Do Salaried Employees Need to Track Time?
Quick Answer
It depends on whether the salaried employee is exempt or non-exempt. Federal law requires employers to record hours worked for non-exempt employees, including salaried non-exempt employees, because they're owed overtime. For exempt employees, federal recordkeeping rules don't require a record of hours worked, though many businesses still track time for PTO, project costing, client billing, workload planning or state law reasons.
"They're on salary, so we don't need to track their hours." It's one of the most common assumptions in small business, and it's only partly true. Being paid a salary doesn't by itself decide whether you need time records. What matters is whether the employee is exempt from overtime, and even then, tracking time can be useful for reasons that have nothing to do with pay.
This guide explains what federal law requires, the difference between exempt and salaried non-exempt employees, when tracking time for salaried staff makes sense and how to do it without micromanaging.
Note: This is general information, not legal advice. State laws may have different requirements, so check the rules where your team works.
Quick Answer
| Employee type | Must you record hours worked under federal law? | Owed overtime? |
|---|---|---|
| Hourly, non-exempt | Yes | Yes, over 40 hours in a workweek |
| Salaried, non-exempt | Yes | Yes, over 40 hours in a workweek |
| Salaried, exempt | No, under federal recordkeeping rules | No |
The key question isn't "salary or hourly?" It's "exempt or non-exempt?"
Salary Doesn't Automatically Mean Exempt
Under the Fair Labor Standards Act, an employee is generally exempt from overtime only if they meet three tests:
- Salary basis: they're paid a predetermined, fixed salary, not based on hours worked.
- Salary level: the Department of Labor's fact sheet lists the standard minimum as $684 per week.
- Duties: their primary duties fit an exemption, such as executive, administrative, professional, computer or outside sales.
An employee who's paid a salary but doesn't meet the duties test, or earns below the salary level, is salaried non-exempt. They're owed overtime, and you must track their hours. For more detail, see what is a non-exempt worker and salary vs. hourly pay.
Some states set higher salary levels or stricter duties tests than federal law, so an employee who is exempt federally may still be non-exempt under state law.
What Federal Law Requires for Records
Non-Exempt Employees, Hourly or Salaried
Department of Labor recordkeeping rules require employers to keep records for non-exempt employees that include hours worked each workday and total hours worked each workweek, along with pay rates, overtime earnings and other payroll details. Time cards and other records used to calculate wages must be kept for at least two years, and payroll records for at least three.
Exempt Employees
For bona fide executive, administrative and professional employees, federal regulations require employers to keep most of the same basic records, such as name, address and pay information, but they don't require the records of hours worked each day and week. Employers must still record the basis on which the employee is paid, in enough detail to calculate their total pay.
So federally, you don't have to track exempt employees' hours. But "not required" isn't the same as "not useful."
Why Track Time for Exempt Employees Anyway?
| Reason | Why it helps |
|---|---|
| PTO tracking | Know when people are out and how much leave they've used |
| Project and job costing | See what projects or clients really cost |
| Client billing | Bill accurately for professional services |
| Workload and burnout | Spot people working 55-hour weeks before they burn out |
| Capacity planning | Know whether you need another hire |
| Classification protection | If someone's exempt status is ever questioned, records of actual hours help |
| State requirements | Some states or programs may require more records |
Many businesses track exempt employees at a lighter level, such as daily start and end times, time by project, or just PTO and absences, rather than requiring a full punch for every break.
Salary Rules That Affect Time Tracking
Tracking an exempt employee's time is fine, but how you use it matters. The Department of Labor explains that, with limited exceptions, an exempt employee "must receive the full salary for any week in which the employee performs any work," without reductions for the number of days or hours worked. That means you generally can't dock an exempt employee's salary because they worked fewer hours one week.
There are some permitted deductions, such as when an exempt employee is absent for one or more full days for personal reasons other than sickness or disability. Deductions from salary for partial-day absences are generally not allowed. Whether a partial day can instead be charged to a PTO bank is a separate question; check with your payroll provider or an employment attorney before setting that policy. Improper salary deductions can put an employee's exempt status at risk. See is it legal to dock an employee's pay.
Salaried Non-Exempt: Common Mistakes
- Not tracking hours at all, because they're "on salary."
- Not paying overtime when they work more than 40 hours.
- Calculating overtime wrong. For salaried non-exempt employees, overtime is based on the regular rate, which depends on how many hours the salary is meant to cover.
- Letting them work off the clock because "it's a salaried job."
- Giving job titles that imply exempt status when duties don't meet the test.
If you have salaried employees whose duties don't clearly fit an exemption, review their classification with an employment attorney or HR professional. Misclassification can lead to back pay for unpaid overtime.
How to Track Time for Salaried Employees
For Salaried Non-Exempt Employees
Track them exactly like hourly employees: clock in and out, record meal breaks and pay overtime for hours over 40 in a workweek, plus any state daily overtime. See how to track employee hours.
For Exempt Employees
Pick the lightest method that meets your goal:
| Goal | Simple method |
|---|---|
| Know who's out | PTO requests and a shared calendar |
| Understand workload | Daily start and end times, or weekly hours estimate |
| Cost or bill projects | Time logged by project or client |
| Protect against misclassification questions | Clock in and out, like other employees |
Explain the reason when you introduce tracking. "We're tracking time by project so we can price jobs accurately" lands very differently from "we're tracking your hours."
