Tracking Employee Time Off: Everything You Need To Know

Are you looking for an efficient and effective way to track your employees’ vacation, sick leave, and paid time off?

As a business owner, you know that tracking employee time off can be a time-consuming and complicated task. However, with the right software and strategies, you can simplify this process and improve your business’s productivity and profits.

Let’s start at the beginning.

The Fundamentals

1. What does tracking employee time off mean?

Tracking employee time off means keeping a record of your employees’ absences, including vacation days, sick leave, personal days, and other types of paid time off. 

It can be done manually, using timesheets or paper forms, or by using automated software solutions designed specifically for this purpose. 

We’ll get into more detail on these methods later. 

2. Why does tracking employee time off matter?

• It helps you stay in compliance with labor laws regarding employee absences. 
• It allows you to plan to avoid disruptions in your business operations. 
• It improves your employees’ morale and job satisfaction by showing them that you value their time off and are committed to ensuring they receive the appropriate benefits. 
• It helps you identify patterns in employee absences and take corrective actions.

Tracking Employee Time Off, By Type

Now that we know what tracking employee time off is and why it’s important, let’s take a look at the most common types:

Vacation Leave

Vacation leave is accrued over time. Therefore, the longer an employee works at a given job, the more vacation time they will receive. 

To track employee vacation time, you can use a vacation tracker or an Excel spreadsheet. This way, you can record each employee’s accrued vacation time and monitor their requests for time off. 

Sick Leave

Sick leave is typically provided to employees to help them recover from illness or injury. 

By monitoring the amount of sick leave used by each employee, you can ensure that they comply with federal and state labor laws and regulations.

This employee vacation and sick time tracking template is an excellent tool for small business owners to monitor their employees’ vacation and sick time usage. 

PTO (Paid Time Off)

PTO combines vacation and sick leave, providing employees with a single pool of time off that they can use for any purpose. It’s important to understand how pto works so that you know how to setup and operate the right PTO system for your business.

This PTO request form is a great template for small businesses to manage and track their employees’ PTO requests effectively. This template allows businesses to: 

• Track each employee’s PTO balance
• Record time off requests
• Monitor the number of PTO days taken

Personal Days and General Time Off Requests

Personal days can be used for any reason, such as attending a family event or taking care of personal business. 

This time off request form template is another tool you can use to track general time off requests from your employees.

How Small Business Owners Are Tracking Employee Time Off 

There are two primary methods to track employee time off, but how do you know which one is best for your business?

Let’s find out.

Method #1: Track Employee Time Off Using Timesheets

Some small businesses use Excel or physical spreadsheets to track employee time off. 

This method involves creating timesheets, paper forms, or PDFs to track employee time off requests, approvals, and balances. While it may seem like an easy and cost-effective solution, there are a few downsides to this method.

It’s time-consuming. Updating spreadsheets and manually entering data can take a lot of your valuable time, especially if you have more than a few employees. 

It’s prone to errors, like incorrect data entry or misplaced forms. 

It’s not transparent. Employees can’t access their time off balances, leading to more frequent questions to managers about their time off.

Method #2: Track Employee Time Off Using Employee Time Tracking Software

There are several benefits of using time tracking software for your business:

It automates time tracking. This makes it easier for you as a business owner to manage your small business schedules. 

It tracks employee time off requests, approvals, and balances automatically, eliminating the need for manual data entry.

Your business can better comply with labor laws, such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA), by tracking employee hours and leave accruals. 

Monitoring employee performance gets easier, as you can identify trends and forecast future workforce needs.

So, what is the best way to track employee time off?

While both methods listed are viable, employee time tracking software is the best way to track employee time off. 

Time tracking software provides a centralized system that enables employees to request time off and track their balances, providing transparency and saving time. 

As a business owner, you can quickly approve or deny requests, monitor balances, and avoid scheduling conflicts with other employees.

As we mentioned, employee time tracking software automates time tracking, reducing the risk of errors and saving you time that can be better used for other business activities. 

Beyond tracking employee time off, you can generate reports that provide insights into employee attendance, productivity, and efficiency, enabling you to make data-driven decisions that improve your business operations.

The Importance of Accurately Tracking Employee Time Off 

Accurately tracking employee time off is critical for any business. 

It not only helps to ensure compliance with labor laws and regulations but also enables business owners to manage employee absences more effectively. 

Accurate time off tracking can also help to reduce administrative overhead and costs associated with employee time off.

