Tracking the hours your employees work provides many benefits to both employers and employees, but what is the difference in the laws around salaried vs. hourly workers?
This post goes over the legalities of tracking salaried and hourly employees’ hours.
Is Employee Time Tracking Legal?
Not only is time tracking legal, but it’s required for certain types of employees under the Fair Labor Standards Act (FLSA). The purpose of maintaining accurate time tracking records is to ensure employers are paying their employees as required by law, including minimum wage and overtime wages when applicable.
The FLSA specifically requires employers to record:
- Employee's full name and social security number.
- Address, including zip code.
- Birthdate, if younger than 19.
- Sex and occupation.
- Time and day of week when an employee's workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework")
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee's wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
Employers are required to maintain these records for a period of three years, to remain compliant with recordkeeping requirements. However, there is no specific requirement on how employees’ hours must be tracked.
Additionally, while the FLSA does not require employers to force exempt employees to clock in or track their time, it does not prohibit them from requiring it.
Salaried & Hourly Employees
The categories of employee types can get confusing when it comes to labor laws. While most salaried and exempt employees are not required to track time or receive overtime, non-exempt and hourly employees are.
Salaried employees are paid a specific amount each pay period, regardless of how many or how few hours they worked. They are not entitled to overtime pay for hours worked over 40 for the workweek or eight for the workday.
Employees who receive hourly wages are considered hourly. Overtime and minimum wage laws apply to these types of workers. While some state laws may have additional requirements, the FLSA requires hourly workers to be paid “at a rate of not less than one and one-half times their regular rates of pay after 40 hours of work in a workweek.”
Exempt employees must meet certain criteria outlined by the FLSA to qualify as exempt. To determine if an employee can qualify, they must “ (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties.” Exempt employees almost always receive salaries rather than hourly pay.
Non-exempt employees are any workers entitled to overtime pay as outlined by the FLSA and/or state labor laws.
Legal Requirements for Tracking Salaried and Hourly Employees
Time tracking labor laws vary depending on the type of employees you have. Exempt employees are not required by law to track the hours they work. However, to be exempt, they must meet the previously mentioned criteria.
Hourly and non-exempt employee hours must be tracked as a part of federal recordkeeping requirements. However, the way time is tracked is not regulated.
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Benefits of Tracking Salaried and Hourly Employees
Although it’s not legally required to track your exempt employees’ hours, as an employer, you do have the right to require them to track their workdays. Tracking your employees’ hours - whether hourly or salaried - is a good idea, with multiple benefits for both your business, and your employees.
1. Easier to Manage Payroll
Payroll is much easier to complete on time when you have accurate timesheet records. Having your employees clock in and out regularly, ensures you have the right information to manage your payroll.
2. Improved Productivity
Certain time tracking options provide employers the ability to review how much time your employees are spending on each task they work on. This helps improve productivity and accountability because employees know their performance is being monitored. Additionally, by tracking employee time, you are able to find problem areas and make adjustments to improve those processes.
3. Ensures Employees are Paid Accurately
Tracking time for your employees not only ensures you’re paying them the correct amount as required by labor law, but provides them with the peace of mind of knowing their pay will be accurate, every time.
4. To Ensure Compliance With the Law
Penalties for non-compliance with labor laws can be stiff. Not only will your business be greatly disrupted with inaccurate time records, but investigations into allegations of labor law violations will include reviewing time and payroll records. If you don’t have accurate time and payroll records in such an event, you could face thousands of dollars in fines, a criminal prosecution, and even possible jail time.
Accurately tracking and recording employee hours, helps you avoid these issues.
5. To Protect the Employer From Liability
In the event an employee files a complaint alleging you owe them unpaid wages, your payroll and time tracking records will be essential in providing your innocence.
How to Track Employees’ Hours
It’s easy to track the hours of hourly employees’. Despite their pay being the same regardless of the hours they do, it’s still beneficial to track salaried employees’ hours, too. There are multiple ways to do this, with varying levels of accuracy and consistency.
Using Time Tracking Software
Technology is an easy and accurate way to keep track of employees’ hours. Software like ClockShark’s time-tracking app, make tracking hours, jobs, and tasks much easier and more accurate. Plus, with payroll integrations, you can have wage and payroll records available with a click.
Of course, you can opt to have a physical time clock located in an accessible area of your business. Employees can use this time clock to clock in and out for their shifts.
Recording Hours Manually
You can also have your employees manually record the hours they work each day. While this is an option, it does not provide you with the same level of accuracy, consistency, and insights as other ways to track time.
Tracking Employee’s Hours Doesn’t Have to be Confusing
When you own a business, your greatest asset is your employees, so it’s important to make sure they are properly and adequately compensated for the work they do. Time tracking can be challenging if you don’t have the right tools to make sure and get it right for the benefit of your company and your employees.
ClockShark’s time-tracking app makes it easier for your employees to track their hours and get paid on time. Try a 14-day free trial today, to see how easy ClockShark makes time tracking.