11 Best Practices for Employee Payroll Time Tracking
Expertise provided by Meagan Fox, BBSI Payroll Specialist
Tracking your employees’ time at work is essential for simplifying payroll and providing fair and appropriate compensation. Effective payroll time tracking begins with implementing best practices that will help you improve productivity, efficiency, and culture.
What Is Time Tracking?
Time tracking is any process or system used to track the amount of time worked by employees, including their start and stop times, meals, and other breaks. It helps workers follow their assigned schedules and ensures equitable pay, as it simplifies the issuing of accurate hourly wages, overtime, and irregular pay, such as sick leave.
Payroll time tracking also helps employers manage employee schedules. Whether you process payroll payments on a biweekly, semi-monthly, or monthly schedule, time tracking tools help you consolidate regular hours with overtime, minimizing disbursement errors.
Time tracking also helps employers identify and promptly solve issues like tardiness and wage theft. It can even uncover the root causes of employee behaviors and proactively address problems like burnout before they occur.
Why Is Time Tracking Important?
Per the Fair Labor Standards Act (FLSA), employers must maintain an accurate record of the hours nonexempt employees work and the wages they earn. In practice, that means tracking clock-in and clock-out times, breaks, and total hours worked in any given workweek.
Per the FLSA, exceeding 40 hours per workweek constitutes overtime. But some states and territories also have daily overtime thresholds.
- More than eight hours: California, Alaska, and Nevada (plus the Virgin Islands and Puerto Rico)
- More than 10 hours: Colorado
- More than 12 hours: Oregon
While certain salaried employees are exempt from overtime and not subject to overtime pay after exceeding these thresholds, time tracking is still helpful. It allows you to monitor billable hours, ensure a manageable workload, and track the ongoing demands of special projects. Plus, having salaried employees track the time they work on particular projects can help you identify overworked team members and proactively mitigate burnout.
Across all employees, time tracking can identify issues in workplace culture. For example, recurring absences may indicate that employees are fatigued and need additional PTO.
As an employer, the last thing you want is to create a culture that fuels employee turnover or dissatisfaction. Tracking time will help you make more informed decisions about workload distribution and staff management.
11 Best Practices for Employee Time Tracking
Whether your organization is staffed with hourly employees, salaried employees, or a mix, time tracking is essential. But getting the most out of your time-tracking strategy requires adapting it to your employee’s various roles and responsibilities.
Here are 11 timekeeping best practices to help maximize the ROI of your effort.
1. Set Clear Rules and Expectations
One of the most important considerations for any time-tracking program is setting the same rules for all employees across your organization. You should document each requirement and expectation clearly, then communicate them to everyone. Clear boundaries and transparency make it easier for employees to follow your guidelines and avoid feelings of favoritism.
2. Keep It Simple for Your Employees
The more streamlined your timekeeping process is, the easier it will be for your employees to adapt and comply with the requirements and expectations.
Identifying which time tracking tools will work best for your organization depends on organizational culture and your employees’ backgrounds (e.g., training, technological fluency, etc.).
Many companies want to dive into an advanced time tracking implementation, but your workforce might not be equipped to use these methods. For example, they might lack the technological literacy or necessary device to use a given application or software. Remember that modern methods can also be simple, such as facial recognition, which only requires employees to stand in front of a scanner.
3. Explain the Value of Time Tracking to Your Team
You can ensure faster employee buy-in to time-tracking requirements when they understand why it's necessary and how it benefits them. For example, you should communicate to your hourly employees how time tracking will ensure fair compensation and talk to salaried employees about the benefits detailed above, like avoiding burnout. Most importantly, make sure you listen and cater to your staff’s needs.
4. Track Non-Billable Activities
Tracking non-billable activities such as training, company meetings, or travel from one site to another allows you to identify and mitigate inefficiencies and bill projects more accurately.
For example, identifying excessive travel time between locations for work or training can help:
- Decide whether to consolidate space (e.g., combine locations)
- Reorganize schedules (e.g., fewer but longer training sessions)
- Reroute traveling employees more efficiently (e.g., more linear stops)
5. Track Meals and Breaks
Meals and breaks are essential to your employees' health and overall wellness and, in many circumstances, a legal obligation. Full, unpaid meal periods (i.e., 30+ minutes) are often required for long shifts. Time tracking ensures that these and other breaks are observed fairly by both the employer and the employee, avoiding potential monetary or regulatory consequences.