As a business owner, there are a couple of things you need to stay on top of:

Documentation

Documentation is critical when it comes to tracking employee time off. For each type of time off, there are specific forms and documents that you need to maintain. 

For example, for vacation leave, you must keep a record of the date on which the employee requests the vacation, the start and end dates of the vacation, and the total number of vacation days taken. 

You also need to document the accrued vacation time, vacation time used, and vacation time remaining for each employee.

Record-keeping

Accurate record-keeping is essential to ensure that your business is compliant with state and federal regulations, as well as internal policies. 

The documentation for time off should be maintained in a secure location and should be accessible to authorized personnel only.

To accurately track employee time off, businesses must have a clear understanding of their employee time off policies. This includes an understanding of: 

• The various types of time off
• The accrual rates for each type of time off
• The documentation requirements for each type of time off

Best Practices for Tracking Employee Time Off

To ensure compliance with the legal requirements for tracking employee time off, small business owners should adhere to the following best practices.

1. Develop a clear time off policy

As an employer, you should create a written time off policy that outlines:

• The procedure for requesting time off
• The types of time off available to employees
• The rules for taking time off

This policy should be communicated to all employees and should be easily accessible to them.

2. Use a centralized tracking system

Whether it’s a software program or a manual time tracking system, it should be accurate and easily accessible to all employees.

3. Maintain accurate records

Maintain accurate records of employee time off, including: 

• The type of time off taken
• The date it was taken
• The reason for the time off

4. Provide training to managers and employees

This will help ensure that everyone is on the same page and can reduce the likelihood of disputes or grievances.

Legal Requirements for Tracking Employee Time Off 

Small business owners must ensure they comply with the legal and regulatory requirements for tracking employee time off. Understanding the legal requirements can help businesses avoid penalties, lawsuits, and employee grievances. 

Legal Requirements for Tracking Employee Time Off

One of the main legal requirements for tracking employee time off is compliance with the Fair Labor Standards Act (FLSA). The FLSA requires employers to keep accurate records of the hours worked by their non-exempt employees, including their time off. 

While the FLSA does not mandate that employers provide paid time off, it does require employers who offer paid time off to track it accurately.

Employers who are subject to collective bargaining agreements must also ensure that their time off policies comply with the terms of the agreement. These agreements typically cover issues related to paid time off, including: 

• The number of days or hours of paid time off that employees are entitled to
• The procedures for requesting time off
• How the employer will track and account for this time

In addition to these federal requirements, individual states may also have their own laws and regulations regarding time off. Some states require employers to provide a certain number of paid sick days to employees, while others require employers to provide paid family and medical leave. Employers must ensure that they comply with both federal and state laws when tracking employee time off.

Types of Employees Covered

The legal requirements for tracking employee time off apply to both exempt and non-exempt employees. 

Exempt Employees

These are employees who are not eligible for overtime pay under the FLSA. 

These employees are typically salaried and are exempt from the minimum wage and overtime pay requirements of the FLSA. However, exempt employees are still subject to the time off tracking requirements of the FLSA.

Non-Exempt Employees

Non-exempt employees, on the other hand, are employees who are eligible for overtime pay. These employees must be paid overtime for all hours worked over 40 hours in a workweek. 

Employers must track the time off of non-exempt employees accurately to ensure that they are paying them the correct amount of overtime pay.

The Benefits of Tracking Employee Time Off for Your Business

While there are clear legal benefits to tracking employee time off, there are many other benefits that will positively impact your business as well.

Improved Productivity

According to a survey conducted by OnePoll, inefficient processes waste nearly a third of employees’ time.

By implementing time-tracking software, employees gain a clear understanding of their tasks and deadlines, which can improve overall productivity by up to 30%.

This is because when your employees have a clear understanding of their time off, they can take initiative to plan their workload and make sure they complete all their tasks before taking time off.  

It also allows managers to monitor employee workload and allocate resources accordingly, ensuring tasks are completed efficiently.

Improved Profitability

Tracking employee time off can also have a significant impact on your business’s profitability. 

By having an accurate understanding of employee time off, you can ensure your business is appropriately staffed, preventing any potential delays or interruptions. Proper staffing can also help you avoid costly overtime expenses.

According to a study conducted by the Society for Human Resource Management (SHRM), co-workers are 29.5% less productive when covering for absent employees, and absenteeism can lead to increased costs.

Employee Satisfaction

By tracking employee time off, employers can demonstrate their commitment to a healthy work-life balance for their employees.

