Tracking employee hours is not only a safe way for managers to gauge where employees’ time is being spent, but it also helps businesses understand labor costs, prepare for payroll, and increase employee productivity. The simplest and best ways to track employee hours include using pen and paper methods, timesheet software, spreadsheets, time clocks, and mobile apps.
Regardless of what you choose, determine what works best for your small business by weighing the technology requirements, cost, legal compliance, and ease of use for your employees. Below are the top ways for how to track employee hours.
1. Time Tracking Software
Time tracking software is designed to track the hours employees log for the purpose of running payroll, recording billable hours, and assigning labor costs. Using time tracking software eases the burden of logging employee hours manually and ensures your staff is compensated accurately.
This type of tracking is especially good for businesses, like restaurants and retail operations, that need to maintain employee schedules.
Using time tracking software can also make payroll processing more efficient because:
- Employees can track their time digitally, decreasing error
- Supervisors and managers can approve time entered online with a click of a button
- HR Specialists can run reports, allowing management to see where improvements can be made
2. Time and Attendance Software
Similar to time tracking software, time and attendance software is an easy way to track employee hours without a fuss. It is ideal for businesses with hourly employees because it assists in monitoring employee attendance, overtime, and late clock-ins based on the hours they log, ultimately helping you remain compliant with labor laws.
Using time and attendance software is efficient because:
- Time can be tracked by software, physical time clocks, or location using GPS time tracking methods to record attendance from worksite to worksite
- Allows for scheduling of employees, in addition to tracking time at work
- Provides alerts when employees are approaching overtime, have clocked in late, or have clocked out early, helping you monitor attendance
3. Mobile Time Tracking Apps
Many time tracking apps are available for smartphones and tablets. Employees can use these apps to log their hours, which can be automatically synced with your payroll system. The best time tracking apps allow employees to track productive hours, breaks, PTO requests, and even create invoices all from their mobile phones.
Mobile time tracking can benefit a wide range of jobs and industries, but it is particularly valuable for roles and situations that involve flexibility, remote work, project-based work, and the need to track hours accurately. Here are some types of jobs that would benefit most from mobile time tracking:
- Remote workers
- Field service technicians
- Freelancers and contractors
- Construction workers
- Sales representatives
- Consultants
- Retail and hospitality
- Project managers
- Truck drivers
- Healthcare workers
- Event staff
- Agricultural workers
- Maintenance and repair technicians
4. Spreadsheet Time Tracking
Spreadsheet time tracking utilizes a template on tools such as Google Sheets or Microsoft Excel. This is similar to manual time tracking, where the employee enters their time into a spreadsheet, but offers mathematical features to provide better accuracy. A spreadsheet can be shared online with managers and supervisors for time checking and approval.
Both Google Sheets and Microsoft Excel offer timesheet templates that automatically calculate total hours, regular hours, and overtime hours. They can also help track the efficiency and productivity of teams within your organization. This method may be ideal for smaller companies, such as construction companies or mom-and-pop stores.
5. Physical Time Clocks
Businesses that need their on-site employees to “punch in”’ for their shifts or workday can benefit from using a physical time clock. You may use a wall-mounted or biometric time clock depending on your specific business need. Physical time clocks are especially useful for factories and warehouses that employ a lot of workers with different schedules.
Wall-mounted time clocks are suitable for businesses such as factories or warehouses. These typically have in-house employees who are required to log their time when they arrive, leave for breaks or lunch, and leave for the day.
With a wall-mounted time clock, the company clearly understands the hours each employee physically worked, so it pays accordingly. A disadvantage is that this system only works for employees physically in an office or factory and does not account for remote employees. Wall-mounted time clocks can be purchased on Amazon or at most office supplies stores, costing anywhere from $100 to more than $1,000.
Biometric tracking relies on certain biological features, such as a fingerprint scan or facial recognition, to track time. This type of tracking verifies the employee’s identity and can prevent employees from buddy punching—which in turn, cuts down on time theft by reducing the chances of employees being paid for the time they did not work.
Biometric data is valuable to companies that may need to control access throughout their office or physically identify employees as they enter and leave a building. However, since biometric time clocks record specific data about employees, there are laws in place to regulate their use.
These time clocks can also be purchased on Amazon and at most office supply stores. Prices range from $150 to more than $500.
6. Manual Employee Time Tracking
Manual time tracking—also known as pen-and-paper tracking—involves employees recording their own time on a handwritten piece of paper. However, this method can lead to issues (such as time theft, accounting errors, payroll issues, and labor law violations) and is not recommended for small businesses.
Although manual time tracking is a valid way to track employee hours, it does not offer the accuracy and security of a software time and attendance solution. Even though this is a free method, it is last on our list because of the following reasons:
- Inefficiency: Employees can spend hours manually tracking their time.
- Inaccuracy: Mathematical mistakes can be made when calculating hours.
- Inconvenience: In this digital world of computers and cellphones, it can be problematic for an employee to track hours on paper.
