It is not uncommon when companies require their employees with fixed salaries to fill in timesheets. As people usually don’t enjoy timekeeping, they tend to describe this practice as an unnecessary waste of time. Logically, if you’re getting paid for getting your job done and not missing deadlines, why do you need to track how much time it takes you?
However, many companies have valid reasons to make their employees keep and submit their time logs. There are multiple aspects where timesheet data are useful, even if the employee doesn’t get paid on their basis. Let’s look at how timesheets for salaried employees can benefit businesses and why they are an important part of the work process.
The main concern about timekeeping for salaried employees is their exempt status for overtime. If you are non-exempt from overtime, you get paid one time and a half for extra worked hours over the standard working week. But if you’re exempt, you are normally paid the same salary every week, with a few exceptions.
Fair Labor Standards Act only requires time-tracking for non-exempt employees and doesn’t regulate timekeeping for those who are exempt from overtime. However, employers are still entitled to get exempt employees to fill in timesheets. While punch-in / punch-out systems may seem too much, timesheets are often a reasonable tool to manage salaried workers and teams.
So if you’re exempt from overtime and your payment is not defined by the amount of hours you spent working, why bother filling in and submitting timesheets? There are various situations when accurate timekeeping is crucial, even if the employees who perform work don’t get paid per hour. Let’s take a look at the reasons why timesheets for salaried employees can be still necessary.
1. Billing customers
The first and most important reason to make salaried employees fill in timesheets is collecting information on works performed for a project to bill the customer. Invoices based on timesheets are common practice in many areas, from architecture and construction to software development. It simplifies the billing procedures and provides a transparent cost calculation.
Using timesheets for billing and accounting is common not only for the private sector. Scientific institutions and organizations that receive their money from government grants and contracts often require their employees to fill in timesheets, because otherwise, it would be hard to figure out the amounts of time billed for each grant.
2. Calculating compensations
Surprisingly, but yes, this is another reason to keep time records for salaried employees. Employers have an option to additionally pay overtime hours, however, it’s entirely at their discretion and also depends on the field and on the nature of work you perform. In many situations, knowing how many hours an employee spent on a task defines how the work will be paid. As long as the employee doesn’t deduct amounts from your paycheck based on hours you tracked, it is okay to require salaried employees to fill in timesheets.
Another aspect of handling overworked hours is allocating time off in lieu (or comp time) proportional to the employee’s extra work time as compensation for overworking. Anyway, any compensation for extra hours provided by the company’s internal regulations requires an accurate record of time expenses.
3. Calculating time off and leave balances
Alongside with granting time off in lieu, many employers calculate leave balances on the basis of timesheet data. And if an employee refuses to provide the employer with the information on time expenses referring to their salaried status, there is no way to determine how much time off this employee is entitled to.
Often, timesheets include not only work time records, but also data on vacations, sick leaves, and other time off used by an employee. This way, they help keep track of remaining time-off balances, especially timesheet software tools that have built-in mechanisms for balance calculations.
Of course, sometimes there are other ways than timesheets to track time spent by an employee (access control systems etc.), but timesheets seem to be one of the least obtrusive measures. Among other measures, clock-in & clock-out and computer activity tracking should be mentioned, which are often considered to be an overkill.
4. Efficient project management and adequate estimation of future work
One more reason to keep accurate time records is efficient management. The information on work progress and the availability of resources is crucial for any team or project manager, and timesheets are the tool that provides them with this data.
There are many recommendations on using timesheets for project cost management, forecasting and resource planning, and they are an easy solution that provides managers with granular data for their planning and forecasting purposes. Among many aspects that can be managed with the help of timesheet data, the most important are:
- Work progress and estimated delivery dates;
- Teams’ productivity and performance;
- Workload distribution within teams;
- Possible bottlenecks and time-wasters;
- Expected costs and ways to optimize them.
5. Personal time management and productivity improvement
Maybe it’s not the first reason why salaried employees are required to do timesheets, but it is still important. Measuring productivity for both teams and individuals is not an easy task in knowledge-based fields, but timesheets can be of help here. They provide data necessary for figuring out what tasks take more time than expected, what gets done quickly and easily, and what to-dos are time wasters.
This data helps figure out what can be done to optimize daily routine, increase the efficiency of work activities, and improve personal productivity. This is a way to develop a mindful approach to work time distribution — for example, reduce time spent on checking emails, restrict unproductive communications with colleagues, and stop wasting time on useless meetings.
Sometimes, timesheet data reveals some productivity or efficiency problems that can require involving other staff or management — for example, redistribution of workload might be required to increase efficiency when performing specific tasks. Similarly, if timesheet data shows that any particular employees or the entire staff are overworking, hiring process can be initiated to optimize work efficiency.
6. Applying for a tax credit
Taking advantage of research and development (R&D) tax credit is another valid reason why companies with salaried staff prefer to keep track of time expenses. People tend to think that only research labs or large innovative corporations are eligible for the R&D tax credit but in fact, any business that performs research or experimental development can qualify for this incentive if they provide evidence to support their claims. Tracking project time expenses is an important part of proving that the company carries out research and innovative development activities, so keeping timesheets is crucial when applying for a tax credit.
As counterintuitive as it can seem, timesheets for salaried employees are an integral part of the entire work process. While not influencing paid amounts and employees’ benefits directly, timesheets provide crucial data for billing, accounting, HR and project management. Specific benefits of keeping track of work time for employees and employers depend on companies’ internal procedures and regulations, but the fact is that timesheet data gives insights into many aspects of work life and business processes.