The Federal Labor Standards Act says companies must keep track of employee hours, but doesn’t specify how. Although this means you can use anything from a paper-based sign-in sheet to a complex computer system, the company is ultimately responsible for making sure that time sheets are correct -- not the employees. For this reason, the method isn’t as important as finding a system that works and sticking with it consistently.
The FLSA requires that payroll records include specific data regarding hours worked and the wages an employee earns. No matter how you keep track of employee hours, work hour data must include the time and day that an employee's workweek begins, the hours worked each day and the total hours worked each week. In addition, you must retain source documents -- such as time cards, work schedules and work tickets-- for two years, either on-site or in an off-site central storage location.
Standard Time Tracking
Standard time tracking works for both full-time and part-time employees, whether they work the same or different hours each week. With standard tracking, employees must punch in and punch out using an electronic time clock or a computer, two-to-four times each day depending on whether they take a meal break. According to the U.S. Department of Labor, you can establish a policy, such as recording time to the nearest five minutes or one-tenth of an hour, that accounts for minor discrepancies between clock records and actual hours worked since not all employees can clock in or out at exactly the same time.
You can record hours using exception tracking for administrative or other employees who usually work the same hours every week. With exception tracking, you create a form showing standard working hours and require employees to record time only if it varies from the normal workday. For example, if the workday normally starts at 8 a.m. and an employee arrives at 8:10 a.m. but works the rest of the day as normal, the starting time will show the exception and the day’s work hours will be 10 minutes short.
Tracking Off-site Employees
Most businesses use computer software to track hours for employees who work at home or at off-site locations. Virtual time tracking records attendance in real time, most often down to seconds. Set the program up to run automatically when a user logs in to her work computer to reduce the chance that an employee will forget to punch in. That way, the first screen an employee will see every morning is her virtual time card. Options for virtual time tracking range from free programs to proprietary software.