Proper employee time tracking compliance is crucial for HR professionals, payroll managers, and small business owners alike.
This article breaks down the Fair Labor Standards Act (FLSA) guidelines on timesheets, different laws that are imposed on hourly and salaried employees, and explains why accurate timesheets matter for overtime and recordkeeping compliance.
Federal Timesheet Requirements under the FLSA
Under the Fair Labor Standards Act (FLSA), employers must keep accurate time and pay records. The law does not prescribe a specific “timesheet” format (paper, spreadsheet, or software are all acceptable).
What Records Are Required (FLSA)
Every covered employer must maintain basic records that effectively serve as legal timesheets. According to the Department of Labor, these records should include:
- Employee identifiers (full name, home address, sex, occupation; DOB if under 19)
- Day and hour the workweek starts
- Hours worked each day and total hours each workweek
- Total earnings (straight-time) for each day/week
- Regular rate/basis of pay and overtime hours/pay
- Additions/deductions from wages
- Total wages each pay period
- Date of payment and pay period covered
For non-exempt (hourly) employees, keep at minimum:
- Hours worked each day and total hours each workweek
- Overtime hours and overtime pay
- Regular rate/basis of pay and total wages each pay period
- Additions/deductions and pay period/payment date
(Many employers also capture time clock in/out to substantiate daily totals, but it isn’t required by FLSA.)
For exempt (salaried) employees, FLSA does not require daily/weekly hour tracking, but you must keep core payroll records (e.g., salary basis, pay period, payment dates).
Overtime
Under federal law, non-exempt employees must receive overtime pay at 1.5× their regular rate for all hours worked beyond 40 in a single workweek
Meal/Break Time
There is no general federal law requiring meal or rest breaks for adult workers.
However, the FLSA does have guidelines on how breaks are counted if provided: short rest breaks (typically 5–20 minutes) must be paid as work time, whereas bona fide meal periods (usually 30 minutes or more off-duty) can be unpaid.
Importantly, if you deduct an unpaid lunch from a timesheet, the employee must be fully relieved of duties during that break. (State laws may impose their own mandatory break requirements, discussed later.)
Timekeeping Method Flexibility
The FLSA lets employers use any timekeeping method as long as it is complete and accurate. You might use a traditional punch clock, have a supervisor keep time, rely on workers to self-report hours, or use digital time-tracking software.
Record Retention
Employers must preserve timesheets/payroll records for a certain period in case of audits or disputes. The FLSA requires keeping payroll records for at least 3 years. Additionally, records on which wage calculations are based (like time cards, work schedules, and piece-rate documentation) should be kept for at least 2 years.
Timekeeping Rules for Hourly Employees
While different countries have their own time clock rules and regulations, there are some universal regulations that all US states must adhere to in regard to hourly employees:
- The FLSA states that the timesheet records must clearly state the date and time when a worker starts work and the date and time when a worker finishes work, as well as the number of daily and weekly work hours.
- Hourly employees must be compensated for each hour they’ve worked.
- Working off the clock is illegal. If an employee is made to work off the clock, they can file a complaint to the Department of Labor or a lawsuit under the terms of unpaid wages under the Fair Labor Act.
- Clock-ins and clock-outs are rounded to the nearest quarter of an hour under the 7-minute rule.
- Employers can modify an employee’s time card without them being aware, but they have to pay that employee for all hours they’ve worked.
- Timesheet records must be kept for clock-ins, clock-outs, overtime, and employee breaks in order for everything to be in compliance with FLSA.
- Employers should make their employees wait until their shift has started before they clock in. Accordingly, employees cannot be asked to work or perform any type of work-related duty before they officially clock in and start their shift.
- The employer should decide how many hours a week an hourly employee should work. If the employee works over 40 hours a week, the employer has to pay them 1.5 times their daily wage for overtime work.
Timekeeping Rules for Salaried Employees
Salaried employees aren’t required to track their working hours because:
- Salaried employees are entitled to receive their base pay no matter how many hours they’ve clocked in at work during the workweek.
- Salaried employees are required to complete their assigned tasks and duties no matter how long it takes them.
- Salaried employees cannot get their pay docked by their employer unless they are absent from work for a full day. For example, if an employee needs to leave the workspace after the break, then the employer cannot dock that day’s wages.
The things they have to track are:
- Time off, i.e., short-notice leave
- Vacation leave
- Holidays
- Sick-leave
- Payroll periods
- Overtime if the company allows it
Freelancers, contractors, and volunteers are excluded from the statutes of FLSA as they have their own laws regarding labor.
State-Specific Timesheet Rules
In addition to federal law, many states have their own state laws that affect timesheet practices. These laws can mandate extra recordkeeping, different overtime rules, required breaks, or longer record retention. It’s important for businesses to know the rules in each state where they operate.
Falsifying Timesheet Records
If you have a business that tracks work hours with manual timesheets, then you’re running at risk of exposing your company to a few inefficiencies and inaccuracies that might violate federal and general laws regarding employee work hours.
