Category: Time and Attendance

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8 proven ways to reduce overtime & labor costs (2025)

painting of a bartender with a large clock behind him

Summary

  • Unnecessary overtime and an increase in labor cost can be caused by several factors, one of which is the lack of an efficient HR and payroll system.

  • Overtime is not inherently bad, but if it becomes excessive, it can affect your bottom line and cause employee burnout.

  • The right software can curb labor cost increases without sacrificing operations and employee satisfaction.

Labor costs and overtime take up a significant portion of business expenses. While extended work hours are occasionally necessary, they can quickly become a burden if they occur too often and strain your finances.

But what causes unnecessary overtime and increase in labor costs? Common culprits include failure to anticipate demand, antiquated HR and workforce management systems, and the lack of real-time operational visibility. These issues not only impact your bottom line but can also harm employee engagement and disrupt work-life balance.

So, how do you reduce labor costs and overtime without sacrificing operations and employee well-being? Here are eight practical ways Workforce.com can help you achieve just that.

1. Forecast labor demand.

An effective cost reduction strategy is to anticipate demand. Sure, no one knows what exactly will happen on the next business day or week, but having an estimate based on relevant data points can give you a good idea of staffing needed per shift. 

Workforce.com can forecast labor demand by analyzing indicators such as weather, foot traffic, historical sales, economic trends, events, holidays, booked appointments, and other relevant factors. With these insights, you can better anticipate demand for a given period, reducing the risks of overstaffing.

Starbucks Australia is one of the organizations that experienced lower labor costs when they started using Workforce.com. Because they have many store locations, anticipating demand was challenging since each store is different. However, with Workforce.com, they can create labor-efficient schedules based on demand up to four weeks in advance, ensuring the right amount of staff is always scheduled for the right number of customers.  

2. Quickly fill vacant shifts due to no-shows or last-minute absences.

No-shows or last-minute absences are inevitable in managing a team, but how they affect your operation and labor costs will depend on how effectively you address them.

When an employee notifies you that they can’t work a shift at the last minute, you must quickly cover the vacant shift. Otherwise, you may need to rely on overtime, driving up labor costs unnecessarily.

Workforce.com equips frontline managers to offer a vacant shift to other qualified team members. Case in point: The Winnipeg Jets. Before using Workforce.com, they had difficulty managing no-shows, especially when they experienced 80 replacements in a week, and there was no centralized way of managing these swaps. Using Workforce.com, managers can offer vacant shifts and fill them quickly, all in one platform, without calls, emails, or texts. 

“With Workforce.com, switching shifts is so much easier. I don’t know anyone who’s not using it,” says Kristin LaCroix, TrueNorth’s Director of Technology Services. “Everyone got on board with it pretty quickly.”

3. See labor costs in real-time when creating schedules.

Staying on top of labor costs means understanding your expenses before they’re incurred. Workforce.com offers that visibility. 

When scheduling or creating shifts, Workforce.com displays wage costs in real time, enabling managers to keep staffing levels aligned with labor budget allocations and customer demand.

“We know for each shift, what its cost is without having to crunch any numbers on a spreadsheet,” says Troy Persad, General Manager at Bridge Control Services. When building schedules, every shift tile displays wage costs, which he uses to optimize shifts according to the budget and crew’s needs.

The same goes for The Winnipeg Jets, “Workforce.com is preparing us to become a little bit more strategic in how we schedule,” shares LaCroix. “It helps us move staff to different times if we see inefficiencies, helping us provide a better experience to our guests.”

Workforce.com plays a massive role in helping you schedule in a way that keeps overtime costs low. Scheduling software tracks work hours and unavailability, automatically suggesting the most cost-effective people for coverage while avoiding unnecessary overtime. It lets you see wage costs for every shift, so you’ll always know how much your business spends on labor in real time.

This kind of automation reduces the overtime errors that come with scheduling via spreadsheets. For instance, Workforce.com will alert managers whenever they try to schedule a shift that will cause an employee to dip into overtime. It also keeps track of maximum work hours and prevents managers from scheduling employees for more than is legally allowed, depending on your state.

4. Track employee hours and overtime down to the minute.

Workforce.com’s time and attendance management software helps you track, manage, and calculate overtime and labor expenses. It alerts your frontline managers whenever an employee hits overtime and automatically records overtime hours and time and a half pay on digital timesheets. These timesheets display scheduled vs. actual hours and labor cost variances, making it easy to pinpoint where and when you are spending too much on overtime.

“There was no real way with our old system to compare variance,” says Kayleen Nemanishen, a configuration analyst for Ranch Ehrlo Society. “With Workforce.com, it’s super apparent – if somebody works 30 minutes longer than scheduled, it shows right on their timesheet.”

More importantly, automated employee time tracking helps you avoid tricky situations where employees claim to have worked more overtime than you have on record. By default, the Department of Labor assumes that the employee is right about the number of overtime hours they worked unless the business owner can provide proof otherwise.

With timesheets recorded daily, you avoid time reporting disputes, protect your business from paying out overtime that was never actually worked, and stay compliant with labor laws. This increases accountability and ensures your overtime tracking is airtight, helping you avoid costly DOL fines and employee lawsuits.

5. Set a labor budget.

Set a cap on an amount or the number of hours you can allocate every day to meet demand for every day, week, or month. This is all about finding the right balance between supporting your employees and improving your bottom line. Setting hard limits on hours worked encourages managers and employees to adapt and become more efficient with navigating overtime. 

On Workforce.com, you can set labor budgets and track schedules and shifts against your set allocation. You can set and plan labor budgets by location or department. Budgets can be shown either in hours or wages.

Of course, setting limits doesn’t disqualify you from paying overtime worked beyond them. The law stipulates that any time over 40 hours has to be paid as overtime. So, if someone has exceeded your overtime budget, ensure you have an accurate way of recording, calculating, and alerting managers to all overtime pay owed. 

6. Offer flexibility with sending schedules in advance.

Flexibility is different for hourly workers. For them, it’s about knowing their shifts well in advance so they can plan other areas of their lives, such as childcare, medical appointments, or PTO. But is scheduling shifts far in advance always productive?

The answer is yes—if done correctly, Workforce.com can help you schedule in advance because it can predict demand and create shifts quickly. You can even create reusable shift templates for consistent schedules, streamlining the process week after week.

Publishing schedules in advance reduces no-shows and last-minute absences and helps control labor costs by minimizing disruptions. Additionally, it ensures compliance with predictive scheduling or Fair Workweek laws in cities where these regulations apply, protecting your business from potential fines.

7. Equip your team with the right labor tracking tools.

Unnecessary labor costs often stem from minor errors or administrative oversights, such as missed log-ins or accidentally scheduling employees beyond their allowed hours. These mistakes are easy to overlook, mainly when relying on manual processes or inefficient systems.

Workforce.com streamline time-consuming administrative tasks and reducing the errors associated with manual input. The Amenity Collective saw a drastic drop in time spent on admin work since implementing Workforce.com in their organization—from 20 hours a week to just 3 hours. 

“With Workforce.com, we’ve been able to reduce the time our staffers spend publishing schedules by 85% – that is a huge efficiency gain for our organization and for our employees,” says Adam Chen, CIO of the Amenity Collective. “What that allows our employees to do is spend more time building stronger relationships.”

Workforce.com offers a real-time view of what’s happening in every shift. It shows who clocked in, who’s running late, and who’s about to go into overtime. HR and operational data can be accessed anytime—no need to wait for month-end reports. 

In addition, Workforce.com has a powerful employee self-service system that enables staff to clock in and out easily, view their work schedules, get notified for open shifts, request leaves, and update their information. These tools lighten the administrative workload and reduce errors and inaccuracies. 

8. Cross-train to bolster your workforce.

If only a few of your team members can carry out specific tasks, you’ll end up in a situation where the same few people get overtime. This can lead to employee turnover , as excessive overtime disrupts work-life balance. At the same time, it can dampen employee morale as staff who aren’t offered overtime opportunities may feel unfairly treated, missing out on the extra pay.

The solution? Conduct cross-training programs for different roles. This way, you can fill vacant shifts with a larger pool of qualified employees. Cross-trained employees not only help you avoid scheduling unnecessary overtime but also allow you to divvy overtime in a fairer manner if needed.

Workforce.com’s performance management system makes this process more efficient. It lets you track employee progress and development, identify their strengths, and provide targeted training to expand their skill sets.

Stay on top of labor costs and overtime with Workforce.com

Running a cost-effective operation starts with the right tools. Manual processes increase the risk of unnecessary overtime costs and waste valuable time on tasks that could be completed in minutes with a more efficient system.

Workforce.com has a comprehensive suite of solutions to help you stay on top of your labor budgets, reduce overtime, and simplify payroll processing. Want to see what else Workforce.com can do for your business? Book a call today.

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Shift Differential Pay: How to Calculate + Implement (2025)

Summary

  • Shift differential pay is additional compensation for staff who work hours outside of their regular schedule.

  • Shift differential pay becomes challenging to navigate once government-mandated overtime pay and varying schedules come into play.

  • Payroll software can automate calculations for shift differential pay along with overtime, payroll taxes, and other withholdings.

Operations that run 24/7, 365 days a year, face the unique challenge of ensuring they have people working around the clock, especially during odd hours. This is where shift differential pay comes into play, where employers pay their staff variable rates based on the type of shift they work.

