Employees fill out time sheets to determine the number of hours they will be paid for, to track any overtime that might be due, and to record any vacation or sick time taken. Time sheets also increase compliance with federal and state labor laws, which require that employers keep accurate records of hours worked for nonexempt employees.

Daily Tracking

Time sheets track employees' hours daily, so employees should record their time based on their hours worked each day. For example, an employee who works on Monday, Tuesday and Wednesday of a five-day workweek would record only her time worked on those three days.

Recording Time

The employee records her time in the respective areas of the time sheet. For example, her time for Monday might read: in - 8 a.m., out - 1 p.m., in - 2 p.m., out - 5 p.m. She took an hour of unpaid lunch. This leaves her with eight hours, which she records in the total hours column for that day. She adds her hours for each day and puts her total regular hours for the week in the slot for total workweek hours; hours 40 and below for the week are considered regular hours. If she works more than 40 hours for the week, under federal law, she should be paid overtime; the extra hours go under the overtime column. If she takes vacation, sick or personal time, she records the time under the day it was taken and codes it accordingly.

Breaks

Federal law does not require that you give employees short breaks. However, if you choose to provide rest breaks between five to 20 minutes long or if state law requires paid rest breaks, you must pay employees for that time. Some employers, for example, might give full-time employees two paid 15-minute breaks per day, even if state law does not require it. To ensure employees do not take more than their allowed break time, have them include breaks taken on their time sheets. Note that meal periods, which typically last between 30 minutes and an hour, are often unpaid; however, exceptions apply. For example, if an employee works through her lunch period, she should be compensated for the time.

Rounding

You may have employees write their exact time worked on the time sheet and pay them as such, or they can round up or down in a legal manner. If you prefer, you may do the rounding yourself. For example, federal law allows you to round down minutes from one to seven and round up minutes from eight to 14 to the nearest quarter hour. This process results in the employee slightly gaining or losing time, but in the end, it averages out.

Exempt Employees

Most hourly employees are nonexempt, but most salaried employees are exempt. Federal law does not require that you maintain records of hours worked for exempt employees, only the basis upon which they were paid. You must, however, have a system that records sick days, jury duty, bereavement leave, vacation time and other absences for exempt workers. You can have exempt employees check a unique box on the time sheet and fill in only those areas.

Signatures

Both an employee and her supervisor are supposed to sign the time sheet. Tread carefully when it comes to not paying employees because they failed to submit a time sheet or a signed one. The state might require that you pay employees according to hours you reasonably know they are due for the pay period.