How to develop an actionable timesheet policy

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Accurate timekeeping offers multiple benefits for your business. 

It helps teams be productive and prevents loss of time and money due to inefficient planning.

And once you have a timekeeping system in place, the next step is to solidify and standardize that system with a timesheet policy.

In this article, we’ll cover the contents of a solid timesheet policy, its benefits, and five no-nonsense tips along the way.

This article contains:

(click on the below links to jump to a specific section)

• What is a Timesheet Policy?
• What Should You Include in a Timesheet Policy?
• 4 Key Benefits of a Timesheet Policy
• 5 Actionable Tips to Develop an Excellent Timesheet Policy

Let’s get started with the basics.

What is a timesheet policy?

A timesheet policy is a formal document that clearly states timekeeping objectives, procedures, and responsibilities for your employees. 

It brings your entire team on the same page regarding rules for tracking work time, along with validating and submitting the timesheet data. 

The policy also lays a clear action plan for each employee and lists the corrective measures for regular violations. 

Now, let’s dive into the details of a timesheet policy.

What should you include in a timesheet policy?

Every business has different timekeeping needs. 

We’ve shortlisted a few essential components of an effective timesheet policy that you should include in yours. Feel free to customize these sections to your needs. 

1. Policy objective

You must clearly state the goals that you are trying to achieve through the timesheet policy — like accurately recording employee hours, time-offs, and leaves.

You can open the policy with statements, such as:

“The purpose of this timesheet policy is to set up standard procedures for accurate recordkeeping and payroll. This policy is intended to promote accurate and orderly maintenance of employee timesheets, following the federal and local labor laws.”

Adding the objective up top helps employees understand how the policy applies to the real world.

2. Policy scope

The scope of the policy answers the question: whom does the policy apply to?

Here, you must specify whether it’s a company-wide policy or meant for a particular user group, say a department or an age group.

In the case of a timesheet policy, you may choose to have a single policy with multiple segments that apply to different users. You must specify which section applies to which user group.

For example, your company may have employees who are either exempt or non-exempt from the FLSA (Fair Labor Standards Act) regulations. 

Non-exempt employees are hourly employees who are entitled to FLSA benefits such as minimum wage and overtime pay. Their weekly wages are calculated based on a fixed hourly rate and the number of hours they work each week.

Exempt employees earn a fixed yearly salary and aren’t eligible for the above benefits. 

To be exempt from FLSA, employees must meet the salary basis, salary level, and duties test. These tests stipulate that an employee must earn a yearly salary that exceeds a minimum threshold while performing exempt job duties.

While FLSA requires employers to maintain accurate time records for hourly employees, there’s no such rule for salary employees. 

However, employers may still choose to track time and keep timesheets for salaried employees for its many benefits. 

Since the time-keeping needs for both the job categories are different, you should avoid any confusion by adding statements like:

Section 2 specifies timekeeping instructions and responsibilities for the employees. 

It’s divided into two sections.

• If you’re a salaried employee, refer to section 2A for detailed timesheet guidelines.
• If you’re an hourly employee, refer to section 2B for detailed timesheet guidelines.

Alternatively, you can create separate policy documents for each user group. 

However, a single company-wide policy helps maintain uniformity and saves the hassle of revising multiple documents in the future.

3. General information

Before you get to the heart of the policy, you may want to include a section that offers basic information regarding your timekeeping systems, software, and processes.

You could also use this section to explain some standard and repeating terms in the policy context.

Here are some examples of standard timesheet policy terms with their indicative meaning.

Some of these can be modified according to your needs:

• A work hour is any hour of the day that an employee has worked with prior authorization by the manager.
• A workday is [specify the number] hours of authorized work done between regular hours of operations (8 am – 6 pm)
• Overtime hours are authorized hours of work done beyond forty hours in a work week. It’s rounded to the nearest [specify the fraction] of an hour.
• A non-exempt employee is an hourly worker who receives payments based on a fixed pay rate and additional compensation for overtime hours. 
• An exempt employee is a salaried worker in any department of the company. They aren’t eligible for overtime compensation but can take time off in lieu of work done beyond their regular hours (overtime).
• Sick pay is [specify percentage] of the employees’ daily wage or salary that they earn for paid sick leaves.
• Holiday pay is time and a half of the employees’ daily wage or salary for working on a holiday.
• Annual leave is the total number of paid leaves an employee is entitled to in a year.