Introducing Time Tracking to Salaried Staff
"Starting next month, everyone, including salaried staff, will log time in our system. For salaried folks, this isn't about counting minutes or changing your pay. It's so we can see how much time projects really take, plan workload fairly and make sure no one is consistently overloaded. If you're regularly working long weeks, I want to know so we can fix it."
Then follow through. If the data shows someone is overloaded, act on it. If people see that tracking leads to better workload decisions, they'll accept it. If it only leads to questions about why someone left at 4:30, they won't.
Salaried Employees and PTO
Even when you don't track exempt employees' hours, you'll want to track their paid time off. A PTO policy that covers both hourly and salaried employees keeps things fair and clear. See PTO accrual explained and the free PTO tracker template.
Common Questions From Managers
"Can I require exempt employees to clock in?" Many employers do. The federal salary basis rule focuses on paying the full salary for any week the employee works, so the key is not to use time records to reduce an exempt employee's salary, except where deductions are permitted.
"Can I require exempt employees to work set hours?" Generally yes. Setting schedules and expectations for when people work is allowed. What you can't do is reduce their salary because they worked fewer hours, except as permitted.
"Do exempt employees get overtime if they work 60 hours?" Not under federal law, if they truly meet the exemption tests. Some employers offer extra pay or time off anyway; that's a business decision.
Examples: Who Needs Time Records?
| Employee | Pay | Likely status | Track hours? |
|---|---|---|---|
| Office manager who runs the office, supervises 3 people and hires | $70,000 salary | Likely exempt (executive), if duties fit | Not required federally; optional |
| Bookkeeper who enters data and follows set procedures | $45,000 salary | Often non-exempt; depends on duties | Yes |
| Shift lead who mostly does the same work as the crew | $52,000 salary | Often non-exempt; depends on duties | Yes |
| Software developer whose primary duty is programming | $95,000 salary | Often exempt (computer), if duties fit | Not required federally; optional |
| Customer service rep | $40,000 salary | Usually non-exempt | Yes |
These examples are for illustration only. Classification depends on each person's actual duties and pay, not their job title, and state rules may be stricter. When in doubt, ask an employment attorney.
Calculating Overtime for Salaried Non-Exempt Employees
For a salaried non-exempt employee whose salary is meant to cover a 40-hour week, the regular rate is generally the weekly salary divided by 40. Overtime is at least one and a half times that rate for each hour over 40.
| Item | Amount |
|---|---|
| Weekly salary (for 40 hours) | $1,000 |
| Regular rate ($1,000 ÷ 40) | $25 per hour |
| Overtime rate (1.5 × $25) | $37.50 per hour |
| Hours worked this week | 45 |
| Overtime pay (5 × $37.50) | $187.50 |
| Total pay this week | $1,187.50 |
If the salary is meant to cover a different number of hours, the calculation changes. Other pay arrangements, such as a fluctuating workweek, follow their own rules. Confirm your method with your payroll provider. See the time and a half calculator.
Setting Up a Fair Time Policy for Everyone
- Classify each role correctly as exempt or non-exempt.
- Decide what each group tracks: full punches for non-exempt, and whatever level you choose for exempt.
- Put it in writing, including why you track time for exempt staff.
- Apply PTO rules consistently across hourly and salaried employees where possible.
- Train managers on what they can and can't do with exempt time records.
- Review classifications when job duties change.
A short written policy prevents confusion and makes it easier to explain the rules to new hires. See how to create an HR policy.
Using Time Data to Prevent Burnout
One of the best reasons to track exempt employees' time is to protect them. Salaried staff often absorb extra work quietly until they burn out or quit. If time records show someone working 55 or 60 hours most weeks, that's a signal to rebalance work, hire help or adjust deadlines, not a badge of honor. See signs of burnout at work.
"I noticed you've been logging close to 60 hours a week for the past month. I appreciate the effort, but that's not sustainable, and I don't want you to burn out. Let's look at what we can move, delegate or push back."
A Quick Classification Checklist
| Question | Yes / No |
|---|---|
| Is the employee paid a fixed salary that doesn't change with hours worked? | |
| Is the salary at least the federal standard level, and any higher state level? | |
| Do their primary duties fit an exemption, such as executive, administrative or professional? | |
| Do they meet any state-specific tests? |
If any answer is no, the employee is likely non-exempt, and you need full time records and overtime pay. If you're unsure, get professional advice before assuming someone is exempt.
Remote and Hybrid Salaried Employees
Remote work makes time tracking feel more sensitive, especially for salaried staff. Keep it focused on outcomes and workload, not surveillance. For exempt remote employees, daily start and end times or time by project is usually enough. For non-exempt remote employees, the rules don't change: all hours worked must be recorded and paid, including time answering messages before or after their scheduled hours. See how to know if remote employees are working.
Track Time for Every Type of Employee With Updoot
Updoot's employee time clock works for hourly and salaried staff alike, recording every punch to the minute from a phone, browser or kiosk. The payroll report shows regular hours, overtime and PTO for each employee every pay period, and the KPI dashboard shows hours worked across your team, so you can see workload for everyone, whether they're paid hourly or salary.
Sources
- U.S. DOL: Fact Sheet #17A, Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
- U.S. DOL: Fact Sheet #17G, Salary Basis Requirement
- U.S. DOL: Fact Sheet #21, Recordkeeping Requirements Under the FLSA
- eCFR: 29 CFR 516.3, Records for Executive, Administrative and Professional Employees
- U.S. DOL: Overtime Pay
- U.S. DOL: Fact Sheet #23, Overtime Pay Requirements of the FLSA