Why Track Employee Hours Worked?

Why track exactly how many hours every employee works?

For an organization with primarily hourly employees, this question might be very straightforward, as tracking hours worked is required to know how much the employees need to be paid and how much overtime is owed.

But for organizations that have primarily (or even exclusively) salaried roles, and especially those with flexible paid time off (PTO) policies, it can become more of a question, Why does it matter if an employer tracks how much an employee works in this scenario?

There are actually quite a few reasons to do so, even when it’s not directly required for payroll administration. Let’s take a closer look.

Here are some of the main reasons to track hours worked for all employees—regardless of whether they’re salaried:

• Tracking hours worked can make it simpler to track time off because it can be all part of the same system. Tracking time off includes sick days, holidays, and all types of leaves of absence. For example, tracking time worked and time off is critical for accurate calculation of Family and Medical Leave Act (FMLA) absences, especially if those absences are not taken in full-day or full-week increments.
• Some programs, such as FMLA regulations, require employees to have worked a minimum number of hours to be eligible to participate. This is easier to gauge if hours are tracked and is more relevant if it can be argued that the employee may not be eligible.
• Not tracking total time off (as noted above) for some employees could result in situations where employees inadvertently are allowed to take more time off than the company policy allows. This not only potentially decreases overall productivity but also can even appear to be discriminatory if it affects only some employees and not others. (If other employees are subject to strict adherence to the policy, this appears unfair and can breed resentment as well.)
• Some states have rest and lunch break requirements, which must be tracked to show proof that the employer is meeting this obligation. (Tracking also allows for follow-up if some employees are not taking their breaks.)
• Employers have an obligation under the Fair Labor Standards Act to pay employees for all hours worked, which includes time in which employees were “suffered, or permitted” to work. Without time tracking, it is more difficult to see if employees are working at times when they’re not being paid, which can be problematic.
• Tracking total time worked can allow employers to make assessments of where there are staffing problems. For example, if one department or group consistently works far more hours than everyone else, there may be justification to hiring additional staff for that group. Taking proactive measures like this can help keep employee morale up.
• Being a salaried employee does not automatically mean that the employee will be exempt from overtime regulations. If an audit reveals an exempt employee was misclassified, it will be much easier to assess the overtime pay obligations if accurate records were kept. Likewise, if the company is sued for overtime pay in such a scenario, it will be helpful to show the limits of such obligations rather than relying on estimations.
• Tracking hours worked can lead to more consistent employee arrival times if this is something that is important to your organization. It can also lead to a reduction in what is commonly known as “time theft”—when employees take longer breaks from work (such as on lunch or rest breaks) than they’re meant to.

Bear in mind there may also be consequences to tracking time too closely without flexibility—especially for salaried employees who may feel they’re being punished if a policy is implemented without a good business justification communicated at the same time. Making the tracking simple for employees is critical.

*This article does not constitute legal advice. Always consult legal counsel with specific questions.
 

About Bridget Miller:

Bridget Miller is a business consultant with a specialized MBA in International Economics and Management, which provides a unique perspective on business challenges. She’s been working in the corporate world for over 15 years, with experience across multiple diverse departments including HR, sales, marketing, IT, commercial development, and training.