How to track employee hours: What you need to know

Tracking employee hours is crucial for ensuring accurate and compliant employee pay and optimizing workforce operations, but the process can be quite challenging. Many organizations still rely on an outdated or manual approach, which leads to inefficiencies, errors, and compliance issues that can negatively impact their bottom line.

To get it right, employers need an effective timekeeping strategy to boost payroll accuracy, job satisfaction, and transparency into time and labor. Below we’ll dive into everything you need to know about how to track employee hours, how to choose the right tools for your organization, and how a reliable process can lead to happier employees and more profitable operations.

The importance of tracking employee hours

Accurately tracking employee hours is crucial for both organizations and their employees. An efficient, precise process offers many key benefits, including:

Accurate payroll calculations

Accurate time capture is the foundation for accurate payroll. When you have accurate hours information, you’re able to calculate payroll correctly, resulting in savings for the organization and precise paychecks for employees. This contributes to a positive employee experience, and when employees are happy with their jobs and their employers, they’re more likely to stick around. Accurate paychecks are so important to the employee experience, in fact, that one in six people said they’d quit their job if they received just one inaccurate paycheck.

Finding the right time collection system is essential for any organization, but it can be especially challenging for employers whose workers have various work locations and schedules. While physical devices like biometric time clocks are ideal for an office environment, employers whose teams work in the field or in multiple locations need more advanced technology to make sure they know who’s working and when. Mobile solutions are ideal for these organizations because they make it easy for employers to track hours and for employees to clock in and out on the go. And when time collection is easy and accurate, everyone wins.

Compliance with laws and policies

Knowing how to pay employees is key to paying them correctly—and that includes complying with labor laws, internal policies, and union collective bargaining agreements (CBAs). Compliance requirements vary by location, organization, and even employee, and they often establish rules for employee hours. Regulations might include the length of their shifts, how often they can take breaks, and how long their breaks should be. When you understand the rules and regulations that apply to your workforce, you can create time collection processes that keep you in compliance and create a positive work environment for employees.

Non-compliance isn’t just bad for the employee experience; it can take a hard hit on your bottom line. In 2023, organizations paid more than $126 million in fines for violating the Fair Labor Standards Act (FLSA). Effective time collection enables strong payroll management and accurate compensation in line with labor laws and regulations. It also results in the detailed documentation of earnings, deductions, and other relevant information that’s crucial to protecting the organization, its workforce, and its customers.

Overtime prevention

Unnecessary overtime is one of the biggest contributors to out-of-control labor costs. Without accurate time collection and real-time insight into employee hours, it’s hard to know whether employees are about to go into overtime. And if you don’t catch it when it happens—or ideally, before it happens—you might get stuck paying employees more for the overtime they worked or dealing with costly compliance penalties.

An automated process for managing time capture can help the organization identify patterns and discover where overtime can be reduced without sacrificing output. This leads to a more cost-effective operation that can better meet customer demand when and where it occurs. To achieve these benefits for your organization and employees, it’s important to choose the timekeeping approach that best fits your specific requirements.

How to track employee hours

Depending on your organization, workforce, and how you deliver your products or services to your customers, there are several time collection management methods to consider:

1. Pen and paper

Small, midsized, and even large organizations sometimes rely on pen and paper to record employee hours. But as the organization grows or operations, roles, and working hours become more complex, this traditional method becomes more time-consuming, error-prone, and inefficient. Plus, the added burden of re-entering this info into an ERP or payroll system takes up even more time, increases the margin for human error, and leaves employers at risk for potential compliance issues.

2. Electronic timesheets

Electronic timesheets enable organizations to digitize their time collection efforts with spreadsheet files and office applications. Some companies use electronic timesheets to lessen the burden of using pen and paper to track employee time, as it reduces some of the time-consuming, error-prone risks associated with manual calculations.

But while this method is certainly better than pen and paper, it’s still not nearly as accurate as a time clock that gathers real-time punches. Team members can accidentally duplicate or erase timesheets, edit formulas, or forget to fill in their hours or absences—all of which require extra time spent on corrections later on.

3. Time clocks

Time clocks help organizations seamlessly track employee hours in real time via several different options, including wall-mounted devices, mobile apps or kiosks, and web-based clocks. They’re the ideal tool for accuracy, as they centrally house and protect all employee time captures. Biometric time clocks, in particular, are the best option for preventing time theft because they use features like fingerprint scanning to confirm the identity of the employee in real time. The most effective time clocks are part of a time and attendance solution, enabling punches to flow seamlessly into automated payroll rules, exceptions reporting, leave management, and more.

4. GPS tracking and geofencing

For organizations with employees that work outside of a typical office setting, functionalities that support timekeeping on the go are a must. That’s why some mobile time clocks include features for GPS tracking and geofencing to prevent falsified time and ensure accurate, efficient time capture.

Geofencing capabilities allow workers to clock in only at specific locations (e.g. a construction site) while geolocation uses the employee’s location from their mobile app to identify where clock operations occur. These features make it easy for organizations with a mobile workforce to gain complete transparency into employee hours, regardless of where they’re working.

5. Time tracking software and apps

Many employers have started leveraging holistic time tracking solutions for an automated timekeeping process that supports the complexities of their workforce. These solutions offer advanced functionalities for accurate, efficient time collection. This is a major improvement on error-prone manual processes like punch cards and paper timesheets.

Powerful time and attendance software and apps make time collection easy, no matter where your employees work. With accurate time capture, your organization can better control budget and compliance, pay your employees correctly every time, and save hours on daily workflows.

While there are many ways to track employee time, the best solution is the one that eliminates the inefficiencies and risks of manual timekeeping by supporting accuracy, compliance, and productivity.

Automate your time capture process with TCP Software

An effective, accurate time capture process is essential to your organization’s success, as it’s the foundation of accurate, compliant time and attendance practices and records. But managing complex time collection can be a difficult feat—particularly for management teams that lack the proper tools for support.

TCP’s time clock solutions help organizations easily manage their time collection processes so organizations can improve payroll accuracy, control labor costs, and keep budgets on track. Our time clocks integrate with TimeClock Plus for a holistic time and attendance solution.

TCP believes that organizations shouldn’t have to choose between meeting their goals and keeping their employees happy, no matter how complex the company’s timekeeping needs are. Learn more about how TCP’s TimeClock Plus can help your teams operate efficiently or speak with an expert to start streamlining your time and attendance policies today.