HR Mavericks

Eddy’s HR Mavericks Encyclopedia

Time Tracking

Tracking your employees’ time helps you remain compliant with laws and regulations, and provide insight into how your employees are spending their time on specific tasks.

Continue reading to learn what employee time tracking is, why it’s important and how to start tracking your employees’ time.

What Is Employee Time Tracking?

Employee time tracking is a record-keeping process that tracks the number of hours an employee worked in a pay period. Some industries and companies incorporate granular time tracking methods to assess how many hours are spent on each task that the employee worked on in the given pay period.

Why Is Time Tracking Important?

Time tracking ensures that you keep accurate records for all of your non-exempt employees in order to remain compliant with the Fair Labor Standards Act (FLSA) and other legislation. Outside of compliance, tracking both non-exempt and exempt employees’ hours is important and can help:
  • Improve productivity. With a precise record of how long they’ve been working on a specific task, time tracking can help push employees to be more productive and efficient in their work.
  • Estimate budgets. Managers can get a better idea of how long projects will take based on previous time tracking data and create more accurate budget estimates using that information.
  • Reduce burnout. Tracking your employees’ time allows you to identify anyone who is working too many hours and may be at risk of burning out. Managers can help delegate work or identify methods to reduce the amount of hours the employee is working.

Does Every Employees’ Time Need To Be Tracked?

Not all of your employees are required to track their time. Federal, state and local legislation requires that you track all of your non-exempt employees’ hours and maintain accurate records. You are not required to track the hours of exempt employees, though tracking all employees’ time can help you improve your business and culture.

Five Time Tracking Methods

There are several methods to consider for tracking your employees’ time. Listed below are some of the most popular time tracking methods to choose from.

1. Pen and Paper

The most basic form of time tracking only requires pen and paper (and potentially a stopwatch). Using this method, you can create a sign in sheet for employees to record the time they start their shift and the time that they finish. For more precise data, you can have employees use a stopwatch to track each task they complete and record the time on paper. Pen and paper is an easy time tracking method to use, though it’s more difficult to compile reports and process time sheets.

2. Physical Time Clock

Physical time clocks allow employees to punch in and out of shifts manually. Some time clocks have physical punch cards for employees to use while others are electronic. Using a physical time allows you to have a precise start and stop time for all of your employees’ shifts, providing accurate records and ensuring you remain compliant with all laws and regulations. One downside to physical time clocks is that you can’t track time for each specific task, only the employees’ start and stop times.

3. Honor System

The honor system is a form of time tracking that relies on employees to estimate how long it takes to complete tasks. Since it doesn’t require any documentation, the honor system is an easy method to incorporate into your company. Because it relies solely on estimates, the honor system is not an accurate time tracking method and shouldn’t be used for FLSA compliance.

4. Spreadsheet

Spreadsheets allow you to create a templated document that employees use to track their time. You can include columns for the specific task, the client, the starting time, the end time and the total hours worked. Tracking time in spreadsheets is relatively accurate and you can create custom reports using your data. Unfortunately, spreadsheets have to be manually updated every time you change a task and are not the most efficient form of time tracking.

5. Time Tracking Software

Time tracking software serves as a digital timesheet that allows employees to track their time precisely using a web-based, desktop or mobile app. Employees can use the timer function to track in real-time or manually enter the hours they worked. With robust reporting options and automatically generated timesheets, time tracking software reduces the amount of manual administrative work. Eddy's all-in-one HR software includes time tracking to make your job that much easier.

How to Start Tracking Your Employees’ Time

The following steps can help you pick the right time tracking method and start recording your employees’ hours.

1. Determine the Goal of Time Tracking

There are several reasons to track time and those reasons can help you determine what method of time tracking you should look into. If you only need to keep records on when an employee starts and finishes their shift, you may be able to use paper tracking or a physical time clock. If you’re looking for detailed reports on the time it takes to complete different projects, time tracking software is most likely your best choice.

2. Set Your Budget

Before you look into potential time tracking solutions, you should determine how much you want to invest in your process. Several of the methods mentioned above can be implemented free of cost and there are time tracking software providers who offer their product for free. If you are looking for a complete time tracking software solution with extensive features and capabilities, you’ll probably have to pay for it. Determine the maximum amount you’re willing to spend so that you don’t go over budget.

3. Research Time Tracking Options

Once you’ve determined why you want to track time and established your budget, it’s time to research your options. If you only need a basic time tracking option, your research process won’t be as long. If you’re considering time tracking software, look for providers that include features to make your job easier, like automated timesheets, overtime tracking and reporting capabilities. Take advantage of any free trial offers for a test run of the software before you purchase it.

4. Select the Best Option for Your Company

After weighing your options, reconvene with other stakeholders and come to a decision. Trust your research and choose the best option for your company. With a set method in place, compile enough training documents and resources so employees can seamlessly incorporate time tracking into their daily process.


Eddy is the all-in-one HR tool built with you in mind. The robust features and ease of use will benefit your company both inside and outside your HR team.
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Time Tracking Methods
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