Shift differential pay may seem straightforward initially, but it can get quite complicated. Here’s a rundown of things you need to know about shift differential pay, plus tips on making your shift differential policy effective.

What is shift differential pay, and how does it work?

Shift differential pay is additional pay for working less desirable shifts, such as graveyard shifts, weekend shifts, or holidays. This is typical for shift-based businesses and industries that operate round the clock, such as customer support centers, manufacturing, healthcare, and security.

Businesses that need to extend operations due to peak seasons may also offer shift differential pay to employees who must come in after typical work hours or during holidays.

Shift differential pay is a type of premium pay that’s not mandated by law, but it’s a good way to incentivize employees to pick up shifts outside their typical schedule or comfort level. It can also help curb turnover rates, especially among shift-based organizations.

Calculating shift differential pay

Companies decide how much shift differential pay to offer. But, again, this is just a perk and optional. So, the amount and implementation will be up to your discretion. Sometimes, the rate can even be up for negotiation between you and your employees. Whatever the rate, remember that the goal is to encourage your employees to be more receptive to working odd hours.

Shift differential rates are assigned in different ways. Here are some of the common options and sample computations:

A set rate per hour

Scenario: Employees who work the third shift earn $15 more per hour.

  • Base hourly rate: $7.25/hour
  • Shift differential rate: $15/hour
  • Hours worked: 8 hours

Sample computation:

  1. Add the base hourly rate to the shift differential rate:
    7.25 + 15 = 22.25 (hourly rate including shift differential)
  2. Multiply by the hours worked:
    Total Pay = 22.25 × 8 = 178

Result: The total pay for the 8-hour shift is $158.

A percentage of regular hourly pay

Scenario: Employees earn an additional 10% of their regular hourly rate for night shifts.

  • Base hourly rate: $7.25/hour
  • Shift differential rate: 10% of hourly rate
  • Hours worked: 8 hours

Sample computation: 

  1. Calculate the percentage increase by multiplying the base rate by 10%.
    7.25 x 0.10 = 0.725
  2. Add the shift differential rate to the base rate:
    7.25+0.725 = 7.975 (hourly rate including shift differential)
  3. Multiply by the hours worked.
    7.975 x 8 = 63.80

Result: The total pay for the 8-hour shift is $63.80

Is shift differential pay the same as time and a half-pay?

No, because time and a half pay is mandated by law for non-exempt employees whenever they incur overtime hours in a day or week. It’s called time and a half pay because the overtime rate is calculated by 1.5 times an employee’s hourly wage. On the other hand, shift differential pay is simply an incentive for workers to work undesirable shifts or days and is not mandated by law.

Also read: What is time and a half + how to calculate it

Factors such as wages and work responsibilities affect an employee’s eligibility for overtime under the Fair Labor Standards Act (FLSA); this means that even some salaried employees are entitled to overtime pay. With this in mind, it’s essential to consider how overtime can affect shift differential pay decisions and calculations. 

Shift differential should be included in the computation of the regular rate of pay when calculating overtime.

Tips for Implementing Shift Differential Pay Effectively

While shift differential pay can improve employee retention and help ensure coverage, it’s not just about assigning a dollar amount to unconventional hours. You need to be strategic in the way you deploy this kind of policy. Here are some helpful tips. 

Be intentional when setting differential pay rates

As the employer, you decide how much shift differential pay will be. So how do you figure out the best rate? Here’s how you can approach it:

Consider the hours and shifts you’re covering. Let’s say you have an operation that runs 24/7, and you have this schedule:

  • 8 AM to 4 PM (Day Shift)
  • 4 PM to 12 AM (Second Shift)
  • 12 AM to 8 AM (Third Shift)

Assigning a shift differential rate for the second and third shifts would make sense, because those hours are odd and less desirable compared to the day shift.

Aside from unusual hours, look at holidays or peak seasons too. Working during these days can sacrifice rest and family time, so the rate should acknowledge the work they do and the personal time they give up.

Another approach is to look at roles and responsibilities. Is the shift differential the same for all positions? Do specific roles deserve more? If some jobs entail heavier workloads or responsibilities, consider offering a higher differential to make those roles and shifts more appealing. While assigning a single, uniform rate is more straightforward, giving a higher incentive for functions that take on more responsibility may be more attractive to employees.

Use technology

So you’ve decided to incentivize employees with shift differential pay. Great. Now, how are you going to calculate it efficiently? 

Sure, it’s straightforward to calculate shift differentials when, say, “John” works the graveyard shift for an entire pay run, and that’s it. Whether you pay a bonus amount or a multiple of John’s standard rate, this is a fairly easy calculation. 

But what if John works variable shifts across multiple teams during this period? What if he worked the first shift on some days and the second on certain days? And on top of that, he worked for more than 40 hours and is entitled to time and a half pay on top of the differential pay? Now, imagine you have 50 different Johns. This is where things get tricky.  

It would be best to have software to do all the work for you. Workforce.com can help you manage shift differentials along with other areas of human resources management. Here’s how:

  • Accurate time and attendance – Proactively getting timesheets right is essential to paying employees correctly and on time. The more edits you need to make retroactively, the more chances there are for errors, further complicating differential pay. Workforce.com’s automated system efficiently captures time punches, generates timesheets, and runs payroll with as little manual data entry as possible. 
  • Comprehensive team structure – Workforce.com enables you to sort staff into specific teams to differentiate what kind of work qualifies for differential pay. With properly designated teams, it’s easy to automatically apply differential pay to front-of-house staff as opposed to, say, back-of-house.
  • Classification tags – In Workforce.com’s system, you can tag employees based on classifications like seniority and experience. This offers more flexibility in distributing differential pay to staff than something as simple as teams.
  • A strong labor compliance engine – Workforce.com automates compliance with federal and state-based wage and hour laws, which is necessary for any organization, especially for implementing shift differential pay. It gives you a paper trail in case of an audit and prevents instances of incorrect pay computation.
  • A robust payroll system – A common challenge is finding a system that only requires a little configuration from the IT team. Go for a system that automatically assigns your pay rules and identifies eligible employees. All the better if you go for payroll software housed in the same ecosystem as time tracking and a labor compliance engine. 

Communicate the policy and make it accessible

It’s all about transparency. You need to inform your employees that shift differential pay is offered for working specific shifts and that a policy states the rate and eligibility.

Train your managers to know the ins and outs of shift differential pay, so they can quickly clarify when staff has questions about it. It’s also essential to include the policy in the employee handbook and make it accessible to everyone so that they can refer to it when needed. A good employee self-service system can do this. 

Gather feedback and incorporate it with your employee retention plan

Money can solve most problems, but not the lack of employee engagement. Compensation is a crucial element, but it doesn’t mean that you simply throw money at the problem, hoping to make operational issues disappear.

Shift differential pay will only be effective if employees find it valuable. Aside from time, consider potential hurdles staff must face when working odd hours or days. Think about extra spending on their end for transportation or babysitting if they need somebody to stay with their kids while they work nights or holidays. With this insight, you’re more equipped to improve your shift differential pay policy. 

Furthermore, a shift differential policy only supplements an overall employee retention program. It’s vital but not the end-all and be-all of keeping employees engaged. Aside from this incentive, it’s best to have a good feedback system, training opportunities, flexibility, and recognition programs.

Optimize labor with data

Shift differential pay may be an added expense, but it can still be cost-effective. The key is properly forecasting your staffing needs to avoid instances where you need to offer differential pay incentives due to under- or overstaffing.

Workforce.com’s labor forecasting system looks at historical data, weather, booked appointments, seasonal trends, foot traffic, and much more to get a picture of how much demand you can expect every day for every shift.

The key to paying your employees right

At the end of the day, it’s all about compensating your employees correctly. The best way to ensure accuracy is error-free timekeeping and payroll processing.

Workforce.com’s time and attendance platform is specialized for shift-based industries. It records clock-ins and clock-outs accurately, and automatically generates timesheets. Employees in the field can also clock in and out via their mobile devices, ensuring time spent on work is recorded correctly.

Aside from accuracy, Workforce.com is also compliant and can apply multiple pay rates, including shift differential pay. So you can rest assured that once timesheets are pushed to payroll, your staff will receive accurate and compliant pay.

Discover how Workforce.com helped organizations manage time and attendance, employee scheduling, and payroll. Book a demo today.

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Your guide to tipping laws by state (2025)

Astronaut Grabbing a Tip Jar

Summary

  • Tipping laws vary by state, and HR professionals need to navigate the specific requirements to ensure compliance. — More

  • Employers can choose from different tip policies, such as tip splitting, tip sharing, or tip pooling, to establish the fair distribution of tips among employees.

  • Payroll software streamlines tip calculations, simplifying the process for employers and ensuring accurate and fair tip distribution.

In the United States, tipping has become deeply ingrained in our culture, more so than in many other countries. Michael Lynn, a professor of consumer behavior and marketing at the Cornell University School of Hotel Administration, told NBC the US is “the most tip-happy country.” In many other countries, leaving a small tip is optional and extra, but tipping in the US holds a far more substantial role. The livelihood of employees in certain sectors depends on gratuities as they are baked into their hourly wages.

