DOL. Time must be rounded both up and down and never done in the employer’s favor. Specifically, the time must follow the 7/8 rule:

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Why is Your Payroll Bigger Than Expected?

Have you ever run payroll and found that your cost is much higher than expected? In some industries, like dental offices, for example, payroll costs should be consistent. If your same five employees come to work every day and work their scheduled shifts, you should expect their payroll to be the same. If they use time off when they’re sick or when they’re on vacation, that’s the only time it differs (but usually your PTO policy will balance it out). Employees on a set schedule should obtain almost the same amount of hours every pay period, without any surprises.

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Top 5 Payroll Errors You Can and Should Avoid

payroll errors

Business owners are experts at running their business. But they probably are not trained in payroll and they probably haven’t studied federal and state wage and hour laws. This leaves room for quite a bit of error.

Messing up payroll is serious business. Payroll is a business’ largest expense and getting it wrong could mean facing an even larger expense. I’ll bring five of the most common payroll errors to the attention of these busy people so they don’t wind up in trouble for it later.

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