The Role of Timekeeping Tech in Employment Law Compliance

Timekeeping might seem like a straightforward task: track when employees clock in and out, process payroll, and move on. But in reality, it’s one of the most scrutinized areas of employment law compliance. With wage-and-hour violations on the rise and enforcement tightening across the country, even honest mistakes can lead to audits, fines, or worse.

In this blog, we’ll break down:

• The employment laws that most commonly trip up small businesses
• Why detailed recordkeeping is more critical than ever
• How modern timekeeping tech helps you stay compliant
• What your software can’t do, and where human oversight still matters

Let’s start with the basics: what exactly are you required to track, and what’s really at stake when you get it wrong?

Understanding Employment Law Compliance: What’s Actually At Stake?

If you’re running a business, you're already subject to a tangled web of employment law compliance. Ignore it, and you’re gambling with audits, lawsuits, and fines. The good news? Most of it boils down to keeping clean, consistent records and respecting your employees’ time.

Which Big Laws Do You Need to Know?

Here’s the short list of heavy hitters in the employment law compliance arena:

• Fair Labor Standards Act (FLSA): Sets the baseline for minimum wage, overtime pay, and recordkeeping.
• State Wage and Hour Laws: These can be more stringent than federal standards. For instance, California has specific mandates regarding meal and rest breaks.
• Meal and Rest Break Requirements: Vary by state and are enforceable down to the minute.
• Child Employment Laws: Govern the employment of individuals under 18, with strict rules about hours and job types.

It's crucial to remember that state laws can impose stricter standards than federal ones, making it essential to be aware of the regulations specific to each state where your business operates.

Why Recordkeeping is a Bigger Deal Than You Think

You’re required to keep detailed time records for non-exempt employees — aka, anyone eligible for overtime. This means tracking:

• Hours worked each day
• Total hours worked per week
• Overtime hours
• Breaks and meal periods (in certain states)
• Wage rates and total compensation

Non-Compliance Isn't a Slap on the Wrist

These consequences of employment law compliance aren’t just hypothetical. Violations can result in significant financial penalties. For instance, in the 2024 fiscal year, the Department of Labor recovered over $273 million in back wages due to FLSA violations, with overtime violations accounting for the majority of them.

To illustrate the gravity of employment law violations, consider these recent cases:

Seattle Hospital Pays $100 Million in Damages

In April 2024, a jury in Seattle awarded nearly $100 million in damages to employees of a prominent hospital. The hospital system was found to have violated state employment laws by rounding time clocks and failing to provide required second meal periods for shifts exceeding ten hours.

Security Company Faces Penalties for Years of Non-Compliance

A security company in Indiana faced its third violation since 2018 for failing to pay guards overtime at time and a half for hours worked over 40 in a workweek. In January 2024, the U.S. Department of Labor assessed the company $27,597 in civil money penalties and recovered $28,334 in back wages and damages for 31 workers.

Restaurant Fined for Child Labor Violations

In December 2024, a restaurant in Napa was fined $45,570 for child labor violations, including allowing minors as young as 14 to work outside permitted hours and operate hazardous equipment.

Beyond financial repercussions, non-compliance can damage employee morale and your company's reputation. Ensuring accurate timekeeping also means fostering a fair and transparent workplace.

How Timekeeping Technology Supports Employment Law Compliance

Timekeeping tech has come a long way from spreadsheets and dusty punch cards. Today’s systems are built with compliance in mind, helping employers proactively address the kinds of wage-and-hour violations that trigger audits, lawsuits, and costly fines. These tools flag risk, surface anomalies, and generate audit-ready data with very little manual effort.

Key Features That Keep You on the Right Side of the Law

When you’re shopping for timekeeping tools, prioritize those with:

Payroll Integration

When your time tracking software talks directly to your payroll system, there’s no need to manually input hours worked. That reduces the risk of rounding errors, data entry mistakes, and late payments. 

If the software doesn’t integrate with your payroll system, ensure employee hours can be quickly uploaded to payroll via a timekeeping software report. This is also important in case of tech outages. 

Either way, you should never have to manually input hours into payroll - no one has time for that. 

Automated Break Tracking

In states that mandate meal and rest breaks, modern systems log these automatically and even send alerts to managers when employees miss a required break or approach overtime.

Geo-Fencing & Biometric Login

Want to stop off-site clock-ins or buddy-punching? Tools like facial recognition, fingerprint scanning, and geo-fenced locations ensure only the right employee clocks in at the right place and time.

Job and Project Coding

By assigning hours to specific tasks or job sites, employers get granular insight into labor costs and a more defensible position when it comes to classification audits or wage disputes.

Editable Logs with Audit Trails

Mistakes happen, but every correction should be documented. With built-in audit trails, you can adjust records when needed without compromising data integrity or legal defensibility.

Keep in Mind: Regulators don’t just care about what you paid. They want to know how you tracked, calculated, and justified it.

The right timekeeping platform helps you avoid noncompliance before it becomes a problem. And in a landscape where wage laws vary wildly by state and shift constantly, that kind of prevention is a major competitive advantage.

What Your Timekeeping System Can’t Do Alone

Even the best timekeeping software has limits. It’s a tool, not a legal advisor, not a compliance officer, and definitely not a replacement for sound judgment.

Software Can Track Time, But It Can’t Interpret Risk

While timekeeping platforms automate essential functions, they can’t tell you if you’re adhering to employment law compliance correctly. For example:

• Employee Classification: Software won’t warn you if you’ve misclassified a worker as exempt from overtime.
• State-Specific Rules: It can log a missed break, but won’t confirm whether a break is legally required in your state.
• Policy Changes: Your platform won’t notify you when wage laws change or how those changes impact your team.
• Audit Readiness: It can store records, but it can’t help you prepare your narrative or strategy if you’re selected for a Department of Labor audit.

That’s where expert guidance comes in.

Human Oversight Bridges the Gap

When paired with experienced support, your timekeeping tech becomes part of a larger compliance strategy. A strategy that’s proactive, defensible, and tailored to your business. The goal isn’t just using your system. It’s using it well, with the right people in your corner.

Staying Ahead with Smart Timekeeping and Employment Law Compliance

Running a compliant business means building systems that are accurate, defensible, and adaptable. We’ve covered the key employment laws that govern timekeeping, the role of technology in mitigating risk, and the human expertise required to fill in the gaps software can’t cover.

At BBSI, we support our clients with more than just tools. We provide tailored guidance to help you navigate complex employment laws, audit-proof your practices, and stay aligned as rules evolve.

If you’re unsure whether your current setup is truly compliant or if you have specific questions that this blog didn’t address, please reach out to your local BBSI Business Partner. We’re here to help you stay ahead, not just keep up.