For U.S. businesses covered by the Fair Labor Standards Act (FLSA), accurate time records help ensure nonexempt employees are paid for all hours worked and give the employer records to support payroll. Federal law requires accurate records, but it does not require a particular time clock, app, or software. A workable system can be simple—as long as it captures actual work, supports corrections, and meets the applicable recordkeeping rules.
What does federal law require small businesses to record?
Under the FLSA, covered employers must keep records for covered nonexempt employees. The U.S. Department of Labor (DOL) lists identifying and employment details alongside hours and wage information. Depending on the employee and pay arrangement, records include:
- Employee name, address, occupation, and other identifying information.
- The workweek’s starting day and time, and hours worked each day and each workweek.
- The basis of pay, such as an hourly rate, and the regular rate used when applicable.
- Straight-time and overtime earnings, additions to or deductions from wages, total wages for each pay period, and the date of payment and pay period covered.
The DOL’s Fact Sheet #21 says, “Any timekeeping plan is acceptable as long as it is complete and accurate.” The agency describes the fact sheet as general information, not an official statement of position contained in regulations. The DOL’s recordkeeping overview also explains the federal framework. Other laws or circumstances may require additional records.
Do you need a time clock or time-tracking software?
No particular timekeeping format is required by federal law. A time clock is one option, not a legal prerequisite or a compliance guarantee. The right approach depends on how and where employees work. The DOL’s Small Entity Compliance Guide describes flexible methods, including recording daily hours without requiring a punch at every start and stop. When employees follow a fixed schedule that rarely changes, an employer may use schedule records and note actual deviations.
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| Method | May suit | What to check |
|---|---|---|
| Paper or employee-entered timesheet | A small, stable team with a straightforward schedule | Entries are complete, corrections are traceable, and records reach payroll on time. |
| Physical time clock | A fixed worksite where employees start and finish on site | Missed punches can be corrected, and the recorded time reflects work actually performed. |
| Mobile or software-based timekeeping | Teams with variable schedules or multiple locations | Employees can access and correct entries; records can be reviewed, exported, and retained; and the system works for employees’ language and access needs. |
Compare methods by whether they capture all work, make errors easy to identify and correct, hand off reliably to payroll, and allow records to be exported and retained. Consider total cost, but do not assume a paid product is necessary simply because it automates calculations.
A free DOL option
The DOL offers the WorkWise Timesheet App for iOS and Android. The agency lists employer and employee options, regular hours, breaks, overtime, automatic pay calculations, and English and Spanish availability. DOL describes it as a public service and cautions that it may not cover every workplace situation. Using it does not transfer the employer’s responsibility for complete records and correct pay.
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How do you keep time records accurate?
Record the time employees actually work, including compensable work outside a scheduled shift where applicable. A schedule is not a substitute for noting work that differs from it. The DOL’s FLSA Hours Worked Advisor says an employer may not arbitrarily omit work time that is practically ascertainable.
Use rounding carefully
Rounding to a small time increment may be acceptable only when it averages out over time and does not result in failing to count hours actually worked. No particular increment is automatically safe: review actual punches and pay outcomes for patterns that consistently reduce compensable time.
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Build review and correction into the process
- Have employees or supervisors flag missed punches, off-schedule work, and inaccurate entries promptly.
- Document corrections so the original entry and the change can be understood.
- Compare time records with payroll before finalizing pay, checking hours, breaks, overtime, rates, and additions or deductions.
- Do not rely blindly on predictions or auto-filled entries. In Field Assistance Bulletin 2024-1, the DOL says such “smart” entries do not relieve an employer of the obligation to ensure records are accurate and employees are paid for all hours worked.
How long should you keep timesheets and payroll records?
DOL Fact Sheet #21 gives different minimum periods for different record categories:
| Record category | Federal retention period in DOL Fact Sheet #21 | Examples listed by DOL |
|---|---|---|
| Payroll records and related listed records | At least 3 years | Payroll records, collective bargaining agreements, and sales and purchase records |
| Records used to compute wages | 2 years | Time cards, piecework tickets, wage-rate tables, work schedules, and records of additions to or deductions from wages |
These periods come from the DOL’s Fact Sheet #21. Other applicable laws, a claim, a contract, or a preservation duty may affect how long a particular business should keep records.
Check state and local requirements too
This is an overview of U.S. federal guidance, not a complete compliance answer for every location or workforce. States may provide additional rights and protections, and employers must follow both federal and applicable state law. The DOL’s small-business guidance makes that point. Check the labor agency for the relevant state and locality, or consult qualified counsel, for rules that apply to your business, industry, and employees.
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