Employee Time Tracking:
When It's Best to Hire a Payroll Company

AUG 18, 2021

Time tracking is a proven method to manage work hours effectively. When done regularly and accurately, this process can help boost productivity and improve employee engagement and performance.

Employee time tracking is a big undertaking, and it takes a lot of time and effort to get it right. The small-business owner who uses manual timekeeping or allows employees to approximate their time each pay period can be a cause for costly mistakes and additional work. A timekeeping solution is often disregarded, but it can go a long way in making sure a business is operating efficiently.


Many businesses, even those with under 10 employees, are outsourcing employee timekeeping solutions to proactively solve concerns surrounding wasted or stolen labor time or process efficiency. 


Here are some of the advantages of outsourcing employee time tracking with a trusted and established payroll company.


Reduce Costly Mistakes


Outsourcing employee time tracking increases payroll accuracy. Payroll mistakes can be costly. The problem must be found, corrected in the system, and a new check issued. Payroll mistakes also lower a business’s reputation. Repeated mistakes reduce staff loyalty and increase turnover — which costs a small-business owner even more time and money. As many as 56 percent of employers discover errors on nearly a fourth of employee timesheets.


Nearly 60 percent of Americans are paid by the hour, according to the U.S. Bureau of Labor Statistics. These employees rely on employers inputting their hours correctly. If time tracking is not done properly, the employee is either shorted wages or paid too much. It can also trigger a landslide of other errors, which can cause bigger issues down the line, from incorrect federal income tax withholdings to PTO calculations, meaning employees might not earn vacation time or sick days that they are rightfully due. 

Prevents Employee Time Theft


Time theft is one of the most overlooked issues. The American Payroll Association (APA) finds that 75 percent of businesses in the United States are affected by time theft every year. One survey suggests 43 percent of hourly workers exaggerated the amount of time they worked during their shifts. Additionally, this causes productivity losses of $400 billion annually. You can install surveillance cameras to prevent employees from stealing physical property from you, so why not consider hiring a payroll company with expertise in employee time tracking to help deter your employees from doctoring a timecard? Here are some of the ways outsourcing your business’s employee time tracking to a payroll company can help small-business owners avoid a variety of time theft issues. 

Rounding Up


If a company tracks employee time on paper, it provides ample opportunity for employees to fib about how many hours they have worked. Or if employees plug in their time through a program like an Excel sheet, they can easily adjust their time.


It is common for employees to round up their time. For example, if an employee leaves the office at 5:45, they may round the time up to 6:00. The average employee steals about 4.5 hours each week from their employer, which totals almost six full workweeks annually, which is a huge monetary cost to the businesses they work for. 


Buddy Punching


If employees have the opportunity to alter their timecards or clocks, it is more than likely some will take advantage of it. Buddy punching is a good example. This happens when a coworker is asked to clock in another employee if that employee is running late. Buddy punching costs employers $373 million annually in the United States. If an employee is clocked in but does not arrive for another 20 minutes, that’s time theft.


A payroll company with specialized time tracking software can make this type of time theft nearly impossible.

Extended Breaks


Employees deserve their breaks, and they are required by law. However, time theft happens when employees take longer breaks than are allowed in the break time policy. The employee may take a 45-minute lunch break but only marks 30 minutes on his or her timecard. One survey found the average cigarette smoker wastes an equivalent of six workdays a year on smoke breaks on the job.


Using workforce management software and solutions, payroll companies can help small-business owners crack down on time theft and save money.

Personal Business


Another way that employees can steal time from employers is by spending time on non-work-related tasks. For off-site employees, it also means running personal errands between jobs. This can include paying bills online or scrolling through social media or other non-work-related sites. Personal phone calls or texting on the job also fall under this category. One survey found that 62 percent of the people polled spent at least an hour during the workday looking at their phones! These distractions can cut down on employee productivity since research finds it takes a few minutes for a person’s brain to fully return the focus to a work task upon switching from a personal one.  




One of the more challenging and daunting aspects of employee time tracking, especially for small-business owners, is compliance. The Fair Labor Standards Act (FLSA) mandates how employers must pay employees for time worked as well as time off. The standards make manual employee time tracking increasingly time-consuming and tedious. Small-business owners can automatically improve compliance with federal, state, and local laws and regulations and avoid stiff penalties and legal costs. 


The Department of Labor can audit a business at any time and usually without warning. This does not give employers much time to gather records. These records should date back a minimum of three to four years and can take up a lot of storage space. It can prove to be very difficult to find a single timecard if an employee dispute ever arises. 


By utilizing an outsourced employee time tracking system, a small-business owner can store all those records virtually and access them within seconds. In addition, they keep an audit trail of any changes that were made, who made them, and the date and time they were made. 

Employee Time Tracking Solutions


Time and attendance solutions like those offered by Payroll Vault, a boutique-style, full-service payroll company, can be a game-changer for small businesses. Payroll Vault timekeeping options include:


  • Web – employees can punch in and out via a web portal using any device.
  • Standard – choose from traditional PIN — or swipe-based, biometric, or punch time clocks.
  • GPS – a high-end system for field-based employees that allows them to punch in and out based on geographic location.
  • Voice Punch – eliminates manual timecards and standard clocks and allows employees to call in and enter their user ID to punch in and out.


The highly intuitive systems from Payroll Vault are easily set up, make data editing simple, and ease the timekeeping process.


If a boutique payroll service seems to be the best fit for your payroll needs, contact your nearest Payroll Vault to get a quote.