In some cases, you can be up against employee fraud. Inaccurate timekeeping inside a company and timesheet fraud are common in companies that still use the manual system for keeping timesheet data.
Some of the timesheet frauds can be in the form of:
- Inflating work hours - where employees can manually enter how many hours they’ve worked
- Falsifying timesheets - If the data from employee attendance has to be put manually in a time card or timesheet, then it’s very easy for dishonest employees to alter these figures to suit their needs.
- Nepotism - This happens when management favors an employee and schedules that particular employee to work on specific tasks rather than other available employees.
- Various errors due to delays in completing timesheets - Manual timesheets can be a hassle and some companies are so late in filling and submitting them that employees are known to be working on timesheets for work hours they had completed months ago.
Why Accurate Timesheets Matter for Compliance
Accurate timesheets aren’t just about correct pay—they protect your business. Here’s why:
- Overtime Compliance: FLSA and state laws (e.g., CA) require overtime pay after 40 hours/week or 8 hours/day. Missing records can lead to costly unpaid overtime claims. Employers must capture all hours worked, including off-the-clock time.
- Recordkeeping Laws: The FLSA and states like NY and CA require employers to retain timesheets (up to 6 years). In a dispute, missing records often favor the employee’s estimate of hours worked.
- Audit & Legal Protection: Labor departments and courts rely on time records. Incomplete or falsified timesheets can lead to penalties, lawsuits, or class actions. Keeping an audit trail of edits adds protection.
- Employee Trust: Transparent time tracking builds morale and reduces disputes. Rounding or discouraging full reporting can damage trust and invite complaints.
- Business Insights: Good timesheets help with labor costs, productivity, and project planning—an added benefit beyond legal compliance.
Tip: Train staff on accurate time reporting. Ban “buddy punching” and flag irregular entries early to avoid audit risks later.
Non-compliance with Timesheet Rules
Failing to comply with timekeeping laws can seriously impact your business. When timesheets are inaccurate, incomplete, or missing, you risk:
- Back pay and liquidated damages – If employees weren’t paid correctly (e.g. for overtime or off-the-clock work), you may owe not only the unpaid wages but also double that amount in damages.
- Regulatory fines – The U.S. Department of Labor (and state agencies) can impose civil penalties just for failing to keep proper records — even if no wages are owed.
- Burden of proof – If you lack timesheets, courts often accept the employee’s estimate of hours worked, putting you at a legal disadvantage.
- Audits and investigations – A single complaint can lead to a broader audit. Inspectors look closely at your timesheets, edits, and patterns. Gaps or inconsistencies can be interpreted as negligence — or worse, intentional wage theft.
- Reputation and trust – Lawsuits and enforcement actions can damage your credibility with employees and your reputation as an employer.
Stay Compliant with My Hours Timesheet Software
My Hours is a flexible, FLSA-compliant timesheet solution built for teams of all sizes. You can track work hours in real time, manually enter time logs, or use start–stop timers across projects, clients, and tasks.
FAQs
Are timesheets considered legal documents?
Yes – timesheets serve as official records of hours worked and are part of required payroll records under labor laws. While the FLSA doesn’t mandate a specific format, employers must keep accurate time records, so a timesheet is effectively a legal record.
Are timesheets required by law?
Timesheets (or some form of hours-tracked records) are legally required under the Fair Labor Standards Act (FLSA) for non-exempt employees in the United States. While the FLSA doesn’t require a specific timesheet format, employers must track and retain records showing:
- The total hours worked each day and week
- When the workweek begins
- Regular and overtime pay rates
- Total earnings and any deductions
Do employees have to sign timesheets?
No. There’s no federal law that requires employee signatures on timesheets. The FLSA requires accurate time and pay records but doesn’t prescribe any particular form, so signatures are optional. Many employers still require a signature or digital approval as a best practice, and some state laws, CBAs, or company policies may require it.
Can employers alter or falsify timesheets?
Employers may correct timesheets to reflect the actual hours worked, but they may not falsify records (e.g., reducing hours to avoid overtime). The FLSA requires employers to keep accurate records and pay for all hours worked; altering records to underpay can trigger back wages, civil money penalties, and other enforcement. Document any corrections and notify the employee.
How long must timesheets (timecards) be kept?
Under federal law (FLSA), keep payroll records for at least 3 years and keep records used to compute wages—like timecards/timesheets and work schedules—for at least 2 years.
What are the penalties for not keeping proper timesheets?
Failure to keep accurate time records can trigger Department of Labor investigations, back-wage payments, and in lawsuits, liquidated damages (often matching the back pay) plus attorneys’ fees. For repeated or willful violations, employers can face civil money penalties and even criminal penalties, including fines up to $10,000 and potential imprisonment for a second conviction. You may also be subject to court injunctions, audits, and additional state-law penalties or longer record-retention requirements.