For HR professionals, managing a workforce in a tipped industry presents unique challenges. Ensuring compliance with the specific laws governing how these employees should be paid is a delicate task. Understanding the intricacies of tipping laws is crucial to avoiding potential legal pitfalls and ensuring fair compensation for employees.

Adding to the complexity is the interaction of tipping with overtime regulations. Determining the proper calculation of overtime pay for tipped employees requires a nuanced understanding of the rules and regulations. Failure to comply with these guidelines can result in costly legal consequences for businesses.

This guide will break down all federal and state tipping laws to help you navigate the intricate landscape of gratuity regulations. 

Click here to jump to a table outlining each state’s minimum wage laws for tipped employees.

What is the US tipping law?

According to the IRS, tips are discretionary payments made by customers to employees. This includes cash tips received directly, tips left through electronic settlement or payment methods, the value of noncash tips, and tip amounts received through tip pooling or tip-sharing arrangements.

The Department of Labor (DOL) defines a tipped employee as “any employee working in an occupation in which he or she regularly receives more than $30 a month in tips.” Examples of tipped employees include servers, bartenders, hotel staff, valets, and other service-industry workers who rely on tips as a significant part of their income.

Tipped employees receive a special form of hourly wage known as a tipped wage. The tipped wage is a lower direct wage (known as “tip credit”) paid by employers to tipped employees, with the expectation that the employee’s tips will supplement their earnings and meet or exceed the federal minimum wage requirement. 

According to the DOL, federal law states that employers of tipped employees are required to pay a direct wage of $2.13 per hour as long as the combined amount of tips and the direct wage equals or exceeds the federal minimum wage. However, many states have higher direct wage requirements for tipped employees that employers must adhere to.

Consider a restaurant server who receives a direct wage of $2.13 per hour and earns an average of $20 per hour in tips. To determine compliance with the law, we calculate the total hourly earnings by adding the direct wage and tips:

Direct Wage: $2.13 per hour

Tips: $20 per hour

Total Hourly Earnings: $2.13 + $20 = $22.13

In this scenario, the server’s tips of $20 per hour ensure compliance with the law. Since the total hourly earnings ($22.13) exceed the federal minimum wage requirement, which is currently set at $7.25 per hour, the server is receiving appropriate compensation.

Tipping laws by state

While federal law sets the groundwork for tipping regulations in the United States, it is important to note that individual states have the authority to establish their own tipping laws. These state-level variations can significantly impact the requirements and practices surrounding tipping in different parts of the country.

To gain a comprehensive understanding of tipping laws in each state, we have provided detailed tables below that break down the regulations. These tables will help you navigate the specific requirements for maximum tip credits and minimum cash wages in each state.

But first, let’s define two key terms that play a crucial role in understanding tipping laws.

Maximum tip credit: The maximum tip credit refers to the amount that employers are allowed to offset the minimum wage requirement by considering the tips received by their employees. This credit can vary from state to state, and understanding the specific maximum tip credit in each jurisdiction is essential for employers and employees alike.

Minimum cash wage: The minimum cash wage represents the lowest hourly rate that employers must pay to tipped employees directly, regardless of the tips they receive. While some states align the minimum cash wage with the federal standard, others have established higher cash wage requirements to ensure fair compensation for tipped workers.

To explore the specific tipping laws in your area in more detail, click on the link provided for each state. 

State Minimum cash wage Maximum tip credit Total tipped minimum wage rate
Alabama** $2.13 $5.12 $7.25
Alaska $11.91 – $11.91
Arizona $11.70 $3.00 $14.70
Arkansas $2.63 $8.37 $11.00
California $16.50 – $16.50
Colorado $11.79 $3.02 $14.81
Connecticut***** $16.35   $16.35
Delaware $2.23 $12.27 $15.00
Florida * $9.98 $3.02 $13.00
Georgia ** $2.13 $5.12 $7.25
Hawaii *** $12.75 $1.25 $14.00
Idaho $3.35 $3.90 $7.25
Illinois $9 40% of the applicable minimum wage ($6) $14.00
Indiana $2.13 $5.12 $7.25
Iowa $4.35 40% of the applicable minimum wage ($2.90) $7.25
Kansas**** $2.13 $5.12 $7.25
Kentucky $2.13 $5.12 $7.25
Louisiana** $2.13 $5.12 $7.25
Maine $7.33 50% of the applicable minimum wage ($7.32) $14.65
Maryland $3.63 $11.37 $15
Massachusetts $6.75 $8.25 $15
Michigan 38% of the applicable minimum wage ($4.01) $6.55 $10.56
Minnesota $11.13 – $11.13
Mississippi** $2.13 $5.12 $7.25
Missouri $6.88 50% of the applicable minimum wage ($6.87) $13.75

Montana

Businesses with gross annual sales over $110,000

Businesses not covered by FLSA standards with gross annual sales of $110,000 or less

$10.55

$4

 –

$10.55

$4
Nebraska $2.13 $11.37 $13.50
Nevada**** $12 – $12
New Hampshire $3.27 $3.98 $7.25
New Jersey $5.26 $9.87 $15.49
New Mexico $3 $9 $12
New York – Maximum tip credit varies by region. Consult New York’s Minimum Wage Overview for more information. $15
North Carolina $2.13 $5.12 $7.25
North Dakota $4.86 33% of the applicable minimum wage ($2.39) $7.25
Ohio $5.35 $5.35 $10.70
Oklahoma**** $2.13 $5.12 $7.25
Oregon $14.70 – for exceptions in the Portland Metro and non-urban counties, check Oregon’s Minimum wage increase schedule – $14.70
Pennsylvania $2.83 $4.42 $7.25
Rhode Island $3.89 $11.11 $15.00
South Carolina** $2.13 $5.12 $7.25
South Dakota $5.75 50% of the applicable minimum wage ($5.75) $11.50
Tennessee** $2.13 $5.12 $7.25
Texas**** $2.13 $5.12 $7.25
Utah**** $2.13 $5.12 $7.25
Vermont $7 $7.01 $14.01
Virginia $2.13 $10.28 $12.41
Washington $16.66 – $16.66
West Virginia $2.62 70% of the applicable minimum wage ($6.13) $8.75
Wisconsin $2.33 $4.92 $7.25
Wyoming $2.13 $5.12 $7.25

*Florida — The minimum wage is scheduled to increase by $1.00 every year on September 30th until it reaches $15.00 on September 30, 2026.

**Alabama, Louisiana, Mississippi, South Carolina, and Tennessee have no state minimum wage laws. Georgia has a state minimum wage law; however, it does not extend to tipped employees. 

***Hawaii — “The combined amount the employee receives from the employer and in tips must be at least $7.00 more than the applicable minimum wage.” (Source) 

****In Kansas, Oklahoma, Texas, and Utah, employees subject to the FLSA are excluded from state minimum wage laws. Employers must ensure these employees are paid at least the federal minimum wage of $7.25 per hour.

*****In Connecticut, employers can take a tip credit for bar and hotel employees. For restaurant and hotel wait staff, employers must at least pay $6,38 and may take a maximum tip credit of $9.97. Meanwhile, they should pay at least $8.23 and can take a maximum tip credit of $8.12 for bartenders who normally receive tips.

What tipping model should my business follow?

Implementing a tip policy is an important consideration for employers as it establishes guidelines on how tips are distributed among employees and can contribute to a fair and harmonious work environment. When it comes to tip policies, there are various models that businesses can adopt, each with its own implications and considerations.

One common approach is the “everyone keeps their tips” policy, where each employee retains the tips they earn at the end of their shift. While this policy appears straightforward, it can raise concerns about fairness. In a restaurant setting, for example, only customer-facing staff, such as waitstaff and bar staff, receive tips under this policy. Essential back-of-house employees like dishwashers and bussers are left without tips. This can create a disparity, potentially leading to a shortage of back-of-house employees who do not benefit from additional tips.

Another approach is tip splitting or tip sharing, where tips are divided among both tipped and non-tipped employees based on hours worked or predetermined percentages. Tip sharing is usually voluntary, without specific legal guidelines. This policy ensures that all employees have the opportunity to receive tips, fostering a more equitable environment.

Tip splitting can be complex from a payroll perspective when calculating employee wages. Employers must ensure that non-tipped employees receive at least the minimum wage, including their share of tips (which are also subject to taxation). Additionally, the proper application of tip credits to the wages of tipped employees is crucial. It is important to maintain fairness and ensure that non-tipped employees do not out-earn their tipped counterparts due to tip credit rules.

Tip pooling is another option involving the collection of tips earned during a shift and their equitable distribution among both front-of-house and back-of-house staff. Under the Fair Labor Standards Act (FLSA), if tips are shared with non-tipped staff, employers must pay the full minimum wage without applying tip credits. While tip pooling promotes fairness by providing all employees with a consistent hourly wage and shared tips, it may not be a viable solution during slower periods when tips are scarce.

Ultimately, the tipping model your business chooses should align with your company’s values, industry standards, and the preferences of your service employees. Consider the dynamics of your workforce, the potential impact on employee morale, and the legal requirements specific to your jurisdiction when determining the most suitable tip policy for your organization.

Streamline tip calculations with Workforce.com

No matter which tipping policy you choose to adopt, handling tip calculations can be a daunting task. The good news is that Workforce.com can be a valuable ally in simplifying this process. By seamlessly integrating with your POS system, you can customize the percentage of tips to be shared via a “tip jar” feature and automatically ensure that your employees receive their rightful earnings based on their hours worked. 

