A legally compliant time management system does more than clock employees in and out. It creates a defensible record of hours worked, breaks taken, and overtime paid, the kind of documentation that matters if a wage claim or audit comes up. Here’s what that actually requires, and where informal tracking usually falls short.
What the law actually requires
Under the Fair Labor Standards Act, employers must keep accurate records of hours worked, including start and end times, total hours per day and week, and overtime paid. The Department of Labor’s Fact Sheet #21 sets specific retention periods: payroll records must be kept for at least three years, and records used to calculate wages, like time cards and work schedules, for at least two years. A system that doesn’t retain this data long enough, or doesn’t capture it accurately in the first place, creates real exposure if a dispute comes up later.
Where compliance risk usually starts
Two areas cause most of the real problems. The first is rounding: federal regulation 29 CFR 785.48(b) allows employers to round punches to the nearest 5, 10, or 15 minutes, but only if the practice averages out fairly over time rather than consistently favoring the employer. A system that rounds down more often than up, even by a few minutes per shift, can add up to a real wage claim.
The second is remote work. In February 2023, the Department of Labor’s Wage and Hour Division issued Field Assistance Bulletin 2023-1, confirming that the same recordkeeping requirements apply to remote and telework employees. If accurate records don’t exist, the burden falls on the employer to prove hours were tracked correctly, not on the employee.
What compliant time tracking software should do
A system built for compliance calculates hours automatically instead of relying on manual entry, applies your actual overtime rules (daily, weekly, and any premium-day rates) without someone doing the math by hand, and retains historical records well past the legal minimum so they’re available if a question comes up months or years later.
Where TimeTrakGO fits
TimeTrakGO tracks hours, breaks, overtime, and PTO through web, mobile, tablet, and biometric clock-in options, with every punch retained as a historical record. Overtime rules can be configured to match daily, weekly, and premium-day thresholds automatically, and hours export directly into ADP, QuickBooks, Paychex, Gusto, and other payroll providers without manual re-entry.
See how TimeTrakGO handles compliance with a free 14-day trial.
About the Author: Brian Zurawski