4. Procedures

The procedures section is the heart of the timesheet policy, where you detail the timekeeping methods and processes.

You should create separate sections for employees, supervisors, and managers, as they have different responsibilities and may use different tools. You may also want to keep the procedures separate for your salaried and hourly employees.

Here are some general sections on timekeeping procedures for hourly and salary employees that you could include in your policy: 

A. Hourly employees

• Daily clock in and clock outs.
• Time adjustments for missed punches.
• Work schedules.
• Tracking work hours.
• Tracking breaks and meal periods.
• Overtime guidelines.
• Timecard or timesheet approval and submissions, etc.

B. Salaried employees

• Tracking hours for tasks and projects.
• Getting approval for overtime work.
• Tracking overtime hours.
• Tracking time offs and leaves.
• Getting timesheets approved.
• Submitting the timesheets to the payroll system.

To simplify timekeeping, you can use advanced tools like Time Doctor that combine time tracking with powerful project management features. 

The tool helps employees track hours to tasks and projects with a simple start/stop timer in the interactive time tracking mode. Time Doctor automatically saves the tracked data into an online timesheet.

Its integrated payroll management can help you process employee timesheets for accurate and faster salary calculations.

Looking for more info on timesheets? 

Here’s our detailed guide with free-to-download timesheet templates.

5. Responsibilities

After specifying the procedures, you must assign roles and responsibilities to all your employees.

For example, the responsibilities of an hourly employee may include:

• Getting work schedules approved by the supervisor or manager.
• Tracking their total hours (total scheduled time) and actual hours (actual work time) through an electronic timesheet tool.
• Logging at least [minimum required number] hours each work week.
• Maintaining separate timesheets for different projects or departments. 
• Verifying the timesheet data on a weekly or daily basis.
• Getting timesheets approved by authorized approvers (manager or immediate supervisor).
• Submitting the approved timesheets to the payroll before the end of the pay period.
• Seeking prior permission and authorization for working overtime.

On the other hand, a salaried employee may have a different set of responsibilities. 

An employer may not require them to track regular working hours but just the overtime hours, sick leave, and other paid time-offs (PTO) to account for accruals. 

It’ll help calculate compensations such as time-off in lieu, sick pay, holiday pay, etc. and generate an annual leave report for your salaried staff.  

Similarly, managers and supervisors also have their tasks cut out. Their responsibilities could include: 

• Creating work schedules. 
• Authorizing overtime requests.
• Approving leaves and time-off requests.
• Verifying and approving employee timesheets.

For all the responsibilities mentioned above, you should link to the corresponding procedures so that an employee can quickly determine an action plan.

6. Enforcement

Now that you have a solid timekeeping system in place, there should be some measures to ensure that employees follow this system dutifully.

The key thing to remember here is that enforcement shouldn’t be about rigid rules and strict punishments. 

Instead, it should focus on making it easier for employees to adhere to the policy rules.

Here are some enforcement procedures that you can include in your timesheet policy:

• Ensure that employees have quick access to the policy document. You can put it on the company intranet or the employee self-service portal.
• Set clear and realistic time tracking goals and timesheet submission deadlines.
• Include guidelines and tips to help employees adhere to the policy rules.
• Provide convenient course correction measures in case of non-compliance.
• Offer reward programs to promote diligent compliance.
• Specify disciplinary actions to check regular violations.

7. Consent

Work hour tracking may involve sensitive employee information. You must always take the employees’ consent before enforcing timesheet policy, or any workplace policy for that matter.

You can take printouts of the policy doc and ask your employees to sign it. If you intend to keep it digital, get them to sign a separate consent form.