If employees are likely to forego a break, you may consider an automated system that notifies them to take one after a certain amount of time. Similarly, requiring your employees to clock out after a certain amount of hours can help ensure they don’t skip lunch.
Monitoring these breaks can also help you identify potential scheduling needs. If employees regularly extend their breaks, it might make sense to extend them for everyone. Or, if your employees often skip meals (or try to), that may indicate understaffing and burnout.
6. Normalize Healthy Working Hours
In some cases, tracking the hours worked by your staff — especially salaried employees — can reveal issues in work-life balance. And this can be a crucial first step toward addressing them.
For instance, if employees are consistently working outside of business hours, time tracking will allow you to identify the pattern and discuss workload optimization with the employee to establish a healthier work-life balance.
7. Use Time Tracking Software for Accurate Records
With greater accessibility to time tracking software, it is easier than ever to empower your employees to record their work hours. However, some employees may try to abuse that freedom to find loopholes in the system.
A study conducted by the American Payroll Association (APA) revealed that as many as 43% of employees admit to time theft or exaggerating the number of hours worked in a given shift.
One strategy to minimize time theft is to implement geofencing, which restricts clocking in or out of work to an employee’s physical presence at a work site. This, along with the other best practices on this list, can prevent your employees from inaccurately reporting time worked.
8. Automate Your Payroll
Most payroll inaccuracies are due to miscalculations of hourly rates and the employees' time worked — especially concerning overtime. These mistakes are more likely with manual time entry and pay calculations, but implementing an integrated timekeeping system enables automated payroll calculations to virtually eliminate errors and reclaim administrative bandwidth.
9. Keep Long-term Records
Recordkeeping goes a long way toward streamlining employee time tracking for compliance purposes and general oversight. Keeping long-term records can help you identify employee misclassifications and resolve issues during or before an audit.
The FLSA requires employers to keep payroll records for three years, but you can keep them longer. And if you have the space, a business need or anticipate potential claims, you should consider keeping them for as long as you can. However, this requires safeguarding sensitive personal data stored on-premise or in the cloud to minimize the risks of unauthorized exposure. Should you improperly secure payroll data and suffer a cybersecurity or physical breach, the consequences could be severe.
10. Review and Audit Time Tracking Reports
As much as payroll and timekeeping software work hand-in-hand, their functions should be implemented by separate departments. If timekeeping systems are separate from HR systems, managers or other personnel can conduct report reviews without revealing personal information.
In the long run, delegating time tracking puts you in a better position to understand how your employees work and which times are the most productive throughout the day. You’ll also have a clearer picture of weaknesses and risks to solve them sooner.
11. Use Reporting To Improve Underperforming Areas of the Business
As previously mentioned, you should leverage the increased visibility provided by employee time tracking tools to study your employees’ behavior trends and identify and implement any necessary adjustments. Then, depending on the circumstances, you can modify schedules for more flexibility or begin corrective action.
- More scheduling flexibility: Suppose your time tracking report reveals an employee is late every Tuesday and Thursday. When asked, they tell you that they’re responsible for dropping their children off at school on those days. You could adjust their schedule to start and end 30 minutes later rather than discipline them for understandable circumstances.
- Corrective action: If the report shows that an employee uses all their sick days on Mondays, there’s a strong likelihood that they’re abusing the company policy. Discussions and corrective action are warranted, especially if their repeating absence disrupts their team or department’s workflow.
Time tracking tools can help you identify and solve these issues actively rather than passively.
How BBSI Helps Companies with Time Tracking and Payroll
Companies looking to optimize their time tracking and payroll can rely on BBSI to meet their needs. Our proprietary payroll portal, myBBSI, integrates with widely used payroll software like TimeNet to help minimize payroll pain points.
When business owners partner with BBSI, they also get paired with a local Business Unit team which includes a Payroll Specialist who has years of experience processing payroll for businesses. Your Payroll Consultant will also work with you to review your time tracking and payroll to determine any patterns, outliers, or inaccuracies.
Contact your local branch today to learn how BBSI can help streamline your payroll.
Disclaimer: The contents of this white paper/blog have been prepared for educational and information purposes only. The content does not provide legal advice or legal opinions on any specific matters. Transmission of this information is not intended to create, and receipt does not constitute, a lawyer-client relationship between BBSI, the author(s), or the publishers and you. You should not act or refrain from acting on any legal matter based on the content without seeking professional counsel.