Best Practices for Time Clock Punch In and Out Policies

Best Practices for Time Clock Punch In and Out

July 11, 2022

When you run a business, your most important assets are your employees. They have the skills and knowledge to keep your business operating efficiently. Of course, to have things run smoothly you need your employees to work their designated hours. Whether that means a traditional 9-5, a night shift, or weekend hours, keeping to a schedule is important for your business’s success and the health of your employees.

Read on to learn more about the importance of this practice, as well as the best time clock policies for employees you can put in place.

Importance of a Clocking In and Out Policy

Having time clock procedures and policies in place is important for many reasons. These are simply a handful to consider:

Tracking Hours

Of course, one of the most important parts of a time clock punch in and out policy is holding employees accountable for their hours worked. By keeping track of these hours, you can have a holistic view of your business’s productivity and the salaries that need to be paid out.

Additionally, every employer covered by the Fair Labor Standards Act (FLSA) must keep certain accurate records for each covered, nonexempt worker. The records must include accurate information about the employee and data about the hours worked and the wages earned. Having a policy in place helps ensure your workplace remains compliant with these rules.

Accounting for hours also ensures your employees are being paid the correct amount. While hourly workers may receive a standard salary, they may earn more if they work overtime or less desirable shifts. Time tracking can allow you to see at a glance what hours employees are working and to ensure that their paychecks correctly reflect their hours.

Accurate Payroll

Knowing the hours your employees work is essential for completing payroll efficiently and accurately. Employees are entitled to be paid for all hours worked in a workweek. In general, “hours worked” includes all time an employee must be on duty or at the place of work. In addition to typical duties, this can extend to time spent in training, traveling from site to site during the day, and doing repair work.

Having the clocked number of hours worked by each employee helps you complete payroll correctly and to pay the right amount in taxes. Accurate payroll helps your business to avoid fines and penalties and keeps employees happy and motivated to continue working.


The right time clock rules for hourly employees (and salaried employees, for that matter) can help improve productivity. Rules such as when employees need to clock in and out can ensure your staff are correctly accounting for their hours worked.

In addition, rules can help prevent things like buddy punching, behavior that is detrimental to your organization’s efficiency.


Time records that are incredibly precise can help your business budget better. An overview of the record of employee time can show you whether your staff is regularly working more than 40 hours. In this case, you may be paying your employees more in overtime, and it would be most cost-effective to make new hires.

At the same time, you may see that hours worked and productivity aren’t aligning. You may choose to reallocate your budget to different departments or shuffle around your staff to find a better balance.

As you can see, having time clock policies for employees in place can be important for keeping your workplace productive.

Best Clocking In and Out Rules

Of course, it’s not enough to simply ask employees to use a time clock to record hours. There must be a clear clocking in and out policy in place to encourage employees to use the system properly to achieve the most benefits.

Here are some clocking in and out rules your business should have in place:

When Employees Should Clock In and Out

First things first: it’s important to have clear rules around when employees clock in and out. Essentially, they should clock in and out when their designated hours are set to start and end (unless given overtime, etc.). Make it clear that employees should take care of personal business (e.g., stopping by the lockers, grabbing lunch, etc.) before clocking in and should leave the premises after clocking out.

These expectations help hold employees accountable for their hours worked.

Who Is Authorized to Clock In and Out

It’s important to articulate that employees should clock only themselves in and out for their hours worked. Buddy punching can occur when one employee asks another employee to clock in on their behalf. While this seems small, it has cost U.S. employers $373 million a year.

One way to help prevent buddy punching is having your employees use a sensitive clock-in password or longer pass-phrase rather than a traditional swipe card or code. Biometric systems are also a great way to prevent this.

However, one of the best things an organization can do to avoid this practice is to create trust. Incentivize employees to use a time clock correctly by rewarding when these practices are followed.

7-Minute Rule

When setting up time clock policies, you should be transparent about how time is being calculated. After all, it’s rare that an employee will be clocking in and out exactly on the hour every day. Things happen, like running a minute or two late or a final task taking longer to finish up at the end of a shift.

Many companies choose to use the 7-minute rule, a guideline created by the Fair Labor Standards Act for employers to round employee time correctly for payroll. According to recent studies, about 55% of employers round employee timesheets up and down for payroll purposes.

Under these rules, employers can round employee time in 15-minute increments (or time to the nearest quarter hour). Any time between 1-7 minutes may be rounded down, and any minutes between 8-14 may be rounded up. Make sure employees know these rules so they aren’t caught off guard by any timesheet rounding.

What Happens When a Time Clock Is Misused

Just like you should have rules for how employees should use a time clock, it’s also important to have policies in place for what happens when they’re not followed. For instance, if you realize an employee has worked off the clock, is habitually punching in late and leaving early, or participating in buddy punching, what should be done?

In many cases, it’s best to start with a warning. If the behavior doesn’t change, then it may be time for more disciplinary action.

How to Introduce a Clocking In and Out Policy to Employees

Change can be difficult at an organization, and this includes when introducing a time clock. When you create a time clock punch in and out policy, it’s best to follow these steps to help with the transition:

Explain why you’re utilizing a time clock, highlighting that it benefits everyone at the organization.

Show employees how to properly clock in and out along with providing policies and where to find important information.

Ask for feedback and answer any questions your employees have during this time.

Organize training sessions to ensure employees understand the new policy and how to use the technology.

Set a trial period where it may be okay if mistakes are made and allow for time for the process to be refined.

A time clock punch in and out policy need not be set in stone. Make sure to ask for feedback from managers and employees to understand whether the new process is working and if any updates need to be made. Chances are, these rules and policies may change as your business grows and employees become more comfortable utilizing a time clock.

Trust Time Clock Technology to Help

It can be easier to enforce time clock procedures and policies with the right technology on hand. Unfortunately, traditional time punch technology like cards come with a myriad of problems.

First, they can be easily misplaced or lost. It’s also easier to complete buddy punching with these physical cards. Even codes have their issues since they can be forgotten or shared.

FaceIN® employee time clocks replace conventional fingerprint, iris scan, and hand readers to eliminate buddy punching and provide a more hygienic and reliable solution than other biometric time clock systems. Using technology similar to what a smartphone uses for Face ID, your employee can clock in, and only they can clock in for themselves. Other employee time clock systems like fingerprint scanners and badge readers are also viable options when equipped with the right employee time and attendance software.

Learn more about how Lathem PayClock Online software and time clock technology can help improve your business’s time clock punch in and out policy. 

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