The Ultimate Guide to Small Business Employee Time Tracking in the Digital Age

Boost Your Business Efficiency with These Modern Employee Time Tracking Solutions

In today’s fast-paced business world, small businesses need to maximize efficiency and productivity to stay competitive. One essential aspect of running a successful operation is effectively tracking employee hours, which ensures accurate payroll and resource allocation. 

With numerous methods available, it can be challenging to determine which time tracking system best suits your small business needs, or whether you even need to do so at all. 

This article explores the issue of time tracking within small businesses, as well as some of the top ways to track employee hours, weighing their pros and cons to help you select the ideal solution for your organization.

Why Track Employee Hours? 

Accurate Time Management

One of the primary benefits of tracking employee time is that it helps to ensure accurate time management. By tracking employee time, employers can monitor how long employees are spending on specific tasks and projects. 

This can help to identify inefficiencies and areas for improvement, allowing for better time management across the entire organization.

Improved Productivity

Tracking employee time can also help to improve productivity. By tracking the time that employees spend on specific tasks, employers can identify areas where employees may be spending too much time or where they may be struggling to meet deadlines. 

This information can then be used to provide targeted training and support to employees, helping them to work more efficiently and productively.

More Accurate Payroll

Another key benefit of tracking employee time is that it helps to ensure more accurate payroll. By accurately tracking the time that employees spend working, employers can ensure that they are paid correctly and that they receive any overtime or additional compensation that they are entitled to. 

This can help to build trust and improve employee morale, as employees are more likely to feel valued and appreciated when they are paid correctly and on time.

Compliance with Labour Laws

Tracking employee time can also help ensure compliance with labour laws. In Ontario, as is the case in many other places, there are strict regulations around working hours.

For example, The Employment Standards Act (ESA) outlines the rules and regulations regarding overtime pay for employees. The ESA requires employers to pay overtime pay to non-exempt employees who work more than 44 hours in a workweek. Here are the key provisions of overtime pay under the ESA:

• Overtime Rate: Overtime must be paid at a rate of at least 1.5 times the employee’s regular rate of pay for each hour worked over 44 hours in a workweek.
• Time Off Instead of Overtime Pay: Employers may choose to offer time off instead of overtime pay, provided that the employee agrees to this arrangement in writing. The time off must be given at a rate of at least 1.5 hours for each hour of overtime worked.
• Exemptions: Not all employees are entitled to overtime pay. Certain professionals, managers, and supervisors are exempt from overtime pay under the ESA. However, the ESA has specific criteria that must be met in order for an employee to be exempt from overtime pay.
• Record-Keeping: Employers are required to keep accurate records of the hours worked by their employees, including overtime hours. These records must be kept for a period of at least three years. Thus why formal time tracking is a must for many businesses even if employees are salaried (more on them in a moment.) 

It is important for employers in Ontario to comply with the ESA’s overtime regulations to avoid legal issues and penalties. Similarly, employees should be aware of their rights under the ESA to ensure they are receiving fair and accurate overtime pay. By tracking employee time, employers can avoid penalties and legal issues, while also demonstrating their commitment to compliance and employee well-being.

Employee Flexibility

Finally, tracking employee time can actually be beneficial for employees themselves. By accurately tracking their working hours, employees can have a better understanding of their own time management skills and productivity. This can allow them to make more informed decisions about how they allocate their time, and to work more flexibly in order to achieve a better work-life balance.

Time Tracking and Salaried Employees 

Tracking salaried employee time may seem unnecessary as they are paid a set salary regardless of the number of hours they work. However, there are several reasons why tracking salaried employee time can be beneficial for employers:

Compliance with Labour Laws

Employers need to ensure that their salaried employees are meeting the minimum number of hours required under labour laws. By tracking the time that salaried employees work, employers can ensure compliance with these laws and avoid any legal issues.

Performance Evaluation

Tracking salaried employees’ time can also help employers evaluate their performance. It allows employers to see how much time salaried employees are spending on specific tasks and projects, and if there are any areas where they may need additional training or support.

Overtime Calculation

Salaried employees may be required to work overtime on occasion, and tracking their time can help employers accurately calculate their overtime pay. This ensures that salaried employees are paid correctly for any additional hours worked.

Project Management

Tracking salaried employee time can also be useful for project management. By knowing how much time salaried employees are spending on specific tasks, employers can allocate resources more effectively and ensure that projects are completed on time.

Employee Development

Tracking salaried employees’ time can also help with employee development. Employers can identify areas where salaried employees may need additional training or support and use this information to create individual development plans.

Best Ways to Track Employee Time in the 21st Century 

As a small business owner, keeping track of employee time can be a challenging task. Fortunately, there are many 21st-century tools and technologies that can make it easier to track employee time accurately and efficiently. In this article, we will explore some of the best ways to track small business employee time in the 21st century.

Time Tracking Software

Time tracking software is an essential tool for small businesses that want to accurately track employee time. Many software solutions are available that allow employees to clock in and out using a computer, mobile device, or biometric device. This data is then automatically recorded and stored, making it easy for employers to generate timesheets and payroll reports.

Mobile Time Clock Apps

Mobile time clock apps are another useful tool for small businesses that have employees working in multiple locations. These apps allow employees to clock in and out using their mobile devices, and the data is automatically synced to a central database. This makes it easy for employers to track employee time, even when employees are working remotely or in different locations.

GPS Tracking

GPS tracking is a powerful tool for small businesses that have employees working in the field. GPS-enabled time tracking apps can automatically track employee time and location data, which can be useful for verifying employee hours and ensuring that employees are at the right location at the right time.

Biometric Time Clocks

Biometric time clocks use advanced technology such as fingerprint recognition or facial recognition to ensure that employees are clocking in and out accurately. These devices are more secure than traditional time clocks that use punch cards or badges, and they can help to prevent time theft and reduce errors in payroll calculations.

Employee Self-Service Portals

Employee self-service portals allow employees to access their own timesheets and payroll information online. This can be useful for small businesses that have employees working remotely or in different locations, as it allows employees to review their own hours and submit time-off requests online.

While tracking employee time can be a daunting task for small business owners, the 21st century tools and technologies outlined in this article can help simplify the process and ensure accurate payroll and compliance with labor laws. 

However, it is also important to consider working with a chartered professional accountant (CPA) to ensure that your business is meeting all legal requirements and maximizing tax benefits. 

We can provide valuable advice on payroll management, employee classification, and tax compliance, and help ensure that your business is operating in a financially responsible manner. Contact us  today to learn more about how we can help your small business succeed.