Employee Timekeeping: What It Is and Why It Matters

Employee timekeeping is a foundational element of every business, large and small. But once a process is up and running, few managers give it a second thought, save at the end of the pay period when they have to process the numbers and cut checks.

This is a shame because reviewing your timekeeping system periodically is one of the best ways to drive your business forward.

In this article, we discuss why timekeeping matters and how you can improve the process for everyone involved.

Timekeeping defined

Timekeeping is the process of tracking and reporting the hours an employee spends at work. Timekeeping is typically divided into two distinct categories:

Total time
Time on task

For a business that pays team members by the hour (be it part-time or full-time), total time is the product of just two numbers: when they arrive at work and when they leave work.

In some cases, a business may require team members to clock out during breaks and clock back in when they return so that management can create a more accurate picture of their total time on the job.

For a business that pays team members a salary, timekeeping is often used as a means to record time on task and to better observe and control project costs. In that case, employees may not clock in when they arrive and clock out when they leave.

Instead, they may record when they start working on a specific project in the morning (e.g., 8:00 a.m.), when they stop working on that project (e.g., 10:00 a.m.), and when they start working on a different project (e.g., 10:05 a.m.).

This process continues throughout the day until they record the stop time of their last project and leave the office (e.g., 5:15 p.m.).

From this data, you can extrapolate the total time at work (e.g., they started the first project at 8:00 a.m. and finished the last project at 5:15 p.m. so they worked 9.5 hours that day).

However your business chooses to implement timekeeping — be it total time, time on task, or both — in many ways, the process serves as the foundation for the success of your company and employees.

Why timekeeping matters

It may seem straightforward, but making sure your business is using the best timekeeping process is nothing to gloss over. Besides the obvious — the fact that you need to pay your employees for their time — here’s why a good timekeeping process matters.

1) Payroll

As we touched on earlier in this article, timekeeping matters because it provides all the numbers necessary to calculate and process employee payroll.

The Fair Labor Standards Act (FLSA) establishes many of the rules on this subject but still allows each business to choose its own timekeeping system — as long as it records the necessary information.

That means your business could rely on paper timesheets, punch cards, or a digital solution to get the job done as long as you have the total time worked at the end of each pay period.

2) Invoicing

Like payroll, invoicing is one of the pillars of your business’s success. Without it, you’ve got no money coming in to pay your own bills.

Accurate timekeeping gives you the numbers you need to get your invoices out on time so that you can get paid sooner.

Said accuracy also prevents your business from under- and over-billing — two things that can seriously damage customer and client relationships.

3) Planning

You can’t plan for the future if you don’t know what you did in the past. Timekeeping records provide the data effective planning is based on.

When you know that a specific project took X hours last year, you can use that as a metric on which to base a similar project scheduled to begin next year.

You can even analyze the timekeeping data further to see if there are ways to improve efficiency and productivity in order to reduce the total hours on the next project.

4) Team management

Employee timekeeping is also a gateway to more effective team management.

If two team members worked on similar projects and produced the same quality results, but Jake needed four hours more than Alexis to get the job done, you have a better idea of whom to assign the task should it come up again (Alexis).

Timekeeping best practices

So we’ve established why timekeeping matters for your business and employees. Now, let’s get into some ways you can improve your timekeeping process and save everyone involved time, money and headaches.

1) Abide by all timekeeping laws

Whether you’re setting up a new timekeeping system or revamping an old one, abiding by all local, state, and federal laws is extremely important.

At the federal level, the Fair Labor Standards Act (FLSA) sets guidelines for things such as:

Time clock rules
Wages
Overtime
Part-time hours
Full-time hours
Record-keeping practices
And much more

All businesses must comply with these regulations.

Most states also have their own time tracking laws. Practices differ from city to city and industry to industry, so it’s essential to talk to an attorney who is well versed in both labor law and the industry in which your business operates.

2) Choose the right timekeeping system

Choosing the right timekeeping system can help your business keep the tracking and recordkeeping process as simple and as accurate as possible for both employees and managers.

Timekeeping for employees

With the right system in place, clocking in or out and tracking time on task should take no more than 10 or 15 seconds to complete. If it takes longer than that, the process is too complicated to be productive and needs to be overhauled in some way.

Modern timekeeping solutions keep the process as simple as possible so that your employees can focus on the productivity, efficiency, and quality of their job rather than worrying about how long it’s going to take to clock in before they can get to work.

Timekeeping for managers

On the managers’ side of things, the right timekeeping system is more about the speed with which they can handle all the data available to them.

They need that information to process payroll, invoice clients, and find out what’s going on with their team and the business. But all of that information can also be overwhelming if not handled correctly.

Modern timekeeping solutions give managers all the benefits of total data access while, at the same time, providing controls they can use to narrow down the data into a usable format.

3) Implement automation

Modern timekeeping software offers automation that all businesses can benefit from.

With this automation, you can:

Set wages by employee or position
See how much each shift will cost
Forecast and optimize labor costs while you schedule
Stay on budget
Avoid potential overtime
View labor as a percentage of sales
Create payroll reports that give you insight into how your business is running

Then, once implemented into the timekeeping process, this automation does much of the work for you and your team members so that tracking all the details isn’t as cumbersome and time-consuming as it once was.

4) Backup the data

Along with the timekeeping laws mentioned earlier in this article, the Fair Labor Standards Act also establishes regulations for the data that every business must keep, and how long they must keep it.

This applies to any records on which wage computations are based, including:

Time cards
Wage rate tables
Work schedules
Time schedules
Benefits information
Deductions

The federal government also requires businesses to keep any payroll records that result from their timekeeping efforts.

Be sure to backup all this data in some way (e.g., hardcopy or digital files) so that you have it readily accessible should you need it.

Timekeeping software for the 21st century

Luckily for you, the modern manager, there’s a solution to improving your timekeeping process.

Sling was built with the express purpose of simplifying and streamlining every aspect of your scheduling, time tracking, and attendance activities.

You can even reduce timekeeping errors (e.g., forgotten clock ins/clock outs, absenteeism, late arrivals, and time theft) and prevent scheduling conflicts (e.g., overlapping shifts and double-bookings).

Sling also lets your employees clock in and out from any device (phone, tablet, laptop, or desktop) and notifies you when an employee is running late or starts work in the wrong place.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com/Blog today.

This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.