How to Track Employee Hours: FLSA Rules, Methods, and Records

To track employee hours in compliance with federal law, you can use any method you want—paper timesheets, a punch clock, a digital app, or a manual timekeeper—as long as the records are complete and accurate for every non-exempt employee. The Fair Labor Standards Act, through 29 CFR Part 516, sets no required format or device. What it does require is that you capture specific data points, count all compensable time (including some that employees perform outside their scheduled shift), and preserve the records for set retention periods.¹

The accuracy obligation sits entirely with you. If an employee forgets to clock in, that does not excuse the record. The legal test is whether you knew or should have known the work was being performed, and courts consistently hold employers liable for off-the-clock work they were aware of, even when the employee ignored the timekeeping policy.²

Who You Actually Have to Track

The FLSA’s hourly tracking rules apply to non-exempt employees—the ones eligible for overtime. For exempt workers who meet the salary and duties tests, there is no federal requirement to log start times, stop times, or daily totals. You still keep basic payroll records such as name, address, salary basis, and total pay, but the granular hour tracking is optional.³

The salary threshold for the most common white-collar exemptions (executive, administrative, and professional) currently sits at $684 per week, or $35,568 annually.⁴

Many employers still track exempt hours voluntarily. It helps with project costing and gives you a paper trail if an exempt classification is ever challenged. If a worker turns out to have been misclassified, having no time records makes defending a back-pay claim considerably harder.

The Data You Must Capture

For every non-exempt employee, the FLSA and 29 CFR 516.2 require you to maintain:

Full name (matching Social Security records) and Social Security number
Home address including zip code
Date of birth, if the employee is under 19
Sex and occupation
The specific time and day the workweek begins
Hours worked each workday and each workweek
The pay basis (hourly rate, salary, piecework)
The regular hourly rate for any week overtime is worked
Total straight-time earnings, total overtime earnings, and all additions or deductions
Total wages paid each pay period, with date of payment and the period covered

These come directly from the DOL’s recordkeeping guidance and 29 CFR 516.2.³¹

A workweek is a fixed, regularly recurring period of 168 hours—seven consecutive 24-hour periods. It doesn’t have to align with a calendar week, but once you set it, you cannot shift it to avoid paying overtime.⁵

What Counts as Work Time

The hardest part of tracking hours is deciding which activities are compensable. Get this wrong and the clock itself becomes irrelevant.

Waiting Time

Whether waiting counts depends on control. An employee “engaged to wait”—a receptionist between calls, a driver in a loading bay—is working. An employee “waiting to be engaged” and completely relieved of duties is not.²

Training and Meetings

Training time is compensable unless all four of these conditions are true: attendance is outside normal hours, it is truly voluntary, the content is not directly job-related, and the employee performs no productive work during the session. Miss any one and you have to pay.²

Travel Time

A normal commute to a fixed workplace isn’t paid. Travel between job sites during the workday is. A one-day assignment in another city counts as work time, minus the employee’s normal commute.²

Rest Breaks and Meal Periods

Federal law doesn’t require breaks, but when you offer them, short rest breaks of roughly 5 to 20 minutes are compensable and must be included in the hours worked. Meal periods of 30 minutes or more are unpaid only if the employee is completely relieved of duties. Someone eating at their desk while monitoring the phone is still working. If a meal period is interrupted by work, the entire period becomes compensable. Several states impose their own mandatory break requirements—often a 30-minute meal break after five or six consecutive hours—so check state rules alongside the federal ones.⁶

Picking a Method

Because the FLSA doesn’t prescribe a device, the choice is practical. Common options include:

Paper timesheets. Cheap and simple, but error-prone and hard to audit.
Mechanical time clocks. More reliable than handwriting, but you still key data into payroll.
Digital and cloud-based systems. Software or mobile apps that log timestamps via GPS, Wi-Fi, or manual entry and feed hours directly into payroll.
Biometric scanners. Fingerprint or facial recognition devices that verify identity and eliminate buddy punching.