Employees who have a clear understanding of their time off and receive fair treatment from their employers are more likely to be satisfied with their jobs. 

In fact, according to a study conducted by Glassdoor, 77% of employees consider a company’s culture before applying for a job, and 56% say company culture is more important than salary when it comes to job satisfaction. 

Implementing time-tracking software can demonstrate a company’s commitment to supporting employee work-life balance and, ultimately, improve employee satisfaction.

Compliance with Legal Obligations

As we mentioned, the FLSA and state labor laws require employers to provide employees with time off for specific reasons, such as sick leave or jury duty. By tracking employee time off, employers can ensure they comply with these legal obligations and avoid costly legal disputes.

For example, in California, employers are required to provide employees with three days of sick leave per year. By tracking employee sick leave, employers in California can ensure they comply with this legal obligation and avoid potential legal disputes.

Employee Time Off Tracking Software 

What is employee time tracking software?

We’ve mentioned many of the benefits of employee time-tracking software, but what exactly is it?

In a nutshell, it’s a tool designed to help businesses track employee work hours, including time off. 

These tools can automate and streamline the process of tracking employee time off, making it easier for businesses to manage employee schedules, payroll, and comply with legal obligations.

Employee time tracking software typically includes features such as:

• Online time clock: where employees can clock in and out electronically
• Paid time off (PTO) tracking: the software tracks the number of days/hours employees have taken for vacation, sick leave, and other types of leave
• Scheduling: managers can create and share schedules with employees and track shift changes and time off requests
• Reporting: the software generates reports on employee attendance, hours worked, and time off balances.

What should your business consider when choosing employee time tracking software?

When choosing employee time tracking software, there are several factors to consider:

1. Features. Look for software that includes the features we mentioned above, such as PTO tracking, scheduling, and reporting. Some software may offer additional features, such as mobile apps or integrations with payroll software.

2. Ease of use. The software should be user-friendly and easy to navigate, both for employees and managers. Look for software with a simple interface and clear instructions.

3. Price. Consider the cost of the software, including any ongoing fees or subscription costs. Look for software that fits your budget and provides good value for money.

4. Security. The software should be secure and protect employee data. Look for software with strong encryption, data backup, and access controls.

5. Integrations. If you already use other software for HR, payroll, or accounting, look for employee time tracking software that integrates with these systems.

Employee Time Tracking Software for Your Industry

There are many employee time tracking software options available, each with its own features and pricing. 

Here are some of the top examples of employee time tracking software by industry.

Retail: QuickBooks Time

QuickBooks is a popular and efficient employee time tracking software for retail businesses. The software includes:

• GPS tracking
• Employee scheduling
• PTO tracking

QuickBooks also integrates with many popular payroll and accounting software options, making it easy to manage payroll and billing.

Healthcare: TimeClock Plus

In the healthcare industry, TimeClock Plus is a comprehensive employee time tracking software that is used by various organizations. The software includes:

• Time and attendance tracking
• Employee scheduling
• PTO tracking

TimeClock Plus also includes advanced reporting features, such as labor costing and overtime tracking.

Hospitality: Deputy

For hospitality, Deputy is a leader in employee time tracking software. The software includes:

• Scheduling
• PTO tracking
• Shift management

Unlike other software, Deputy also includes a mobile app for employees, making it easy to track time on the go.

Construction: Workyard

When it comes to employee time tracking software for the construction industry, Workyard stands out as the best option. 

Workyard’s time tracking software leverages powerful GPS to help contractors and field service providers create accurate time sheets with ease. Furthermore, Workyard enables construction business owners to manage all aspects of their workforce from a central location. 

Workyard’s key features include: 

• GPS location tracking 
• Mobile time clock app
• Automated job costing
• Detailed timesheet reporting
• Payroll and accounting software integrations 

The Bottom Line 

Accurately tracking employee time off is essential for any business. 

From maintaining compliance with labor laws to improving employee satisfaction and profitability, the benefits are clear. With various methods and software available, it is essential to consider the unique needs of your business when choosing the right approach to employee time off tracking.

We encourage you to take a look at the resources and templates mentioned in this article, as well as explore the different software options available for your industry. 

By implementing an effective employee time off tracking system, you can ensure that your business is operating efficiently and meeting all legal obligations while improving overall employee satisfaction and productivity. So, what are you waiting for? Sign up for a free trial of Workyard today!