If you’re interested in discovering how proper time and attendance tracking and payroll processing can revolutionize your tip management, reach out to us today. We’d be delighted to guide you through the process.

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.

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Canada Statutory Holiday Pay (2025)

Woz with a Canadian flag on the moon

Summary:

  • Workers in Canada get statutory, or public, holidays off and receive pay based on a percentage of their wages earned over a 4-week period.
  • If employees are required to work on a statutory holiday, they typically earn 1.5x their regular rate in addition to their holiday pay.
  • Payroll software makes holiday pay calculations much more accurate and efficient.

When a holiday strikes, it’s important for Canadian employers to know exactly how much they owe their staff in statutory holiday pay – getting this wrong can land you in hot water.

Monkhouse Law is all too familiar with this. In 2022, they filed a class action lawsuit against banking giant BMO for violating the Canada Labour Code. According to the suit, BMO failed to include variable compensation such as commission and bonuses in calculations for holiday and vacation pay owed to employees beginning all the way back in 2010.

Similar holiday pay cases have been brought against insurance companies RBC and Aviva for $800 million and $80 million, respectively.

Holiday pay rules

To avoid winding up with a multi-million dollar lawsuit on your hands, or at the very least, a mob of rightfully angry workers, it’s important to understand what you as a business owe in holiday pay and how to go about calculating it.

Workers in Canada get statutory paid holidays (also known as public holidays or general holidays) off and are entitled to compensation based on their previous weeks’ wages. This public holiday pay is generally calculated as 1/20 of an employee’s regular pay from the four work weeks leading up to the holiday. Variable compensation like vacation and commission is usually included in the holiday pay calculation, while overtime is not.

On top of this pay, most provinces mandate that anyone who works on a holiday receive time and a half for their trouble. This is a rule of thumb, however, and not always the case.

Listed below are more details on statutory holiday pay, broken down by several provinces:

 

Manitoba

Statutory holidays recognized: 

  • New Year’s Day
  • Louis Riel Day
  • Good Friday
  • Victoria Day
  • July 1
  • Labour Day
  • Orange Shirt Day
  • Thanksgiving Day
  • Christmas Day

Holiday pay: Employees with non-variable hours receive holiday pay equal to 8 hours at their standard rate. For employees with variable hours, holiday pay is calculated at 5% of their gross wages (not including overtime) in the 4-week period immediately before the holiday.

If employees work: on top of their statutory holiday pay, staff who work on a holiday earn premium pay, which is 1.5x their regular wage. An exception exists for hospitals, restaurants, hotels, and continuous operations as long as they provide another day off with general holiday pay within 30 days.

 

New Brunswick

Statutory holidays recognized: 

  • New Year’s Day
  • Family Day
  • Good Friday
  • Canada Day
  • New Brunswick Day
  • Labour Day
  • Remembrance Day
  • Christmas Day

Holiday pay: Employees receive a day’s wages at the regular rate or 4% of their gross wages. If employees have variable hours, they receive an “average day’s pay” which is found by dividing their total number of hours worked by the number of days worked over a 30-day period before the holiday. You then multiply these hours by the regular rate. This calculation excludes overtime but includes vacation.

If employees work: Employees receive 1.5x their regular rate of pay for the day on top of the statutory holiday pay.

 

Ontario

Statutory holidays recognized: 

  • New Year’s Day
  • Family Day
  • Good Friday
  • Canada Day
  • Victoria Day
  • Boxing Day
  • Labour Day
  • Thanksgiving Day
  • Christmas Day

Holiday pay: According to Ontario’s Employment Standards Act (ESA), employees get 1/20 of their wages from the previous 4 weeks before the week with a public holiday. This includes vacation but not overtime pay.

If employees work: employees receive 1.5x their regular rate for the day.

 

Quebec

Statutory holidays recognized: 

  • New Year’s Day
  • Good Friday or Easter Monday (employer’s discretion)
  • Canada Day
  • National Patriot’s Day
  • National Holiday
  • Labour Day
  • Thanksgiving
  • Christmas Day

Holiday pay: Employees receive 1/20th of their wages from the 28 days prior to the holiday. Workers paid by commission receive 1/60th of their wages earned through a 12-week period. Overtime is not included in these calculations.

If employees work: Employees get paid for a regular day’s work at their normal rate on top of receiving holiday pay.

 

Saskatchewan

Statutory holidays recognized: 

  • New Year’s Day
  • Family Day
  • Good Friday
  • Victoria Day
  • Canada Day
  • Saskatchewan Day
  • Labour Day
  • Thanksgiving Day
  • Remembrance Day
  • Christmas Day

Holiday pay: Employees receive 5% of their wages from the 28 days before the holiday. This calculation includes both vacation and commission but not overtime.

If employees work: Employees receive 1.5x their regular rate for the day on top of the statutory holiday pay.

 

Calculating holiday pay

Yes, there are a lot of rules, exceptions, and intricacies to holiday compensation in Canada. To stay on top of it all, you need to track time and pay accurately. You also need to be executing the right calculations – sometimes at a very large scale.

Sure, you can use a handy-dandy holiday pay calculator found on the occasional government website. But you could also let software automatically do the work for you.

Time and attendance software not only tracks employee time on a daily basis, but it also calculates holiday pay, applying it directly to timesheets. You don’t have to worry about combing through four weeks’ worth of timesheets to calculate the right indemnity pay for a special day of the year.

Be prepared and get a system in place to calculate holiday pay for you.

Who should be working on public holidays?

Calculating mandated holiday pay is one thing – paying time and half to staff who work on a holiday is another. Labour hours on a holiday are quite an expense to take on and, if not planned correctly, can be unnecessary at times.

So how do you actually determine the number of staff you need on hand during a holiday?

The first step is to track your historical demand patterns consistently. By doing this, you’ll be able to project your expected demand for an upcoming holiday. Typically this is done by looking at last year’s holiday sales alongside other patterns like upcoming local events, promotions, and weather.

With an accurate demand prediction, you can then figure out the number of employees you’ll need on duty. Backing your staffing plan with actual metrics like this keeps you from accidentally overspending on expensive holiday labour. You should only be paying 1.5x rates to employees who are actually needed.

Sounds like a lot of work, right? Building demand predictions and determining labour ratios? The good news is that you don’t need to do all the work. Labour forecasting software makes this whole process easier, saving you admin time and cutting down on wasted time and a half pay.

Get it done efficiently

Once you know the basics, holiday pay is pretty simple to understand – you just need the right tools to improve accuracy, save time, and ensure HR compliance.

With an all-in-one HR, payroll, and scheduling platform like Workforce.com, you can record employee hours and automatically calculate holiday pay when the time comes. Complete with a labour forecasting module, you’ll also be able to predict how many staff you really need working those expensive holiday hours.

When a paid public holiday like New Year’s or Canada Day comes around, keeping your employees happy is more important than ever – this means abiding by national labour standards and paying them what they are legally owed. Get this done in the most efficient way possible while also improving your bottom line with Workforce.com.

Get in touch with us today to get started.

This information is for general purposes only and should not be considered legal advice. While we strive to keep it updated, laws and regulations can change at any time. It’s always a good idea to consult with a legal professional or relevant authorities to compliance with the most current standards.

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What is time and a half pay + how to calculate it

Summary:

  • Under the FLSA, time and a half is the rate at which non-exempt employees earn overtime for every hour worked beyond 40 in a week.

  • Calculate time and a half pay by multiplying an employee’s regular pay rate by a factor of 1.5 for every hour of overtime. However, the steps may differ depending on whether the employee is hourly or salaried, or if bonuses are included in their pay.

  • With HR and payroll software, employers can calculate time and a half pay automatically.

Understanding time and a half or overtime pay is essential if you employ non-exempt workers. While it might sound straightforward (extra pay for extra hours), FLSA rules and varying state laws can make it complicated. Mistakes in calculating overtime pay and identifying who qualifies can lead to non-compliance and penalties. This guide breaks down what time and a half is, how to calculate it, and how to stay compliant.

What is time and a half and how does it work?

Time and a half pay refers to the overtime pay that non-exempt employees are entitled to when they work for more than 40 hours a week, as mandated by the Fair Labor Standards Act (FLSA). It’s called time and a half pay because it’s equivalent to an employee’s hourly rate multiplied by 1.5 per hour of overtime.

Who qualifies for time and a half?

According to the FLSA , some employees are exempt from time and a half pay, while others are non-exempt. Exemption and non-exemption are driven by factors such as wages and the job duties performed.  So what makes an employee exempt from receiving time and a half pay?

As a general rule of thumb, most salaried employees are exempt from time and a half pay if they earn more than $844 in weekly pay or $43,888 in annual salary. This threshold took effect on July 1, 2024. Previously, the weekly wage limit was only $684. On January 1, 2025, the threshold will go up to $1,128 per week or $58,656 per year, and beginning July 1, 2027, these limits will be updated every three years, according to the US Department of Labor’s new ruling.

This means that hourly employees working standard 40-hour workweeks in the usual frontline industries (retail, hospitality, healthcare, etc.) are non-exempt and must receive time and a half pay if they go into overtime.