In any case, make sure to give your employees enough time to read the policy before consenting to it.

Disclaimer: The sample policy statements shared in this article are meant to provide a general guide and can only be used as a reference. They may not account for local laws, state laws or federal laws, and other applicable laws. Neither the author nor Time Doctor will assume any legal liability that may arise from the use of these sample statements.

4 key benefits of a timesheet policy

Let’s explore some key advantages of creating a timesheet policy for your company:

1. Helps set clear expectations

Every organization has business goals related to performance, profitability, client and employee satisfaction. These goals directly or indirectly depend on how well the company manages its time.

A timesheet policy helps convey what you expect from your employees and set clear accountabilities to achieve these goals.

2. Gives a clear action plan

Sharing your timekeeping goals and expectations is one thing, but you also need a concrete action plan to empower and guide your employees along the way. 

A timesheet policy contains a set of procedures and guidelines that your employees can refer to at any time. It’s an effective way to keep the entire organization focused and on the right track.

3. Maintains process consistency

A company may follow a timekeeping system without creating a formal policy document. 

Sure, it may work to a certain degree, but where it fails is to ensure consistency.

When all the employees follow the same standard procedures, the work processes remain consistent and regular. A formal policy also lays a solid foundation for tracking the progress of your initiatives using key performance indicators.

4. Improves timekeeping efficiency

A timesheet policy starts a feedback and revision loop where you constantly aim to improve your timekeeping efficiency and accuracy.

When a policy doesn’t lead you to expected results, you must look out for operational inefficiencies and bottlenecks. Engage your employees at this stage and ask them why the current system isn’t working. 

Then, use the insights to make the necessary changes to your policy and monitor your progress again. This feedback and revision cycle helps you optimize your timekeeping system, which can positively impact your profit margins.

5 actionable tips to develop an excellent timesheet policy

Here are some great tips for creating a solid timesheet policy for your company:

1. Identify your timekeeping needs

Before drafting a timesheet policy, you must assess a few factors that usually shape the company’s timekeeping needs, such as:

• Your business goals.
• Recordkeeping laws.
• The type of workforce — exempt, non-exempt, or a combination of both.
• Client requirements like billing and invoicing.

It’ll help you identify the timekeeping solutions that work best for the company and draft a policy accordingly.

2. Consult all stakeholders

Companies often overlook the need to consult all stakeholders before drafting the policy. This silo approach may result in policy failure, implementation gaps, and employee dissatisfaction.

Employers should make it a point to discuss policy proposals with their employees, clients, and the timesheet software vendor.

Reaching a mutual consensus with all stakeholders will help you implement the policy efficiently.

3. Keep it simple

Quite often, you’d come across unnecessarily long and complicated policy documents. 

It makes it difficult for the people who must carry out and implement the policy.

Make it a point to keep your policy format and language easy to understand and enact. You can even hire specialized writers to draft the policy.

4. Include FAQs

A great way to ensure that employees adhere to the policy regulations is by framing them from their perspective. 

How?

Here are a few sample questions:

• Will my pay be delayed or withheld if I submit timesheets after the due date?
• Do late timesheets affect my accrued annual leave, sick pay, and holiday pay?
• What happens if I work overtime without prior permission?

5. Regularly update the policy

As a company grows, its policies may become insufficient, outdated, or completely irrelevant.

Carrying out such a policy may cause unnecessary drainage of resources and efforts.

For example, following manual time tracking procedures, even when you’ve upgraded to an automated time clock or timesheet system.

Companies should periodically revise their timesheet policy and procedures to account for:

• KPI performance.
• Upgrades to timekeeping systems.
• Changes in FLSA and other employment laws.
• New work models such as remote work or hybrid work.

Final thoughts

Creating a timesheet policy can help employers use their human resources more effectively.

It transfers timekeeping goals and expectations from boardrooms to employees’ to-do lists. 

However, drafting a timesheet policy could be a daunting task, especially for a new business owner.

Don’t worry. Just use the tips and methods shared in this article to develop a solid timesheet policy that works for your company, employees, and clients.