An employment contract is essentially an agreement between your business and an individual worker for them to trade their time, services and expertise for a specific amount of money. Workers that you pay on an hourly basis should receive compensation for all the time that they work, including overtime wages for hours over 40 in a given workweek.
Every staff member will clock in and clock out via a standardized system that your company operates. Whether you have an old-school mechanical device that produces paper time cards or a digital timekeeping system, your company has an obligation under the Fair Labor Standards Act to maintain each worker’s time clock records.
This obligation could serve as a protection for your company if someone wants to allege that you did not pay them what you owe.
Time clock records provide authoritative proof of when someone worked
Having daily documentation of when someone starts and ends their shift makes it easy for you to accurately compensate them after every workweek. The records produced, whether digital or physical, are something that your company has to maintain for at least three years. Businesses can decide to retain time clock records for as long as they see fit, possibly indefinitely.
In a situation where a worker tries to claim that your company did not pay them what you should have, going back through your records to show when they started and ended each shift and how you arrived at the amount that you paid them will typically be the easiest way to show that your company did not violate the law.
Wage claims by current and former workers can hurt your business
If a worker claims that your business did not pay them for their labor, your company could experience multiple negative consequences from that allegation. It could harm your reputation with current and prospective future workers.
The idea that you don’t pay your staff might also damage your reputation with customers, clients and the local community. Unsubstantiated claims could result in an investigation that could put your company’s licensing or accreditation at risk in some cases.
Having the records and skills necessary to push back against wage claims made by people the company employs can protect your business from financial hardship of a successful claim and the social damage unpaid wages could cause your company.