To know more about what makes an employee exempt or non-exempt, read this guide.

How to calculate time and a half pay

When calculating overtime pay for non-exempt employees , you need to understand how to do it for hourly and salaried workers. Hourly workers may take up the lion’s share of non-exempt workers entitled to time and a half pay , but it’s also vital to know how to calculate overtime pay for non-exempt salaried employees.

Calculating time and a half pay for hourly workers

Calculating time and a half for hourly workers is fairly straightforward because you’re already aware of their hourly rate . To compute overtime pay , look at this example and follow these steps. 

Say, Dave is an hourly worker who earns $13 per hour. For this week, Dave has worked a total of 50 hours. How much do you need to pay him, including overtime?  

1. First, you need to get the total regular wages for the week. Multiply the employee’s regular rate by 40 hours.

$13 x 40 hours = $520 in regular wages

2. To get the hourly time and a half rate, multiply the regular hourly wage by 1.5.

$13 x 1.5 = $19.5 per hour of overtime

3. Multiply the hourly overtime pay by the number of overtime hours rendered.

$19.5 x 10 = $195 of overtime pay

4. Add both regular and overtime wages. 

$520 + $195 = $715In this example, Dave should receive a gross pay amounting to $715, which accounted for regular 40 hours and 10 hours of overtime worked.

Calculating time and a half pay for salaried employees

Calculating time and a half pay for salaried employees requires an extra step to get the hourly pay rate because they are paid a fixed wage. 

For instance, Lisa earns a fixed weekly salary of $750, and she’s expected to work 36 hours. But for this week, she has worked a total of 48 hours. Here’s how you can compute her overtime pay.  

1. Find the regular hourly rate by dividing the fixed weekly salary by the employee’s fixed hours. 

$750 / 36 hours = $20.83 per hour of regular work

2. Calculate the employee’s total regular wages. 

$20.83 x 40 hours = $833.20

3. Multiply the regular hourly rate by 1.5 to get the time and a half pay rate.

$20.83 x 1.5 = $31.25 per overtime hour

4. Calculate the total overtime wages

$31.25 × 8 = $250.00

5. Add regular and overtime wages.

$833.20 (regular wages) + $250.00 (overtime wages) = $1,083.20

In this example, Lisa needs to get a total of $1,083.20 in wages that includes both regular wages and time and a half pay for 8 hours of overtime work. 

FLSA typically uses a 40-hour work week for overtime calculations, but companies can choose to pay overtime based on the weekly work hours agreed upon. For instance, Lisa’s employers can choose to start paying her overtime once she exceeds 36 hours, provided that there’s a specific company policy that states so.

Calculating time and a half pay with bonuses

Nondiscretionary bonuses should be included in the calculation of time and a half pay. Here’s an example of how you can compute the overtime pay with a bonus. 

For example, John earns $12 an hour, worked 48 hours this week, and received a bonus of $20 for perfect attendance. Here’s how to compute his regular pay and time and a half pay that accounts for that bonus. 

1. Calculate the straight-time earnings for the week by adding the total number of hours. 

$12 x 48 hours = $576

2. Add the nondiscretionary bonus. 

Total earnings (before overtime adjustment) = $576 + $20 = $596.

3. Calculate the new regular hourly rate based on the straight-time earnings for the week. 

$596 / 48 hours = $12.42 standard hourly rate

4. Multiply the new regular hourly rate by 40 to get the regular wages for the week. 

$12.42 x 40 = $496.8

5. Calculate the hourly overtime rate by multiplying the standard hourly rate by 1.5.

$12.42 x 1.5 = $18.63 per hour of overtime

6. Multiply the hourly overtime rate by overtime hours worked. 

$18.63 × 8  = $149.04

7. Add together the regular and overtime wages to determine total pay.

$496.80 (regular wages) + $149.04 (overtime pay) = $645.84.

In this example, John should receive $645.84 in total wages, which accounts for the attendance bonus he was entitled to. 

Nondiscretionary bonuses must be included in regular rate calculations. Additionally, the example assumes the $20 bonus applies to this specific week only. If it covered a longer period, the bonus would need to be allocated across those weeks to calculate an accurate weekly regular rate.

Human resources or payroll officers must first determine the period that the bonus covers and it should be accounted for according to that timeframe.

Common challenges when calculating time and a half pay

Calculating time and a half pay sounds simple on paper, but when accounting for federal and state rules, things can get tricky fast. While the overtime rate of 1.5 is straightforward, it’s easy to miscalculate.  Here are some of the common challenges when calculating overtime pay:

Classifying employees correctly

It’s always a question of whether an employee is exempt or non-exempt from FLSA and time and a half pay. Given the typical nature of their work, it’s easy to assume that only hourly employees are non-exempt, but it’s not as clear-cut as that. 

Remember that eligibility for time and a half pay is determined by the wages earned and the nature of the job’s tasks. Even salaried employees can be eligible for overtime, making it crucial to understand the rules and exemptions on the state and federal levels.

Understanding specific state laws

The minimum wage is $7.25 per hour for nonexempt employees under the federal law. However, state-based thresholds can vary quite a bit. For instance, the minimum wage in California is $16, and New York’s is $15. Meanwhile, states like North Carolina and New Hampshire have the same minimum wage as the federal government. 

The fluctuating workweek method also seems like an appealing way to lower overtime costs. However, it has many legal nuances and can be prone to calculation errors. Some states even prohibit it, such as California. 

Companies need to have a firm grasp of both federal and state requirements. In the case of calculating time and a half pay, the higher minimum wage or the rule that would benefit the employee should be applied. 

Accounting for differing pay rates between teams/shifts

Obviously, time and a half pay must be based on accurate pay rates in the first place – this is easier said than done, especially for employees who might receive varying pay rates. With this in mind, you’ll need to calculate time and a half pay rates according to the correct rates for every employee, no matter the team, shift, or role they work in.

Excluding nondiscretionary bonuses in the regular rate of pay

Bonuses, especially those that FLSA considered non-discretionary, should be included in the computation of the regular rate of pay. 

Nondiscretionary bonuses are predetermined in nature, such as attendance bonuses or bonuses for quality of work. Even if the employer has the option not to award the bonuses, it doesn’t mean that these incentives are discretionary. It’s nondiscretionary in nature because the employees are aware of the bonus and have an expectation of how and when they will receive it. 

Automate time and a half computations with Workforce.com

Calculating time and a half pay is not a walk in the park, and it can be daunting to understand the exemptions and rules under the FLSA and state-specific regulations. However, a payroll system like Workforce.com can help alleviate most of the uncertainty that comes with time and a half calculations. Here’s how:

Detailed onboarding checklists

Getting time and a half right starts before payroll even comes into play. It begins with employee classification and accurate pay setup. Workforce.com’s onboarding system ensures that each employee’s classification and pay rates are set up correctly from day one. Plus, it streamlines paperwork like signing contracts, filing W-4s, and submitting employee personal details. 

Accurate time and attendance tracking

When timesheets are accurate, it’s easier to compute wages for employees who work overtime; Workforce.com delivers this and more. As employees clock in and out via kiosk or mobile device, the system automatically generates digital timesheets containing regular hours and overtime hours .

Automated labor compliance

Workforce.com is built with a robust compliance engine that helps you pay staff in accordance with labor laws. In addition to calculating total hours worked and overtime pay, it automatically alerts you to potential conflicts with overtime laws, maximum-hour rules, and fair workweek regulations.

Real-time wage tracking

Workforce.com gives you complete insight into your operations. For example, a robust reporting suite lets you pull reports on daily labor spend across every team and location, letting you easily pinpoint where and when overtime hours occur. 

Alternative rate calculations

Aside from an employee’s regular pay rate, managers can assign alternative rates to teams or shifts on Workforce.com to help manage staff who work multiple roles. Whenever an employee works a specific role, the corresponding “team tag” automatically applies. This setup makes it easy to calculate time and a half pay even when juggling multiple pay rates for every employee. 

Powerful payroll

Because Workforce.com’s payroll system is housed in the same system as onboarding, time and attendance tracking, and employee scheduling, wage and overtime calculations become faster and more precise. With data synchronized across modules, there’s no need for duplicate profiles or manual re-entry. As a result, employees receive accurate paychecks every time.  

One of the best ways to avoid issues with time and a half is to never have to pay it in the first place. Check out our free webinar below to see what you might be missing when it comes to paying out excessive overtime.

Webinar: How to lower your overtime hours

If you want to learn more about how Workforce.com can help you manage your workforce while staying compliant with the FLSA and state-specific laws, book a call today.

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A complete guide to attendance write-ups [free template included]

Oil painting of a man writing a letter

Summary

  • Attendance write-ups are warnings issued to employees to address time and attendance policy infractions.

  • Attendance write-ups should include information about the employee and their role, outline infractions and previous disciplinary measures taken, and explain how the employee must adjust their actions going forward.  

  • Click here for an attendance write-up template.

Employee attendance is crucial to maintaining productivity and operational efficiency within any organization. However, there are instances when employees fall short of meeting attendance expectations — leaving managers and HR professionals in a difficult situation. 

Absenteeism and chronic tardiness disrupt workflow and place additional burden on other team members, leading to increased stress and burnout. According to data from the U.S. Bureau of Labor Statistics, businesses in the service industry experience some of the highest rates of absenteeism. Workforce.com’s own research corroborates this, with 31% of businesses listing shift disruption caused by employee absenteeism as one of their biggest problems.