For employees on fixed schedules who rarely deviate, the DOL allows a shortcut: keep a record showing the set schedule and note only the exceptions.³

Biometric Consent

If you use fingerprint or facial recognition clocks, several states regulate what you can collect and how. Illinois has the most aggressive enforcement environment, requiring written disclosure and a signed release before collecting any biometric identifier. Texas and Washington require consent and impose storage and destruction rules. New York prohibits requiring fingerprinting as a condition of employment, with narrow exceptions. California and Oregon have enacted their own biometric protections. Before deploying these clocks, confirm whether your state requires notice, written consent, or a publicly available retention policy.

Rounding Rules

Many employers round clock times to the nearest 5 minutes, 6 minutes (one-tenth of an hour), or 15 minutes. Federal regulations permit rounding, but with one condition: it must be neutral over time. A practice that consistently shaves minutes off employee totals violates the FLSA.⁷

The same regulation covers early arrivals and late departures. Employees who voluntarily clock in early or stay late without performing work do not need to be paid for that time. If they clock in 10 minutes early and start working, those minutes count.⁷

Some employers have dropped rounding entirely, since digital systems can track to the minute. That approach removes the risk of a rounding practice drifting toward the employer’s favor.

Remote and Mobile Workers

The recordkeeping obligation applies identically whether someone works in your office or from a kitchen table. You still record hours each day and total hours each workweek.³

For remote employees, that usually means self-reported entries in a portal. The practical risk is non-exempt staff checking email, answering calls, or handling small tasks outside recorded hours. Because you are liable for time you knew or should have known about, a written “no off-the-clock work” policy will not shield you if managers are sending after-hours messages and expecting responses.

Mobile workers who move between job sites during the day create a different challenge. Travel from site to site is compensable while a normal commute is not, so a plumber or home health aide’s drive times between clients must be captured in the records. GPS-enabled apps make this easier, but the underlying obligation predates any particular technology.²

A Workflow That Holds Up

Owning the right tool is only half the job. Data has to move reliably from employee to payroll.

Start with a written policy distributed to every non-exempt employee. Explain how and when to record time, how to report overtime, and what to do if they forget to clock in. Requiring employees to report all hours worked, in writing, strengthens your position if an off-the-clock dispute surfaces later.

Employees submit entries on the pay period schedule. A supervisor reviews the entries against scheduled shifts and flags inconsistencies, such as an eight-hour scheduled shift logged as four, or overtime logged without prior approval. Most data-quality problems are either caught or lost at this stage.

After supervisor approval, verified hours go to payroll for final calculation, including overtime at one and one-half times the regular rate for hours over 40 in a workweek. A handful of states also impose daily overtime thresholds, typically after 8 hours in a single day, so your payroll process may need to account for both weekly and daily triggers depending on where you operate.

How Long to Keep the Records

The FLSA sets two retention tiers:

Three years for basic payroll records: employee names, addresses, total wages paid each pay period, and dates of payment, measured from the date of last entry.⁸
Two years for the underlying documents used to compute those wages: time cards, work schedules, wage rate tables, and records of daily start and stop times.⁹

Store the records in a safe, accessible location. Department of Labor investigators can request them at any time to verify minimum wage and overtime compliance, and you must make them available for inspection and transcription.¹⁰

What It Costs to Get Wrong

When an employer fails to pay proper minimum wages or overtime, the FLSA allows recovery of the unpaid wages plus an equal amount in liquidated damages, effectively doubling what the employee is owed. The statute of limitations is two years, or three years if the violation was willful.¹¹

On top of employee recoveries, the Department of Labor can impose civil money penalties of up to $2,515 per violation for repeated or willful failures to meet minimum wage or overtime requirements.¹²

Poor records also shift the evidentiary burden. When an employer has no time records or inaccurate ones, courts routinely accept the employee’s reasonable estimate of hours worked. A reliable timekeeping system is dramatically cheaper than defending a collective wage-and-hour lawsuit years after the fact.

1
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers
2
U.S. Department of Labor. Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA)
3
U.S. Department of Labor. Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)
4
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemptions
5
eCFR. 29 CFR 778.105 – Determining the Workweek
6
U.S. Department of Labor. Breaks and Meal Periods
7
eCFR. 29 CFR 785.48 – Use of Time Clocks
8
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers – Section 516.5
9
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers – Section 516.6
10
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers – Section 516.7
11
eCFR. 5 CFR 551.702 – Time Limits
12
eCFR. 29 CFR Part 578 – Tip Retention, Minimum Wage, and Overtime Violations – Civil Money Penalties