Is Time Tracking Necessary for Salaried Employees in the US?

Written by Asim Qureshi
By Asim Qureshi, CEO Jibble

Time tracking in the US involves accurately documenting when employees start and finish their work, as well as any breaks or periods of absence. Generally, time tracking is essential for ensuring proper compensation, managing productivity, and complying with labor regulations. Various methods, such as time clocks, electronic systems like timesheet software, or manual timesheets can be used to track and record employee work hours.

In the US, time tracking requirements differ for salaried and hourly workers, as per their respective compensation structures, and legal obligations.

In this article, I will go through:

Time Tracking Regulations for Hourly Employees
Time Tracking Regulations for Salaried Employees

Time Tracking Regulations for Hourly Employees

Hourly employees are workers who are paid based on the number of hours they work. Their wages are typically calculated by multiplying their hourly rate by the number of hours they have worked during a specific period, such as a week or a month.

Unlike salaried employees who receive a fixed amount of pay regardless of the hours worked, hourly employees’ compensation is directly tied to the time they spend on the job.

Hourly employees may be entitled to additional compensation for overtime hours worked beyond a certain threshold as mandated by labor laws. They often have their working hours tracked through timekeeping systems, such as time clocks or electronic timesheets, to ensure accurate payment for their work.

While time clock rules and regulations may vary among different countries, there are certain universal regulations that all US states must follow for their hourly employees:

Working Hours and Compensation for Hourly Employees

Hourly employees must be compensated for each hour they have worked. The number of hours an hourly employee should work per week is determined by the employer.

Employees who work more than 40 hours in a week must be paid by their employers at a rate of 1.5 times their regular hourly wage for overtime hours. While employers have the ability to make changes to an employee’s time card without their awareness, they are still obligated to compensate the employee for all the hours they have worked.

According to the Fair Labor Standards Act (FLSA), timesheet records must clearly indicate the start and end times of a worker’s shift, as well as the total number of daily and weekly work hours.

Hourly Employees Clock-in and Clock-out Rules

It is against the law for employees to work off the clock. If employees are required to work off the clock, they have the right to file a complaint with the U.S. Department of Labor or pursue a lawsuit under the Fair Labor Standards Act (FLSA) to recover any unpaid wages.

It is illegal for employees to work off the clock. Employees who are asked to work off the clock have the right to file a complaint with the U.S. Department of Labor or pursue a lawsuit under the Fair Labor Act to recover unpaid wages.

Following the 7-minute rule, employee clock-ins and clock-outs should be rounded to the nearest quarter of an hour.

Employers cannot ask employees to work or perform any work-related duties before officially clocking in and starting their scheduled shift. Additionally, it’s essential for employers to ensure that employees wait until their designated shift start time before clocking in.

To comply with the FLSA, accurate timesheet records must be maintained for clock-ins, clock-outs, overtime tracking, and employee breaks.

What are Insignificant Time Intervals?

When it comes to recording working time under the FLSA, occasional and insignificant time periods that fall outside of scheduled working hours, which cannot be accurately recorded for payroll purposes, may be disregarded.

Courts have deemed such time periods as De Minimis, meaning they are insignificant. This rule applies when there are uncertain and indefinite time intervals involved, typically lasting only a few seconds or minutes, and when not counting such time is justified by practical considerations in the industry.

However, it is important to note that employers cannot arbitrarily neglect to count any portion, no matter how small, of working time that can be reasonably determined.

For instance, if an employee clocked in and was then assigned to another job but decided to go home without completing any additional work or clocking out because they felt ill, the time spent transporting their tools would be considered De Minimis or insignificant since it was a one-time occurrence.

Employers are required to include as hours worked any part, no matter how small, of the employee’s regular working time or identifiable periods of time that they are regularly obligated to spend on assigned duties.

This policy should be applied with practicality, taking into account the realities of recording identifiable work time. Simply setting an arbitrary time limit is not sufficient. Factors such as the frequency of the activity and whether it is an essential part of the employee’s job must be considered.

How are Time Clocks Used to Track Hourly Employees' Hours?

The FLSA does not mandate the use of a time clock.

In cases where time clocks are utilized, if the employee voluntarily arrives before their regular start time or remains after their quitting time without performing any work during these periods, they are not entitled to be paid for them.

Similarly, minor discrepancies between clock records and actual hours worked are inevitable, as employees cannot clock in or out at precisely the same time. However, major discrepancies should be discouraged, as they raise doubts about the accuracy of the recorded hours.

In certain industries, especially where time clocks are employed, it has been a long-standing practice to record employees’ start and end times to the nearest five minutes, one-tenth, or quarter of an hour.

Presumably, these rounding practices average out so that all the time actually worked by employees is properly accounted for and they receive full compensation for their actual work hours.

Such time recording practices are acceptable as long as, over time, they do not result in failing to count all the time employees have genuinely worked.

Time Tracking Regulations for Salaried Employees

Salaried employees are workers who are paid a fixed salary for their work, regardless of the number of hours they work during a specific period. Their compensation is not directly tied to the hours worked but is based on an agreed-upon annual or monthly salary. They often have job positions that involve managerial, professional, or administrative roles.

Salaried employees may have more flexibility in terms of their work schedule and, with exceptions, are generally exempt from certain labor law provisions, such as receiving overtime pay for working beyond a certain number of hours. However, they are still expected to fulfill their job responsibilities and meet the requirements of their role within a reasonable timeframe.

So, is time tracking necessary for salaried employees? Well, not really. But some salaried employees still choose to track time time and keep timesheet records because of the benefits they offer when it comes to time management.

What are the Time Tracking Expectations for Salaried Employees?

Salaried employees enjoy certain advantages in terms of tracking their working hours.

Since salaried employees receive their base pay regardless of the number of hours they work during the workweek, they are not obligated to keep a record of their working hours.

Instead, their focus is on fulfilling their assigned tasks and responsibilities within a reasonable timeframe, regardless of the duration it takes to complete them.

Additionally, salaried employees are protected from having their pay reduced by their employer, except in cases where they are absent from work for an entire day.

For example, if an employee needs to leave the workplace after taking a break, their employer cannot deduct wages for that particular day.

These provisions grant salaried employees the freedom to concentrate on their duties without the burden of meticulously tracking their working hours.

Why Would Salaried Employees Track Their Hours?

While salaried employees are not typically required to meticulously track their working hours, there are several instances where keeping a record of their hours can be beneficial.

This includes tracking time off for unplanned leave, vacation leave, holidays, and sick leave.

Additionally, maintaining a record of payroll periods and any authorized overtime hours (if applicable based on company policies) can also be important.

Though not mandatory, these records can provide salaried employees with valuable information and documentation regarding their time off and compensation.

It’s important to note that freelancers, contractors, and volunteers are not covered by the provisions of the FLSA, as they are subject to separate labor laws that govern their specific employment arrangements.

Important Cautionary Note

When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.