Keeping track of employee working hours is not an optional chore: The federal Fair Labor Standards Act (FLSA), and numerous other federal and state laws, require employers to keep records of hours worked, wages paid, and other conditions of employment. Beyond the law, it is impossible to run a successful business without keeping track of employee working hours. The FLSA requires that time records show the date and time a worker's workweek starts, the number of hours worked each day, and the total hours worked during the week. For many business reasons, employers need to keep thorough, accurate records of all hours worked, including starting and quitting times for each employee.

The law does not mandate just how time records are to be kept; employers have any number of options. Following are a few of them.

Many employers require that workers keep written track of their working hours manually on a time card or time sheet and turn them in periodically. Workers with access to computers can log in and out of work electronically.

Time clocks are not required by law but are often used by employers. Where they are used, employees who voluntarily clock in before their regular starting time or stay after their closing time do not have to be paid for such periods unless they are working. However, personal time spent in the workplace may have to be compensated if the employee does any job function, no matter how limited, during that time. Employees may react with resentment and resistance when employers institute time clocks for the first time. Therefore, it is important to introduce time clocks with a maximum of tact (for example, on the basis that they preclude timekeeping errors) and to be lenient at first with employees who forget to punch in or out. Web clocks are similar to time clocks but allow employees to clock in or out over the Internet.

Rounding practices. It is the practice in some industries, particularly where time clocks are used, to record employees' starting time and stopping time to the nearest 5, 10, or 15 minutes. As long as employees are fully compensated for all the time they actually work, this practice will be accepted unless it is used in such a way that on average employees are not properly compensated for all the time they have actually worked.

This is a computerized system using electronic badge readers—terminals that can read barcodes and magnetic strips on badges. Employees pass their badges or identification (ID) cards through an electronic device, which transfers the information to a computer, that records the information and calculates it.

Many companies are now using hand and fingerprint scanners to replace time clocks. Hand and fingerprint scanners eliminate instances of one employee punching in or out for another. While it’s true that a swipe-card system would accomplish many of the same goals, with the hand and fingerprint scanning systems, employees don't have to remember to bring their badges to work.

The FLSA does not require employees to be paid for their time spent changing or washing up, unless the activity is “principal work activity,” so theoretically, early or late clock punching may be disregarded. However, if an employee later claims that he or she was working but the time at work was not recorded, the employer may end up paying the employee for that time. This is because the employer generally will not be able to prove otherwise, and in such a circumstance a court will rule in favor of the employee. To be safe, employers should ensure that an employee clocks in when he or she is ready to begin work and clocks out as soon as work time is done.

Most employers do not require exempt workers to keep track of hours. This is fine, as long as the employer is absolutely sure the workers are exempt. If it is later determined that an employee was nonexempt, that employee might make a claim for overtime pay. If there are no records of the employee's work hours, the employer will have great difficulty countering the employee's claim as to the number of hours he or she worked. Time sheets for exempt employees should record sick days, floating holidays, vacation time, jury duty, bereavement, and other absences. However, exempt employees may not be docked pay because of a variation in the quantity of work performed and recorded.

Most employers consider deliberately incorrect time recording--time card falsifying or clocking in or out for another employee--to be firing offenses. A few caveats: An employer who intends to consider these offenses cause for immediate termination must inform employees of this prospectively and enforce the rule across the board. If discipline for this offense is not enforced even-handedly, it may be used to support a discrimination claim.