A Complete Guide to US Federal Time Tracking Laws

US federal time tracking laws regulate many aspects of time tracking. Although specific penalties for improper time tracking are not mentioned, general labor law penalties apply, and improper time tracking can lead to significant penalties, including fines, back pay claims, and even criminal prosecution. To mitigate these risks, employers must understand and comply with federal time tracking laws.

For employees, knowing their rights under laws like the Fair Labor Standards Act (FLSA) is essential to ensure they receive proper compensation, particularly regarding overtime pay and mandated breaks.

This Article Covers

Time tracking is legal and required under federal law. The Fair Labor Standards Act (FLSA) mandates that employers keep accurate records of wages paid and hours worked by non-exempt employees (29 U.S.C. § 211(c)).

According to the FLSA, an employer must track:

  • Workday hours
  • Time and day of the week when the workweek begins for each employee
  • Total worked workweek hours
  • Payment date and period covered

How Should US Employers Track Employee Time?

While the FLSA requires accurate time records, it does not prescribe a specific method for tracking time (29 C.F.R. § 516.2). Employers have the flexibility to choose a system that suits their needs, provided it is complete and accurate.

Common time tracking methods in the US include manual recording of work hours, physical time clocks, and time-tracking software.

Learn more about the different ways to track time with Jibble.

Key US Federal Time Tracking Laws

Various laws may impact time tracking regulations in the U.S., with some directly affecting work hours and others influencing them in other ways, including:

  • Fair Labor Standards Act (FLSA) – FLSA establishes standards for recordkeeping, minimum wage, and overtime pay for non-exempt employees. Employers are required to keep accurate records of hours worked and wages paid.
  • Portal-to-Portal Act – An amendment to the FLSA, Portal-to-Portal Act defines what types of activities are considered compensable work time. This affects how employers track time for activities like travel, preliminary, and postliminary tasks.
  • Family and Medical Leave Act (FMLA) – FMLA provides eligible employees with unpaid, job-protected leave for specific family and medical reasons. Accurate time tracking is essential for managing leave entitlements and ensuring compliance.
  • Recordkeeping laws  – Under the FLSA, employers must retain payroll records for at least three years and records on which wage computations are based for at least two years. This includes time cards and work schedules.
  • Occupational Safety and Health Act (OSHA) – OSHA sets standards for workplace safety, which can indirectly affect work hours by regulating working conditions that may limit how long employees can work in certain environments.
  • Americans with Disabilities Act (ADA) – ADA prohibits discrimination against individuals with disabilities and may require accommodations that impact scheduling and time tracking, such as flexible work hours.
  • State Labor Laws – Each state may have its own laws that affect work hours, such as meal and rest break requirements, which can vary from federal standards.
  • Health Insurance Portability and Accountability Act (HIPAA) – HIPAA protects the privacy of health information and can affect how time tracking systems handle sensitive health-related data for employees.
  • Electronic Communications Privacy Act (ECPA) – ECPA rotects against unauthorized interception of electronic communications but allows employer monitoring under certain conditions. This is relevant if time tracking involves monitoring electronic activities.
  • State Privacy Laws and Employee Monitoring Laws – Some states have their own privacy laws that regulate how and when employers can monitor employees. If an employer in California uses time tracking software that collects and processes personal information about employees, or uses biometric data (e.g., fingerprint or facial recognition) for time tracking, these laws must be minded.
  • Affordable Care Act (ACA) – ACA equires certain employers to track employee hours to determine eligibility for health insurance coverage under the employer mandate. Employers must identify full-time employees working 30 or more hours per week.

        Can US Employers Round Up Employee Work Hours?

        Rounding hours worked in the US is acceptable and employers can round employee work hours to the nearest quarter hour under the FLSA.

        However, employers must be cautious not to always round down, as this could violate minimum wage and overtime rules. For example, if an employee works 1 to 7 minutes, the time can be rounded down, but if they work 8 to 14 minutes, the time must be rounded up to the nearest quarter hour.

        Do US Salaried Employees Still Need to Track Time?

        There are no clear requirements to track exempt employees’ hours in federal law. While exempt salaried employees are generally not subject to this requirement, state laws may specify otherwise. For example, in Illinois, employers are required to keep work hours records of all employees, regardless of their exemption status.

        Learn more about rules for overtime for salaried employees in the US.

        How Long Should US Employers Keep Employee Time Records?

        Under the FLSA, US employers must retain payroll records for at least three years and records on which wage computations are based (e.g., time cards, work schedules) for at least two years (29 C.F.R. §§ 516.5, 516.6).

        These records must be available for inspection by the U.S Department of Labor’s Wage and Hour Division and can be kept at the workplace or a central records office.

        Additionally, the U.S. Equal Employment Opportunity Commission (EEOC) regulations demand that all personnel records be retained for a year and payroll records for three years upon an employee’s termination should any complaint about unlawful termination arise.

        Check out this in-depth guide on US termination laws to find out more.

        Do Employers Face Penalties for Breaking Time Tracking Laws in the US?

        US employers may be subject to investigations and penalties for failing to properly track their employees’ work hours.

        These penalties are related to recordkeeping laws under the FLSA and other regulations that require proper time tracking practices. There are no specific penalties for unlawful time tracking but general labor law rules and penalties apply. These penalties may include:

        • Back payment of wages
        • A civil penalty of up to $1,000 per violation
        • A civil penalty of up to $10,000 per worker under the age of 16 whose rights were disregarded
        • Criminal prosecution and a fine of up to $10,000
        • Imprisonment for repeated offenses

        Legal Cases Related to Breaking Time Tracking Laws in the US

        Consulting Company Ordered to Pay Over $1.6 Million for Breaking Time Tracking Laws

        In Acosta v. Fire & Safety Investigation Consulting Servs, LLC, the U.S. Department of Labor investigated Fire & Safety Investigation Consulting Services (Fire & Safety), a private investigation firm in West Virginia, after an anonymous consultant filed a complaint alleging the company had failed to pay overtime for hours worked beyond 40 per week.

        The investigation revealed that Fire & Safety not only neglected to pay proper overtime wages but also failed to maintain accurate records of employees’ work hours for each day.

        The district court found that Fire & Safety had violated the Fair Labor Standards Act (FLSA) and ordered the company to pay a total of $1.6 million, which included $817,902 in back wages and an equal amount in liquidated damages.

        Key Lessons from the Case:
        • Properly tracking and maintaining accurate records of employees’ work hours is not optional. This case illustrates that failing to keep detailed and accurate records can lead to severe penalties.
        • ​​This case underscores the impact that whistleblowers or anonymous reports can have on holding companies accountable. Even if a complaint is filed anonymously, it can still trigger a significant investigation by the Department of Labor.
        • Employers should understand the full scope of the FLSA, including which employees are exempt versus non-exempt and what types of work qualify for overtime pay.

        Important Cautionary Note

        When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you to seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for the use of this guide.