What Is Time Tracking?
Time tracking is the method of recording the hours an employee works. This can be accomplished through timesheets, clock-in systems, automated software, or mobile applications. It is essential practice for accurate payroll processing and labor law compliance.
For businesses with shift workers, multiple locations, or deskless employees, effective time tracking is the foundation of fair pay, legal compliance, and operational efficiency.
Why Time Tracking Is Critical
Legal Requirements
The Fair Labor Standards Act requires employers to maintain accurate records of hours worked by non-exempt employees. Failure to track time properly can result in:
- Wage and hour lawsuits
- Department of Labor penalties
- Costly back pay obligations
- Reputation damage
Fair Compensation
Accurate time tracking ensures employees are paid correctly for:
- Regular hours worked
- Overtime (time-and-a-half for hours over 40 per week)
- Shift differentials
- On-call time when applicable
Operational Insights
Time tracking data reveals patterns that help businesses:
- Identify peak hours requiring more staff
- Reduce labor costs by optimizing schedules
- Track productivity across locations or departments
- Forecast future staffing needs
Time Tracking Methods Explained
Manual Time Tracking
Employees write down their hours on paper timesheets or in spreadsheets. While low-tech and inexpensive, manual tracking is prone to errors, time theft, and requires significant administrative work to compile and verify.
Time Clock Systems
Physical time clocks where employees punch cards or badges have been workplace staples for decades. These systems reduce some fraud but create bottlenecks during shift changes and don't accommodate remote or mobile workers.
Biometric Time Clocks
Systems using fingerprints or facial recognition prevent buddy punching but raise privacy concerns and require employees to be physically present at a specific location.
Mobile Time Tracking
Smartphone-based solutions allow employees to clock in and out from anywhere, providing real-time data to managers. These systems work well for deskless workers, field employees, and businesses with multiple locations.
Automated Time Tracking
Software that automatically tracks time based on computer activity, project work, or location data. More common for knowledge workers than shift-based employees.
What Makes Effective Time Tracking?
Accuracy
The system should capture actual hours worked without opportunities for time theft or errors.
Ease of Use
If the system is complicated, employees won't use it correctly. Mobile-first solutions with simple interfaces see the highest adoption rates.
Real-Time Visibility
Managers need immediate access to who's working right now to address attendance issues or scheduling gaps as they happen.
Compliance Built-In
The best systems automatically calculate overtime, track meal breaks, and maintain records according to federal and state requirements.
Integration with Payroll
Time tracking data should flow seamlessly into payroll systems to reduce administrative work and eliminate transcription errors.
Time Tracking for Different Worker Types
Shift Workers
Retail, hospitality, and food service employees work scheduled shifts with defined start and end times. Mobile clock-in/out with geofencing ensures employees are on-site when they punch in.
Deskless Employees
Field service technicians, healthcare workers, and delivery drivers need time tracking that works from anywhere without requiring them to return to a fixed location.
Part-Time and Seasonal Workers
High turnover environments need time tracking systems that allow quick employee onboarding and offboarding without complicated setup.
Salaried Exempt Employees
While not required to track hours for overtime purposes, many organizations track salaried employee time for project costing, client billing, or workforce planning purposes.
State-Specific Time Tracking Requirements
While the FLSA sets federal standards, many states have additional requirements:
California
Requires detailed meal and rest break tracking, with premium pay for missed breaks.
New York
Mandates specific notice requirements about pay rates and regular payday.
Predictive Scheduling Laws
Cities and states including Oregon, Seattle, and San Francisco require advance notice of schedules and pay penalties for last-minute changes—making accurate time tracking even more important.
Common Time Tracking Challenges
Buddy Punching
The American Payroll Association estimates buddy punching costs employers approximately 2.2% of gross annual payroll. Mobile apps with GPS verification and biometric options help prevent this fraud.
Rounding Time
While FLSA allows time rounding in some cases, improper rounding that consistently benefits the employer can trigger wage claims.
Tracking Off-the-Clock Work
Answering emails, taking work calls, or arriving early to prep are all compensable time that must be tracked.
Break Compliance
Many states require paid rest breaks and unpaid meal periods. Failing to track these properly leads to compliance violations.
Remote and Mobile Workers
Traditional time clocks don't work for employees who work from home, travel between locations, or spend their day in the field.
Best Practices for Time Tracking
Choose the Right System for Your Workforce
A system designed for office workers won't work well for frontline employees. Consider your specific needs:
- Do employees work in one location or many?
- Do they have access to computers or just smartphones?
- Do you need GPS verification?
- How many locations do you manage?
Establish Clear Policies
Document expectations around:
- When and how to clock in and out
- Procedures for missed punches
- Break and meal period requirements
- Rules about working off the clock
- Overtime authorization procedures
Train Everyone
Both employees and managers need training on:
- How to use the time tracking system
- Why accurate time tracking matters
- Legal requirements and consequences
- Company-specific policies
Review Data Regularly
Don't wait until payroll processing to review time data. Regular audits help identify:
- Patterns of tardiness or absenteeism
- Unauthorized overtime
- Potential time theft
- System errors or technical issues
Maintain Detailed Records
Keep time tracking records for at least three years as required by FLSA, longer if required by state law.
How Technology Is Transforming Time Tracking
Modern time tracking has evolved far beyond punch cards. Today's solutions offer:
Mobile-First Design
Employees can clock in from their smartphones, making time tracking accessible for deskless workers who make up 80% of the global workforce.
GPS Verification
Location tracking ensures employees are on-site when clocking in, preventing time theft while protecting employee privacy.
Automated Compliance
Smart systems automatically calculate overtime, track required breaks, and flag potential violations before they become problems.
Real-Time Dashboards
Managers see who's working right now across all locations, enabling immediate response to no-shows or scheduling gaps.
Integration with Scheduling
When time tracking integrates with scheduling tools, managers can instantly compare scheduled vs. actual hours worked.
The Future of Time Tracking
As workplaces become more flexible and distributed, time tracking systems must adapt. The trend is toward:
- Mobile-first solutions that work anywhere
- AI-powered anomaly detection to flag potential issues
- Predictive analytics for staffing optimization
- Seamless integration with other workforce tools
- Greater emphasis on employee experience
Choosing the right time tracking system is about creating fair, efficient workplaces where employees are paid accurately and managers have the data they need to make smart decisions.
