This blog was written by Brandon White, Director of Human Resources at Helpside. Brandon has more than a decade of experience, allowing him to make complicated employment situations and regulations approachable for small businesses.
We frequently get this question from small business leaders, and like most HR questions the short answer is, “it depends.” Let’s start with defining which employees we are talking about. In most cases this question is referring to employees who are paid a set salary and are exempt from overtime according to guidelines in the Fair Labor Standards Act (FLSA). We encourage all employers to review the FLSA and confirm that those employees you are paying a salary qualify to be considered exempt from overtime. Simply paying them a salary is not enough.
Assuming the employees we are looking at do qualify to be exempt from overtime, the Department of Labor (DOL) states that employers can track salaried, exempt employees’ hours and set specified schedules for these employees. The DOL says, “We agree that employers, without affecting their employees’ exempt status… may require exempt employees to record and track hours; may require exempt employees to work a specified schedule; and may implement across-the-board changes in schedule under certain circumstances.” So, we have established that you can track salaried, exempt employees’ hours, but should you? There are some business reasons why it may make sense to track employee hours. Here are a few of them:
Project Management
Knowing how much time it takes to complete certain tasks or projects allows you to better plan for new projects and manage employee workloads so they aren’t overwhelming. You can get estimates of how long projects take by tracking employee hours while they work on tasks or projects.
Billable Hours
Some jobs have projects have to be billed by the hour. In situations like this, you may need to keep track of employee hours while on a job regardless of their status or salary.
Work-Life Balance
Tracking employee hours lets you know when an employee has been frequently working long hours or may be headed towards burnout. This will help you determine which employees need to take a break or need help managing their work-life balance. Having employees with healthy work-life balance can keep your workforce productive and happy.
A Word of Warning About Deductions
Typically, a salaried, exempt employee’s pay cannot be reduced for failing to work 40 hours in a week. There are some specific circumstances where deductions are okay, such as full-day absences for illness or personal reasons in conjunction with a bona-fide employee leave plan.
Some salaried, exempt employees may feel uneasy about reporting their hours if they haven’t had to do so at other jobs in the past. Explaining the business reasons behind the decision to track employee hours can be helpful.
Clients of Helpside can access our time-tracking software that can be used both to determine the correct pay for hourly employees and simply track salaried employees’ time. If you have questions about tracking employee hours or salary requirements, contact Helpside at humanresources@helpside.com or drop your name and email address here. and we will reach out.