Contents
“Am I required to track my employee’s time?” I’ve heard this question from new business owners, managers, entrepreneurs, and startups. If you’re asking this question, don’t fret. Starting a new business or hiring your first employee is a big milestone. Let’s make sure you do it right!
The answer is yes, you need to track your employee’s time and hours.
Federal and State Requirements Regarding Tracking Employee’s Hours
If you are an employer (as in you have employees) then keeping eligible and accurate records of the hours your employees work is federally required. You may have specific local requirements, too, depending on the state you’re in. We won’t discuss that here so I recommend talking with an employment law specialist or doing a bit of research into your state’s laws regarding employee hours and time tracking.
How Do I Know I’m Tracking Employee Time Correctly?
Needless to say, every employer is legally required to track employee’s time. Luckily, how exactly this is done is subject to each individual employer. You can choose how you want to track your employee’s time so long as it meets the following requirements.
- Your records need to show hours worked each day by your employees.
- Your records need to show hours worked each workweek by your employees.
- Time records must be complete and accurate.
It’s as simple as that, and that’s one reason I love the time tracking industry. When it comes down to it, you really just need concise and accurate reports of your employee’s hours. So long as you have this, you’re generally in the green.
Time Tracking Leads to Getting Employees Paid (Payroll)
Time tracking is the first step in the larger process of getting your employees paid, also called payroll. To ultimately get your employees paid, you first must record certain employee information as well as track and document their time worked. Time worked associated with a pay rate becomes earnings, and thus you can pay your staff.
How Long Do I Have to Keep My Employee Time Records?
Another great question.
You must maintain employee time records for a minimum of 2 years. If you just opened your doors (congrats!) make sure to start documenting employee hours immediately even if it’s on excel or paper. This is totally legal (however informal) and will get you started until you can get an official time clock software.
It is completely optional to keep time records from before 2 years ago, although I generally recommend keeping as much as you can. They may prove useful should a dispute regarding hours worked or pay ever arise. You may also find them useful if you’re trying to gauge how many hours you should offer a new job position your company is opening up.
I’ve encountered the latter situation many times and found it very useful to see how many hours I offered to a similar job in the past. Storage of time records and time tracking are generally quire neat and easy with the right time clock software, too.
How Should YOU Track Your Employee’s Time?
Time clock software is the default method for time tracking nowadays. If you’re in the market for a time tracking software or app, or something similar, check out my blog on the different ways small businesses typically track employee time here. This may help you identify exactly how you should track your employee’s time in your business. I also share the top 5 time clock software programs I recommend for small business owners, managers, and entrepreneurs.
Conclusion
Tracking employee time is required for any and all U.S. employers. The requirements are simple. You need to track hours worked each day, each workweek, and your records need to be accurate and complete.
How you choose to track and document employee hours worked is ultimately up to you, although there are definitely some best options. Consider what’s best for your unique situation, although most businesses will use a time clock software. You may have another timesheet program, time tracker, or may even let your employee’s write down their time worked.
Keep employee time records for the last 2 years worked at minimum, but keep more if you have the capacity. Whatever the case, track your employee time accurately and with organization, as it is a federal requirement. And, of course, you don’t want to risk overpaying or underpaying which happens all the time without a solid time tracking method in place.
Have Any Questions?
This is not legal advice, but just an answer as to whether you need to track employee time (which is a YES). Some helpful tips are included regarding how you should approach this business need.
Reach out to me at grant@timeclick.com or call us at (435) 753-4102 to learn more about how you should track time. You can also find me on any of TimeClick’s social media platforms. I’d love to hear your questions, feedback, or other considerations!