- Unreliability: Tracking hours on paper is a security issue. It can result in missed hours if you lose the report. It can also lead to a similar issue to buddy punching, where another employee could write down hours for a coworker.
Top Time Tracking Providers
Best For | Monthly Pricing | Key Features | Our Review | |
|---|---|---|---|---|
 | Growing businesses with one physical location that employ hourly workers | Basic: Free for one location and up to 20 employees Essentials: $24.95 per location per month; unlimited employees Plus: $59.95 per location per month; unlimited employees All-in-One: $99.95 per location per month; unlimited employees |
| |
 | Small businesses that need help tracking their billable project time | Standard: $19 base fee per month + $4.99 per user per month Pro: $19 base fee per month + $5.99 per user per month Premium: $19 base fee per month + $7.99 per user per month Enterprise: Custom-priced |
| |
 | Businesses with seasonal highs and lows like vacation rentals or lawn care services | Essentials: Free Starter: $1.50 per user per month Premium: $2.50 per user per month |
| 4.20 |
 | Freelance workers who need to track hours by project | Standard: $6.99 per seat per month Pro: $9.99 per seat per month Enterprise: $14.99 per seat per month cake.com Bundle: $15.99 per seat per month |
| |
 | Time Premium: $20 base fee + $8 per user per month Time Elite: $40 base fee + $10 per user per month ProAdvisor: Free for accounting professionals |
| ||
 | Construction and field workers that need geotracking features | Standard: $40 base fee + $8 per user per month Pro: $60 base fee + $10 per user per month |
| |
Reasons to Track Employee Hours
Aside from keeping track of the number of hours an employee works, there are several other reasons to track employee hours.
- Process payroll accurately: To accurately calculate payroll, you must know each employee’s salary or time worked per pay period. Timesheets also help by tracking paid time off and accruals. Automated time tracking can streamline your payroll process by reducing timesheet errors and can eliminate the need for a large payroll department.
- Monitor employee attendance: Recorded time serves as an employee attendance tracker for your employees. Based on the hours logged, you can manage employee attendance issues by determining whether an employee worked their full scheduled workweek, took paid time off, or was short on hours. Time tracking can also give a clear view of how long it takes employees to get tasks completed. Managers can then better manage employees by calculating future tasks and team scope.
- Stay compliant with labor laws: The Fair Labor Standards Act (FLSA) requires all employers to track the time of their hourly employees. While the FLSA does not require a particular form for record-keeping, data must be kept on all non-exempt employees (whether salaried or hourly) showing their total hours worked daily and weekly, wages paid, and overtime earnings. A common form of noncompliance is due to inaccurate recordkeeping. Using software to track time and attendance can reduce errors and prevent costly legal issues that may arise.
- Perform specific accounting and HR duties: Employee time tracking can be used to determine whether the hours tracked are billable or non-billable, increasing the company’s productivity. As a result, accounting specialists can monitor project budgets and reprioritize tasks where needed. Additionally, tracking employee time can shed light on areas where additional resources may be necessary within the company.
Along with payroll, compliance, and other direct benefits, time tracking also provides more intangible benefits for both employees and the business.
Benefits to Small Businesses | Benefits to Employees |
|---|---|
Accountability: Employees are held to the hours they work. | Security: Assurance that they are being paid based on their actual hours worked. |
Clarity: Time tracking provides transparency about the tasks each worker performs. | Management: By tracking their time, employees can see where they are making progress and where improvements in their time management can be made. |
Morale: Tracking employee time can reduce micromanagement and increase employee satisfaction. | Insight: Time tracking helps employees record the projects they are working on, insight into work behaviors and patterns, and their overall performance. |
Accuracy: Time tracking delivers accurate information for a streamlined payroll process. | Independence: Time tracking allows employees to self-manage and understand their overall capacity and workload. |
Tracking Employee Hours Frequently Asked Questions (FAQs)
Yes, it is legal to track employee hours, but you must comply with labor laws and ensure employee consent when using certain tracking methods. The FLSA sets guidelines for minimum wage, overtime, and other labor standards— and properly tracking hours is essential to comply with its regulations. Also, be careful to safeguard any data collected during tracking, such as with biometric time clocks.
GPS tracking can be used for employees working off-site or on the road, but you should establish clear policies and obtain employee consent to address privacy concerns.
Set clear expectations, use technology that employees find user-friendly, and provide training and support to ensure accurate time tracking without constant supervision.
Implement strict data privacy policies, inform employees of the tracking methods used, and obtain their consent where necessary. Limit tracking to work hours and locations.
Provide additional training and support, set clear expectations, and apply your company’s policies for addressing non-compliance, which may include disciplinary actions.
Bottom Line
Knowing how to track employee time is beneficial for both employers and employees. Accurate time tracking can save your business thousands of dollars by ensuring that you are only paying for the actual time your employees are working. Additionally, choosing the proper employee time tracking method can mean the difference in legal compliance, efficient budgeting, reduced payroll errors, and increased employee performance.
