Employee Time Tracking is Critical
01/25/2023Time tracking is about more than capturing labor hours to issue paychecks. It’s a complex and critical administrative task which is closely tied to your company’s profitability and financial stability.
Improper time tracking can lead not only to payroll mistakes, but also, when working on public projects, to compliance failures with prevailing wage and tax laws. The latter can lead to adverse legal actions and penalties.
Maintain Worker Classifications
Work (or worker) classifications come into play when publicly funded projects must pay prevailing wage rates and comply with prevailing wage laws.
For example, classifying a worker as a laborer when the person is actually an ironworker, is a misclassification that violates the law. It could result in your construction company paying the wrong hourly rate, which includes fringe benefits and tax withholdings.
When a worker moves from task to task in the field, you must track the activity carefully so you can correctly assign and accurately report wage determinations. However, it’s easy to overlook changing work classifications on busy jobsites. It’s important that your workers understand the importance of tracking both their hours and their changing roles in the field.
Verify Wage & Benefit Rates
Wage determinations set the hourly wage and fringe benefit rate for every classification of laborer and mechanic. These rates apply to federally funded projects and come from wage surveys conducted by the U.S. Department of Labor. Some states, counties and cities have similar laws in place and publish their own prevailing wage determinations for state-funded or municipal projects.
Ensure your administrative staff knows where to find applicable prevailing wage rates for each jurisdiction you work in. For example, federal wage determinations can be found at this U.S. government website Most states will have a similar online resource, with prevailing rates broken down by area and city where applicable. Don’t assume last year’s rates still apply — they likely have changed.
Standardize Processes By Using Checklists
Mistakes are easier to make and harder to catch and correct if you don’t have standard processes in place. Create a checklist that outlines payroll workflow by including every step required to complete the payroll cycle. Include a timeline for submitting hours, as well as steps for the process of verifying time and double-checking work classifications and wage determinations.
Even if you use certified payroll software for reporting, keep a separate checklist that details every task required to remain compliant. Train your accounting staff to mark off tasks as they’re completed and to add notes if issues arise.
Maintain Accurate and Up To Date Records
If you work on government-funded projects, keeping up to date with reporting requirements is critical to staying compliant. Avoid the mad rush to meet deadlines; that’s when mistakes typically happen.
Sometimes, despite their best efforts, construction businesses are investigated for prevailing wage issues. In such an event, you’ll want to produce a clear digital/paper trail indicating that you have sound time-tracking and payroll procedures in place. This is where checklists will be important to show prudent due diligence.
Prioritize Training
Provide the training your employees need to minimize mistakes and maintain compliance.
Do field workers understand the importance of tracking on-site role changes and how work misclassifications can affect their pay? Does your administrative staff know how to find and verify wage determinations? Do you provide training on these matters when you hire new team members?
To minimize classification and wage determination errors share articles about prevailing wages and general labor laws, schedule time for employees to watch webinars, and send regular reminders to everyone about best practices.
Automate Time Tracking
Accurate time tracking impacts the profitability of a company. To clearly understand the true labor costs for each project, you need to correctly track every hour along with the task being performed. Knowing your true labor costs is also key to creating competitive bids for future work. However, when using manual processes, it’s easy to forget to clock in and out on timesheets—which can lead to “guesstimating” the labor time for each task.
To avoid human error consider using digital time tracking. The implementation of digital time tracking will remove several manual steps for both field and office personnel and reduce data entry mistakes. There are cloud-based mobile applications which transmit data from jobsites and allow managers and accounting staff to see employee time, activities performed and project locations. Many cloud-based applications include features such as:
- Geofencing
- Labor cost data collection
- Employee accountability functions
These features make it easier to log classifications, manage wage determinations and handle reporting. Research a system that makes it as simple as possible for workers to capture hours digitally and that integrates well with your payroll system.
Benefits of Accurately Tracking Time
Payroll errors and mistakes can affect company profits and create legal and tax problems. By accurately tracking employee time a company can minimize mistakes in its processes and spend far fewer dollars fixing mistakes and paying compliance penalties.
For additional information and resources on tracking employee time, contact Michael Ceschini of Ceschini CPAs at: (631) 474-9400.