As an HR professional or manager, addressing attendance issues is essential to maintain a productive workplace effectively. This is where attendance write-ups play a significant role. Attendance write-ups are formal documentation (or written warnings) for addressing attendance infractions and reinforcing punctuality expectations.

Free Attendance Write-Up Template

Throughout this article, we will delve into the essential components of an attendance write-up, explore best practices for writing one, and provide a sample write-up letter for reference. By understanding the significance of attendance write-ups, HR professionals and managers can proactively tackle employee attendance issues, promote a culture of accountability, and create a more productive work environment.

When should you use an attendance write-up?

An attendance write-up should be used in situations when an employee’s attendance falls below expected standards or violates company attendance policies, including the following examples: 

  1. Regular tardiness: When an employee consistently arrives late for work without valid reasons.
  2. Excessive absenteeism: When an employee develops a pattern of no-call, no-shows, or unscheduled absences. 
  3. Violations of company attendance policies: These could include failing to properly request time off or abusing paid or sick leave policies. It could also include failing to notify supervisors and/or HR managers before taking a leave of absence or not providing a doctor’s note after taking sick days. 

It’s important to note that the decision to use an attendance write-up should be consistent, fair, and in accordance with established company policies and applicable labor laws such as the Family and Medical Leave Act (FMLA). 

What your attendance write-up should include

Write-ups should include several key components to address attendance problems and communicate expectations to employees effectively:

    • Employee information: This includes the employee’s name, position, and any other relevant identifying information.
    • Employee absences: Highlight the employee’s attendance record, explicitly showing the dates and times when they were late or missed work. If you use an attendance point system, be sure to provide a history of where, when, and how points were accrued. 
    • Outline any previous action taken: This could include anything from verbal warnings to disciplinary action. 
    • Outline the company’s employee attendance policy and how it was violated: Provide clear references to the HR policies or guidelines to ensure transparency and avoid misunderstandings.
    • Explain the importance of the company’s attendance policy: Highlight the negative consequences of violating it. Show how unexcused absences negatively impact coworkers and harm the organization as a whole. 
    • Highlight any further disciplinary action: Outline what the company’s policy says about what disciplinary measures will be taken after an attendance write-up. This could be anything from another written reprimand to termination. 
    • Instructions on how employees can reply to a write-up: It is essential to give employees the opportunity to respond to a write-up by providing feedback and/or insight into their poor attendance and or excessive absenteeism. Your write-up should explain how they can do this and through which channels. 
    • Manager and employee signatures and dates: Include spaces for the employee, supervisor, or HR manager to sign and date the write-up. This acknowledges that the employee has received the write-up and understands its contents.

Maintaining consistent documentation and following company protocols is essential to ensure fairness and compliance with legal requirements.

Attendance write-up best practices

The purpose of issuing an attendance write-up is about more than punishing or scaring an employee. It should be seen as a step toward finding and implementing a solution. Here are some tips that will help you get the most out of attendance write-ups. 

Be sure to have all of your facts straight

Presenting an employee with an attendance write-up is a serious measure to take, so it’s vital that it is based on indisputable facts. If an employee is chronically tardy for work, pull up their attendance record and highlight where they haven’t kept to their work schedule. If you use a digital time clock, you can get this information from past timesheets in the form of punch-in variances or even from point totals if you use a point system. 

Whatever data you use for a paper trail, you should be able to find it in your time and attendance software. Be sure to link these infractions to the policies that have been violated. 

Keep it professional

Objectivity is key when it comes to writing employees up. As mentioned above, your attendance write-ups should be based on facts and should not include any subjective opinions. Including something like “John is lazy and irresponsible; he clearly doesn’t care about his job and is always trying to avoid work” can lead to employees becoming defensive, which would make the situation worse.

Instead, highlight the specific issue at hand, such as “John has been late for work on three occasions in the past two weeks, arriving an average of 15 minutes past his scheduled start time without any valid reasons or notifications.”

Don’t view them as final warnings

An attendance write-up shouldn’t be seen as a precursor to termination. It’s just a warning and should be perceived as an opportunity to improve an employee’s behavior and promote good attendance. 

Map out the next steps

Your write-up should include what happens next — like what an employee needs to do to get back in line with your attendance policy and when this progress will be reviewed. 

On the other hand, you should also state what measures will be taken if the employee continues to infringe on your policy. 

Templates

Feel free to copy and paste the templates below for your own personal use. You can also download a file with each template right here. 

Attendance write-up template

[Date]

[Employee’s Full Name]

[Employee’s Position]

Dear [Employee’s Name],

This is an official warning regarding your violation of [Company Name]’s time and attendance policies. 

Attendance infraction:

On [Date(s)], you were observed [mention infraction with details on how it violates the company policy].

Expectations and policies:

[Quote the relevant areas of your time and attendance policies and include a hyperlink to where they can access them directly.]

Previous action taken:

We have discussed this matter on [X] previous occasions. We first [action] on [date]. Additionally, we [action] on [date].

Corrective action and further consequences:

This attendance write up serves as formal documentation of the infraction. Going forward, we expect you to prioritize punctuality and adhere to the established attendance policies. 

Failure to improve your attendance and address this issue may result in further disciplinary action, including [list specifics according to your company policy].

Improvement plan:

To rectify this situation, we recommend that you review and familiarize yourself with our company’s attendance policy and procedures. Additionally, we encourage you to make any necessary adjustments to ensure your timely arrival at work. 

If you encounter any challenges or have concerns related to your attendance, please communicate with your supervisor or the HR department for guidance and support.

Please sign below to acknowledge that you have received and understood this attendance write-up. If you have any questions, feedback, or concerns regarding this write-up, please inform your supervisor. 

Employee’s Signature: _______________________

Date: ________________

Supervisor’s Signature: _______________________

Date: ________________

Please note that this write-up will be kept in your personnel file for future reference. We trust that you will take this matter seriously and make the necessary improvements to maintain consistent attendance.

Sincerely,

[Supervisor’s Name]

[Supervisor’s Title]

[Company Name]

Tackle employee absenteeism at the source

HR managers and supervisors should spend less time and energy on drafting attendance write-ups and implementing disciplinary action. The process can be demoralizing to both employer and employee. 

Having proper time-tracking technology alongside a fair attendance policy can help HR and Ops teams achieve lower absenteeism rates, increase employee loyalty, reduce labor costs, and improve the company culture. 

To find out how, check out our webinar, How to Reduce No Call, No Shows.

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What is an attendance point system? [Examples + Template]

Astronaut Husky staring up at numbers in the sky

Summary

  • Attendance point systems give employees points for being absent – too many points can result in being fired.

  • Benefits of an attendance point system include reduced absenteeism, increased employee engagement, and enhanced managerial objectivity

  • Point systems can be automated with the right attendance software.

Everybody loves points. Points are positive.  Points earn rewards. Points equal winning. This obviously holds true when it comes to workplace attendance, right?

Wrong. Turns out, attendance policies are like golf. You never want points. The more points you accumulate, the closer you come to getting life’s double bogey – unemployment. 

Many large and well-established companies in the US currently utilize attendance points in this way to discourage absenteeism and simplify disciplinary procedures.

Known as points-based attendance, it’s a method gaining popularity across hourly workforces today. 

In this article we’ll explore:

What is an attendance point system?

An attendance point system is an absence policy that penalizes employees with points every time they are late or absent for a shift. Accruing a certain number of these points results in disciplinary action, and with enough points, termination. 

 

Webinar: Points-Based Attendance Overview

 

Attendance point system examples

Amazon is perhaps the most well-known, albeit somewhat notorious, company with an attendance point system. 

Here is a breakdown of Amazon’s point system: 

  • 1 point = employee misses part of a shift
  • 2 points = employee misses a full shift without calling out at least 16 hours beforehand
  • 2 points with an “absence submission infraction” = employee misses an entire shift without calling out at least 2 hours beforehand

Points expire two months after the date they are assigned. If an employee receives three absence infractions and eight points within a two-month period, Amazon will consider firing them.

Walmart is another major company known for its points-based attendance policy which it adopted back in 2019. 

Here are the basics of Walmart’s attendance point system:

  • ½ point = employee arrives between 15 minutes to 2 hours late for a shift or leaves a shift between 15 minutes to 2 hours early. 
  • 1 point = employee calls out of work
  • 1 point = employee is late for over half their shift
  • 2 points = employee is a no-call/no-show

Walmart employees can receive up to 5 points before they are considered for termination. Points are reset to zero after six months. 

Attendance point system template

While both Amazon and Walmart’s attendance policies enforce strict adherence to schedules and effectively limit absenteeism, they often receive backlash for being unfair. 

If you are considering a points-based attendance policy for your business, it may be best to avoid copying Amazon and Walmart’s policies. Instead, adopt a basic point system and refine it over time. 

Here is a basic attendance point system template to get you started: 

 

Example Attendance Point System

disciplinary action for point accumulation

The timeline for removing points varies, but generally speaking, management should be lenient in this area. Points should typically be reset after roughly two months of perfect attendance. 

