Top Timekeeping Compliance Challenges Employers Face (And How to Avoid Them)

Scheduling and keeping track of employee hours is a huge part of running a business. Among the many challenges of accurate timekeeping is staying in compliance with federal and state HR laws and regulations. Read on for a list of four common compliance issues and how you can deal with them effectively.

Why Timekeeping Compliance Is Crucial

Good companies establish trust between management and employees. When workers feel like their time and effort is valued, they are more likely to work hard and follow company policies. Fair and timely compensation is paramount in creating a culture of confidence with employees, and a reliable timekeeping system facilitates that goal. Following compliance regulations to the letter protects the business from any possible legal disputes.

The 4 Timekeeping Issues that Impact Compliance

Explore the four most common issues that affect employer compliance when it comes to managing employee time.

1. Meal Breaks

Though FLSA doesn’t mandate paid employee meal breaks, some states have laws about breaks that may even be industry-specific. Colorado, for example, mandates a 30-minute meal break for every 5 hours worked, where employees in certain industries must be relieved of all duties. In Connecticut, certain employees who work 7 ½ hours must be given a meal break within a specified time window in the shift. 

Compliance may be challenging in fields like healthcare, where the nature of the work makes it difficult to fully relieve someone of their responsibilities at a certain time. A 2024 court ruling in Washington State found that hospital employees who missed meal breaks were owed compensation for the break plus additional time as a penalty for being denied the opportunity. 

Where laws or company policies exist, it’s vital to find ways to ensure the employees can take the breaks they’re owed. You might configure your timekeeping software to send reminders to employees before a scheduled break. Foster a culture where managers encourage employees to take their mandatory breaks.

Review our state-by-state roundup of meal and rest break requirements now!

2. Rounding Rules

The FLSA allows for the time clock to record “the employees’ starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth [6 minutes] or quarter of an hour [15 minutes].” This practice assumes that, over time, the rounding will average out and fairly compensate the employees for the time they work. 

• To avoid violating the FLSA, companies often apply the “7-minute rule” for 15-minute rounding 
  • When clocking in or out 1-7 minutes past the quarter hour, round down to the quarter hour 
  • When clocking in or out from 8-14 minutes past the quarter hour, round up
• Some states have their own rounding rules, such as California, which requires rounding to the nearest 5 minutes, and Illinois, which requires rounding to the nearest 10 minutes.

Rounding policies must be neutral and consistent to avoid wage violations and potential lawsuits from employees. Never round down to avoid paying required overtime.

3. Record Retention

Accurate records protect both the company and the employee in labor disputes. The FLSA provides an exhaustive list of information that companies must gather and store on each non-exempt employee:  

• Employee’s full name and social security number.
• Address, including zip code.
• Birth date, if younger than 19.
• Sex and occupation.
• Time and day of week when employee’s workweek begins. Hours worked each day and total hours worked each workweek.
• Basis on which employee’s wages are paid.
• Regular hourly pay rate.
• Total daily or weekly straight-time earnings.
• Total overtime earnings for the workweek.
• All additions to or deductions from the employee’s wages.
• Total wages paid each pay period.
• Date of payment and the pay period covered by the payment.

Records companies should keep for at least three years:

• Payroll records
• Collective bargaining agreements
• Sales and purchase records

Records companies should keep for at least two years:

• Time cards and piece work tickets
• Wage rate tables
• Work and time schedules
• Records of additions to or deductions from wages

You can ensure record-keeping compliance by providing hiring managers with a checklist of required information and setting policies, such as ensuring new workers don’t start without all their information on file. Perform periodic audits of personnel files to look for missing pieces.

4. Time Theft

Time theft happens when employees misuse the timekeeping system. They may:

• Clock in early or late without performing any work during the extra time
• Have a co-worker clock in or out for them, known as “buddy-punching” if they’re late for their shift or leave earlier than scheduled
• Take extended or unauthorized breaks during their scheduled shift

These labor costs can build up over time, and they can disrupt the schedule, requiring overtime to cover gaps. It can also build resentment with other employees who are honest about their timekeeping. 

WorkforceHub is a proven time-tracking system that allows you to customize the experience that will work best for your business needs. Safeguards like geofencing, unique logins, or biometric scans can help solve time theft and a host of other compliance challenges. The tools work for the employees and the company, providing data and a streamlined experience to keep things running smoothly. 

Say goodbye to these compliance challenges by automating your timekeeping and protecting your business.