What to Include in a Time Card Policy

Whether you use an old-fashioned paper punch system –or new online time tracking software, having a time card policy is important for your company.

Time fraud is an issue for many organizations –and costs billions of dollars in lost productivity each year. It’s also considered to be the number one source of accounting fraud and employee theft. For this reason, having a time card policy in place, and in writing is important –for showing your team that you take reporting actual hours worked seriously, and also informing them of the consequences of falsifying time records.

By having a time card policy in place, your team will know what’s expected of them each pay period, and what will happen in the event that fraud is committed. Your employees, regardless of how long they have been with you, also need to be kept informed and up-to-date with ever changing procedures –something that a time card policy can help with.

With this in mind, here’s a look at a few things you should include in your time card policy.


Start by introducing the time tracking system that your company uses. This is especially important if you have a new system in place, and need to bring your workforce up to speed on it. It’s also important to explain the purpose of the time tracking system. Your workers may feel intimidated by the new system, so it’s important to ensure that they know that the system has been implemented to ensure accuracy. You want to ensure that the time that they’ve worked is accurately logged, so that they can be certain that they will be paid for the hours they have worked. Time cards are often viewed negatively, so it’s a good idea to take the time to explain the benefits of them to help get them on board with the process.


Filling your workers in on how the timekeeping procedures at your business work is another important part of your time card policy. Not only will this help to familiarize them with a new system, it’s also an important step in establishing accountability.

Does the employee have to sign and date their time entries at the end of each pay period? Or do you use some sort of employee timecard software that makes it easier to keep track of a team member’s total hours?

By providing an explanation –verbally, and in writing, they will be able to be held accountable for keeping track of their own work hours.

Prohibited Actions

Every company will have different rules when it comes to what actions are prohibited with their timekeeping system. However, there are some issues that are universal. Things such as signing coworkers in – and clocking in for hours not worked are clearly against the rules for tracking work time –and this should be stated in the policy. Be sure to outline prohibited actions to ensure that your employees know and understand which things are not acceptable.


There are several exceptions to standard time card procedures that you should be sure to include in your time card policy. This is so your team knows what they can expect –and so your payroll staff will know how to handle unique situations.

Overtime Hours – how is this handled in your company? Consider how expensive paying one and a half times hourly rate of pay can get per employee. Your hourly employees are going to be particularly invested in knowing how overtime pay is handled, while you as a business owner would be better off reducing it (without trying to cheat your team).

Vacation Pay – What’s your policy on vacation pay, and sick leave? How many absences can an employee afford to have unpunished? Most full-time employees work hard, but everyone reaches a point where they need time off. How you handle breaks in a work schedule might drastically affect your ability to retain salaried employees.

Do you have exempt or non-exempt employees when it comes to the FLSA (Fair Labor Standards Act) regulations? How does state or federal law affect compensation, and have either changed recently? You’re going to want to be up-to-date on the technical aspects of your time sheet policy to make sure you aren’t accidentally committing any violations.


Finally, it is important that you include disciplinary actions that may be taken in the case of time card fraud, or if time cards are used improperly. You should outline the steps that supervisors should take if they discover –or suspect that an employee is lying about the number of hours they reported for a workweek . In many cases, supervisors are able to handle a minor offense on their own before coming to you for further direction. But more serious cases –such as forging a time card, may require more drastic action, and in some cases can even lead to termination of employment. This should be outlined so your supervisors and the rest of your team are all on the same page, and understand the procedure for handling time card fraud.

While time card policies will vary considerably from company to company –ensuring that you have yours clearly stated in a written policy is important. Make sure each of your workers has a copy –and that they have signed –indicating that they have read, and agree to the policy and the terms and conditions therein. You should also ensure that any amendments or updates to the policy are read, and signed by your team. Finally, have a look at the U.S. Department of Labor to make sure that you’re clear on your responsibilities and obligations as an employer, and to ensure that your policies are in line with the law. It’s also a good idea to run any policies that you create by an attorney –just to be certain that they’re in compliance.

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