Special considerations should be made in the case of no call/no shows. On top of the points given, management should consider the following actions:

  • First no-call/no-show: verbal warning
  • Second no-call/no-show: written warning
  • Third no-call/no-show: termination

Legal considerations for an attendance point system

Are all absences created equal? 

Well, in theory, no. But in practice…sometimes. 

While attendance point policies are legal, they do have to comply with various laws protecting employees from discrimination. Unfortunately, some companies overlook these laws. 

Many “no-fault” or point-based attendance policies have no explicit provisions protecting special case absences from penalization. In essence, these policies unfairly treat all absences the same, no matter the situation. 

According to the EEOC, this is illegal. For an attendance point policy to be legal, it must excuse absences for legally protected reasons such as medical, disability, and sick leave. 

Here are the kinds of absences excused from disciplinary action: 

Family and Medical Leave Act

  • Military caregiver leave
  • Military qualifying exigency
  • Birth of a baby
  • Placement of a child for adoption or foster care
  • Care for a sick immediate family member
  • Serious health conditions

California Family Rights Act 

  • Pregnancy
  • Childbirth
  • Bonding with a new child

Americans with Disabilities Act

  • Substantially limited in one or more major life activities due to a physical or mental impairment

Non-compliance with any of these acts can result in some serious consequences. Back in 2011, the EEOC reached a $20 million settlement against Verizon for denying reasonable accommodations to hundreds of employees. 

At the time, Verizon had a “no-fault” attendance policy that made no exceptions for FMLA-protected absences. As such, employees found themselves repeatedly disciplined for taking medically-related absences.

Unfortunately, illegal attendance policies like this are quite prevalent in the workforce. 

In 2020, a study conducted by A Better Balance involving 18 major US employers showed that “over 80% of the attendance policies failed to make clear that employees will not receive points for qualifying disability-related absences.” Moreover, only 12% of the policies actually acknowledged that emergencies might prevent a worker from complying with company call-out procedures. 

It’s clear that not all employers utilize attendance point systems legally. If your aim is to deploy one in your organization, make sure to do it compliantly and fairly. 

Benefits of an attendance point system

If you choose to use an attendance point system, doing so could come with many benefits. Here are just a few you could experience: 

Reduced absenteeism

This is perhaps the most obvious benefit. Points give employees a clear and concise visualization of their attendance history, promoting punctuality. And with disciplinary actions clearly associated with certain point levels, employees will be extra careful to avoid point accumulation. 

Increased employee engagement

A point system helps employees feel more engaged in their work. Without clear tardiness and absenteeism policies, it is easy for employees to become lackadaisical in their attendance. With a point system, they are more likely to be invested in their attendance records and more likely to communicate with management when they might be running late. 

Whitepaper: Boost your employee engagement strategy

Enhanced managerial objectivity and transparency

A points-based attendance system holds management accountable too, not just hourly employees. With absenteeism points, subjectivity and managerial favoritism are eliminated, giving all employees an even playing field when it comes to disciplinary action.

Automate your point system with Workforce.com

Staff Point History Profile on Workforce.com

Assigning and keeping track of points can get pretty overwhelming when done by hand, especially if you are operating a company with over 20 employees. Luckily, there is a way around all this manual work.

With Workforce.com’s attendance point software, you can easily create a points policy that works for both managers and employees alike. The system is completely automated, assigning points based on deviations from scheduled time clock punches. You can even generate attendance reports, view employee point history, and set up alerts to notify managers whenever employees surpass a certain point threshold.

Cool stuff, right? Check out our feature walkthrough below to find out more, or contact us today to discuss how a point system could work for your business. We’d love to talk you through it.

Webinar: Points-Based Attendance Overview

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How to do a time audit [3 step guide]

Astronaut Dog Sitting and Working at a Laptop

Summary

  • Check the reliability of your data source: are you using outdated, manual strategies? — More

  • Look out for patterns across your system. Where are things going wrong? Too much overtime? Not enough breaks? Find out. — More

  • Translate your findings into long-term benefits for your business. — More

During the 2021 financial year, the Department of Labor’s Wage and Hour Division awarded more than $230 million in unpaid back wages to US workers and brought almost 25,000 compliance actions against employers. Clearly, it’s never been more important to be on top of your time and attendance data.

The nature of shift-based work makes keeping track of how much time employees are at work a bit more complicated and, therefore, more likely to land employers in hot water with the authorities. The healthcare industry is one such example and has had a number of high-profile cases of recovered back wages.

It can be tempting to view a time and attendance audit simply as a way to check in on employee work hours and ensure that they’re being paid the right amount. That’s certainly one function and a vital one, but a time audit process can do much more. With the right approach, a time and attendance audit offers a regular opportunity to fine-tune your business to boost productivity and time management while making sure the fundamentals are aligned and compliant.

Prioritizing your time audit process and integrating it into your management workflow is crucial since, as we’ve seen, not doing so can come at a high cost. Using time tracking software and following our step-by-step guide, your audit doesn’t have to be difficult or take up a lot of time. 

1. Check your data at the source for basic errors

There’s a useful phrase in the field of computer science that is worth making your audit mantra: GIGO or garbage in, garbage out. It means that the quality of your data outcomes is always dependent on the quality of the data you put in. In time and attendance terms, it means that you can head off a lot of problems by making sure your data is accurate before you do anything else with it.

Some common sources of garbage data include:

  • Outdated time tracking tools that don’t accurately record or verify the amount of time spent at work
  • Ad hoc overtime arrangements that make additional hours beyond the workday hard to verify
  • Paper records or spreadsheets that need to be filled out manually
  • Unapproved timesheets that go straight to payroll without managerial oversight

Taking a fresh look at how you gather, record, and sort your time and attendance data will highlight any weaknesses. Eradicating these bad habits and making sure you’re working from complete and accurate data is essential. Without that reassurance, all the auditing in the world won’t help you.

2. Flag areas that cause consistent problems

Time and attendance data can look overwhelming, even for relatively small companies. Knowing the areas that need the most managerial attention will streamline the audit process without you losing too much time and energy.

Checking your team members’ scheduled hours against actual time worked is a fundamental part of the time and attendance audit process. It is important to treat it as a high-priority task and not take it for granted or give it less attention than it requires. 

Deviations between hours scheduled and worked will identify areas where workers are underpaid, allowing you to redress the discrepancies before they become a legal matter. Attention to this area can also help you keep a close eye on your labor costs by taking control of your time and reducing any time-wasting activities from your daily schedules.

Overtime hours and break premiums are also important to keep track of, as this is where significant variations can occur. Unlike scheduled hours, which tend to come in specific time blocks, overtime and missed breaks are where you’ll find those awkward variations in pay. These variations can trip you up if not properly accounted for.

It’s good practice to design your timesheet templates to highlight key information, such as scheduled vs. worked hours, as well as breaks and overtime, as clearly as possible. Using tools like Workforce.com’s time and attendance solution makes this process much easier through real-time automation. It calculates the period of time worked, overtime rates, and break penalties, amongst other things.   

The easier you make it to maintain oversight of this information, the less chance it will catch you out.

3. Continuously improve with your refreshed data

The final step in the time and attendance audit to-do list is to make sure you squeeze every last drop of useful information out of your data. You’ve done the essentials; now’s the time to dig deeper and do the math to extract the long-term benefits for your business.

A great starting point is to calculate the percentages and statistics for relevant criteria for each pay period. How many shifts were employees on time for? How much overtime was used? Break down the figures further by team, location, or individual employee to spot the specific areas of your business that are falling short of time and attendance expectations — or exceeding them. This is all useful information that goes beyond the immediate need to check payroll accuracy. With this information in hand, you are in a better position to set up an action plan that will help you enhance your team’s time management skills.

You should also make sure that your newly improved timesheet data is accessible to anyone else who needs to use it. Human error is always a possibility, so not only will this make sure all angles are covered, but it will also ensure that the same audited data can be exported directly to payroll or made available to external auditors for tax and accounting purposes.

A time audit is a tune-up for your business

The most immediate benefit of a time and attendance audit is peace of mind knowing you’re not exposing your business to wage and hour lawsuits and that you’re getting the labor you pay for. But the long-term benefit of performing this task regularly is that you develop a rich library of data that helps you identify cost-saving measures and areas for improvement.

If conducting regular time audits is of interest to your business, you should go ahead and read our guide below on establishing a time and attendance system – this is the first step on a path to better time audits.

Whitepaper: Practical Guide to Time & Attendance Management

With features that deliver everything you need for regular, thorough time and attendance monitoring and integrations with your payroll system, Workforce.com can help your business thrive now and into the future. Sign up for a free trial or give us a call to get started. 

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Preventing employee time theft in restaurants

Summary

  • Employee time theft is when employees are paid for work they did not do

  • Employee time theft can come in various forms

  • Restaurant managers can prevent time theft with workforce management software

As a manager of a restaurant, when you think of employee theft in the workplace your mind may automatically go to blatant examples, such as staff stealing equipment, cash from the register, or even snacking on supplies. However, there’s a less blatant form of workplace theft: employee time theft.

While employee time theft is not always easy to spot, the impact is. Employee time theft directly impacts labor costs, and sadly, it’s not uncommon. Time theft can be prevented by investing in innovative time tracking software that ensures maximum employee productivity at all times.

What is time theft?

Time theft is when an employee is paid for time they didn’t work. It typically applies to hourly employees rather than exempt employees. Therefore, as a restaurant manager, you are at a high risk of being a victim of employee time theft.

What does the law say about time theft?

Unfortunately for employers, there are no explicit federal time theft laws, which puts businesses in a vulnerable position. While there are ways some businesses may be able to recoup losses through a civil suit, there is no guarantee this will be successful. So, employers need to make sure they’re doing everything they can to prevent time theft in the work environment.

Recognizing time theft in restaurants

There are different forms of time theft. Here are the major ones to look out for:

  • Falsifying timesheets: This is when employees misrepresent work hours. For example, an employee only worked 30 hours in a week, but they doctor their timesheet and say they worked 45 hours. If your restaurant uses temporary staff from staffing agencies, this is something to watch out for. A restaurant in Florida found it had $10,000 added to its payroll costs when a temp agency worker fraudulently misrepresented his work hours.
  • Buddy punching: This is when an employee clocks in and out for a coworker. If an employee is running a few minutes late and doesn’t want this to be recorded, they may ask a coworker (who’s already in the restaurant) to clock in. The reverse can also be true, employees can leave their shift earlier than scheduled, but have their buddy clock out for them.
  • Extended breaks: Employees may take too long on lunch breaks or go for unauthorized breaks like smoke breaks. This is likely to happen where there’s easy access to a back door.
  • Doing personal tasks during the workday: Instead of clearing tables, wait staff are surfing social media on company time or sneaking off to the restroom to take personal calls. A 2020 Digital Distraction & Workplace Safety survey revealed that the average employee spends 2.5 hours each workday looking at digital content that is unrelated to their job.

Uncovering time theft in your restaurant

While time theft can be difficult to prove, here are a few pointers that you may realize at your workplace:

 How to prevent time theft

Prevent time theft by using innovative scheduling and timekeeping software that ensures there’s no lost productivity from employees.

Use accurate scheduling software

According to the Fair Labor Standards Act (FLSA), employers must pay staff according to what’s recorded on the timesheet. Therefore, it’s important that your scheduling software creates the right shifts in the first place. Moreover, all schedules should properly align with hours reflected on timesheets, as this will prevent paying employees for hours they didn’t work.

Use an automated time clock solution

Eliminate the risk of falsifying time cards with a time clock app. Here’s how it works:

    • Staff clock in and out in an app with their personal IOS and Android devices.
    • Managers can guarantee the right worker is in the right shift, at the right place, at the right time with unique clock in/out passcodes, electronic photo verification, and GPS location data. This will directly eliminate buddy punching.
    • All clock-in data is automatically recorded, and the app generates electronic timesheets — the perfect solution for business owners who are tired of using stacks of binders full of paper timesheets.

Give your managers the ability to manage operations during the day

Provide your managers with a time and attendance system that stays on top of employee productivity. Managers should be able to monitor employees remotely — all from a computer or mobile device. This kind of monitoring should take the form of a live timeclock feed and tardiness notifications.

Managers should also receive notifications when employees clock in and clock out for breaks. With these instant notifications, it’s possible to cross-reference clocking in and out with the shift schedule to make sure there are no discrepancies in break times. Giving managers the ability to manage operations during the day ensures they can easily spot time theft.

Create and enforce firm time and attendance policies

Create attendance policies and communicate them clearly to your staff. Your staff might be unaware of their actions and how they can be perceived as time theft, so it’s important they know what time theft is and how they may be breaking company policy.

Make sure time and attendance policies include clocking in and out procedures, break periods, and cell phone and social media usage when on the clock. It’s crucial that employees know what time theft is and understand that it will not be tolerated. If necessary, make sure policies are enforced with disciplinary actions, as they may act as a deterrent.

Provide an enjoyable work environment

Burnout, low pay, and minimal benefits may make employees more likely to commit time theft. Employers should provide staff with enjoyable working environments where they feel valued, taken care of, and respected – this always helps reduce time theft. Consider implementing something like an employee reward system to create a culture of positivity and motivation. You could also regularly grant time off — or add in an extra shift — for workers who excel in their roles.

Prevention is better than a cure

While you can’t go back in time to stop prior time theft, you can certainly take steps to prevent it from continuing. Use automated workforce management software to empower employees to make the most of the hours they’re scheduled for. Contact us today to learn how you can get started.

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The four essential elements your time clock system should offer

When as many as 38% of employees admit to turning up late to work at least once a month, it’s clear that a time clock system that accurately tracks when staff start and finish their working day isn’t something companies can afford to overlook. Research has found that the accumulated minutes lost to tardy workers costs $1 billion a year in California alone.

If you’re considering implementing time clock software at your business, or if you’re one of the 38% of companies still relying on physical time cards and feel it’s time to upgrade, this checklist of features will ensure you choose a time clock system suitable for the modern labor market.

Electronic records for easier data handling

Verifying when employees start and finish their working day is only the start of what time and attendance data can do. This information is at the heart of your HR processes, so you need a time clock that integrates with other departments and systems, from payroll to tax compliance.

This is where the companies still relying on older time clock systems are really losing out. Not only does copying across time and attendance data into payroll or accountancy software add unnecessary hours of work, but it also adds the risk of payroll discrepancies, which can in turn lead to costly legal exposure. The Department of Labor raised more than 24,700 back pay compliance actions in 2021, totaling $230m in underpaid wages.

Using specialist time and attendance software to collate and update your data automatically as employees arrive and leave means more robust labor compliance. It also provides the ability to integrate that data over time, generating internal reports on productivity and efficiency to guide your future business decisions.

Automatic verification for efficient clocking in and out

Shift-based businesses don’t just lose out when workers are late. Managing shift changes as smoothly as possible is also vital, and a time clock system that creates bottlenecks as staff wait to clock in and out adds to your problems rather than solves them. If managers also have to spend time transcribing attendance data or double-checking timesheets, then you’re losing valuable hours every day at all levels of your business.

Once again, manual time clock systems that use punch cards or paper timesheets will struggle in this area. Even electronic code entry systems or key cards can slow down your workflow, as employees spend time pushing buttons or digging in their pockets and bags for whatever they need to satisfy the time-entry requirements.

When speed is of the essence, the latest biometric time clock systems have a clear advantage. Employees only need a thumbprint or to face a camera, and they’re ready to work. Managers benefit, too, with time and attendance data that’s accurate and ready to use as soon as staff is through the door. Mobile apps can speed the process up even more, allowing staff to clock in using their own phone as they arrive.

Manager oversight for company peace of mind

Trust is vital to the viability of any company. Research has shown that employees who feel their employer trusts them are 50% more productive and 76% more engaged in their work. The best time clock systems are therefore unobtrusive for staff and still give managers visibility and authority over time and attendance issues.

Manual time clock systems that rely on self-reporting arguably skew this dynamic in favor of staff, giving managers no reliable way to verify the data. The practice of “buddy punching,” in which staff clock in for absent colleagues, is a typical weakness of this sort of time clock system.

Biometrics swing the pendulum in the opposite direction, using staff’s biological data — fingerprints, retinal scans, facial recognition — to prove they are where they say they are when they claim. It’s airtight from a management perspective but unpopular with employees. A survey found that 69% of the public is uneasy with the use of biometrics.

Time clock systems that utilize mobile apps offer a great compromise. Employees clock in using GPS and sometimes a selfie on the premises, which their manager then checks against their schedule before approving the clock in or out time. This system also gets around some concerns regarding biometrics, as the selfie is approved manually rather than storing the data in a database or feeding it through a third-party biometric algorithm.

Many automatic time clock systems also display cost variances for shifts, showing money saved or lost if there is a difference between an employee’s scheduled time and the actual time they work. Offering oversight into labor costs at a granular level is one of the main benefits of a precise time clock system.

Precise entry tracking for spotless payroll

This one may seem obvious, and you might think every time clock system being used today would be able to correctly log the exact time workers arrive and leave, but anything that relies on employees or managers manually recording hours worked is prone to inaccuracy.

As many as 80% of U.S. employers report having to fix mistakes in manually submitted timesheets, as staff forget to clock in or out or because errors creep in as information is copied across by hand. That’s a big problem when you consider that 1 in 10 companies still rely on inaccurate printed timesheets or offline spreadsheets, according to Workforce.com’s 2021 research.

At the very least, when shopping for a new time clock system, make sure to invest in a digital point of entry that automatically records the precise time employees start and end their shifts so managers can easily check against their scheduled hours. Some WFM software offers mobile GPS tracking for this very purpose, setting up a geofenced area around your workplace that staff must be inside in order to clock in on their phone. If there’s ever a dispute over hours worked or wages paid, you need your data to be irrefutable. If your only defense is an easily edited spreadsheet or drawer full of handwritten paper records, you’ve weakened your position for no good reason.

Future-proof your time clock system for the best return on investment

The labor market is changing fast, and you want a time clock app that can evolve and scale to your circumstances for the foreseeable future. Many of the systems currently used by U.S. businesses are outdated and will only become more inefficient over time.

It’s not enough to simply think of a time clock as an HR tool for checking time and attendance. It’s a holistic part of your entire business and should be as up-to-date as any other vital system. Whichever method you use to get staff clocked in and out, Workforce offers state-of-the-art app-based time clock solutions, deep reporting options, and is able to scale and grow alongside your business.