New Year Time Clock Setup Checklist: Pay Periods, Overtime Rules, PTO and Holidays for 2027

By Nicole Hullihen, former SaaS Chief Operating Officer and Microsoft MVP · Updated November 1, 2026

The new year is a reset point for your time clock. Pay periods roll into a new calendar, PTO balances reset or carry over, holidays change, raises take effect and some states and cities raise minimum wages on January 1. If the time clock isn't updated, the first payroll of the year is where you find out, usually the hard way.

This checklist walks through everything to review in your time clock before the first pay period of 2027. Most of it takes an hour or two, and it prevents the January payroll mistakes that take far longer to fix. Work through it in December, with a final check the week before the first 2027 payroll.

Free New Year Time Clock Setup Checklist

1. Confirm 2027 Pay Periods and Pay Dates

Make sure your time clock's pay periods line up with your payroll provider's 2027 calendar. Biweekly payrolls are worth extra attention, because some years have 27 pay dates instead of 26, depending on when your first pay date falls. Check holiday pay dates too; if a pay date lands on a bank holiday, your provider may move it. See the 2027 payroll calendar.

2. Confirm the Workweek

For overtime under the FLSA, your workweek is a fixed and regularly recurring period of seven consecutive 24-hour periods. It doesn't have to match the calendar week, but it should stay the same. Don't change it at the new year without a good reason and advice, since changing workweeks to avoid overtime isn't allowed. Confirm the time clock is set to the workweek you actually use. See how to set your workweek.

3. Check Overtime Rules for Each State

Federal law requires overtime at time and a half for hours over 40 in a workweek for non-exempt employees. Some states add daily overtime. California, for example, requires time and a half for hours over 8 in a workday and over 40 in a workweek, and double time for hours over 12 in a workday, with special rules for the seventh consecutive day. If you have employees in more than one state, make sure each employee is assigned the right overtime rule.

See the overtime laws by state and how to calculate overtime in California.

4. Reset or Carry Over PTO

If your PTO year follows the calendar, January 1 is when balances reset, carry over or get capped. Apply your policy exactly as written, and check state law first; some states, such as California, don't allow use-it-or-lose-it policies for vacation, though reasonable caps on accrual are allowed. Record each employee's balance before and after the change so you can answer questions.

Also update accrual rates for employees who reached a new service tier, and check sick leave rules for any state or city laws that changed. See year-end PTO and the sick leave policy template.

5. Add 2027 Company Holidays

Add your paid holidays for 2027 to the time clock and PTO calendar, including any floating holidays. Decide how holidays that fall on weekends will be observed, and make sure holiday pay rules, such as who's eligible and whether holiday premium pay applies, are set correctly. Remember that the FLSA doesn't require holiday pay, but your policy may. See business holidays for 2026, 2027 and 2028 and overtime and holiday pay in the same week.

6. Update Pay Rates and Minimum Wage

Enter raises that take effect at the start of the year, and check minimum wage changes in every state and city where you have employees, since many take effect January 1. Update shift differentials and any rate multipliers. If raises take effect mid-pay period, note the exact date so gross pay calculates correctly. Check your state labor department's website for current rates.

See how to calculate a salary increase.

7. Clean Up the Employee List

• Deactivate employees who left during the year (don't delete their records).
• Add seasonal or new hires starting in January.
• Update job titles, departments and hourly vs. salaried status.
• Check that exempt and non-exempt classifications are still correct.
• Confirm contact information for schedule and payroll notices.

8. Update Managers and Approvals

Make sure each employee is assigned to the right manager for timesheet and PTO approvals, especially after promotions or reorganizations. Remove access for managers who left. Decide whether employees will approve their own timecards before managers do. See timecard approval.

9. Update Locations, Geofences and Job Codes

Add new locations and job sites for the year, remove closed ones and check geofence boundaries. Update job or cost codes for new projects and retire codes for finished ones. See job cost codes and geofencing time clocks.

10. Check Kiosks and Mobile Apps

Update kiosk tablets and confirm they're charged, connected and logged in to the right location. Ask employees to update the mobile app. Test a punch on each kiosk, and test photo capture and GPS if you use them. See time clock kiosks.

11. Review Rounding, Breaks and Early Clock-In Rules

The new year is a good time to review your rules for rounding, meal and rest breaks and early clock-ins. Make sure they still match your policy and state law, and that they're applied consistently. See time clock rounding and early clock-in rules.

12. Test Payroll Export

Run a test export to your payroll provider after making changes. Confirm employee IDs, pay rates, earnings codes for regular, overtime, PTO and holiday hours and any new employees all come through correctly. Fix mismatches before the first real payroll of the year.

13. Save Your 2026 Records

Export 2026 timesheets, PTO history and approval logs and store them safely. The DOL says payroll records should be kept for at least three years and time cards for two, and some states require longer. Your 2026 hours may also be needed for ACA reporting, workers' compensation audits and year-end tax forms. See ACA hours tracking.

14. Tell Employees What Changed

Send a short note before the first pay period: new PTO balances, holiday schedule, any pay rate changes, new rules for breaks or early clock-ins and who to contact with questions. Clear communication prevents a flood of questions after the first paycheck.

New Year Timeline

Example: A Retail Store

A retail store with 18 employees skipped its time clock review one January. The first payroll of the year used old pay rates for six employees whose raises started January 1, didn't apply the city's new minimum wage and showed old PTO balances. Fixing it took off-cycle payments and a week of questions. The next year, the manager worked through a setup checklist in December, entered new rates with effective dates, applied PTO carryover and tested the payroll export. The first payroll of the year ran cleanly.

Common Mistakes

• Old pay rates after January raises.
• Missing minimum wage increases.
• PTO not reset or carried over per policy.
• Holidays missing from the calendar.
• Former employees still active.
• Wrong overtime rule for a state.
• Not saving last year's records.

Overtime and Pay Rate Changes Mid-Week

If January 1 falls in the middle of your workweek, a raise or minimum wage increase can take effect partway through a week. Make sure hours worked before the change are paid at the old rate and hours after at the new rate, and that overtime for the week is calculated correctly using the right regular rate. Some time clocks handle effective-dated rate changes automatically; others need a manual adjustment for that week. Check the first timesheet of the year carefully.

Review Your Time Clock Reports

The new year is also a good time to set up the reports you'll use all year: weekly hours and overtime by employee, labor cost by department or job, PTO balances and missed punches. Save them as favorites or schedule them so managers see them without asking. Good reports turn the time clock from a payroll tool into a way to manage labor. See payroll reports for business owners.

Update Your Timekeeping Policy

If you changed rules for rounding, breaks, early clock-ins, PTO or photo and GPS clock-ins, update your written timekeeping policy and have employees acknowledge it at the start of the year. A clear, current policy makes it easier to apply rules consistently. See the timekeeping policy creator and annual policy review.

Multi-Location and Multi-State Businesses

If you have employees in more than one location or state, work through the checklist for each one. Overtime rules, minimum wages, sick leave laws and holidays can differ by state and even by city. Assign each employee to the right location and rule set, and have the manager at each site confirm their employees, schedules and kiosks are ready. Keep a simple table of each location's overtime rule, minimum wage and sick leave law so the next year's review is faster. See tracking time across multiple job sites.

Keep the Checklist for Next Year

Save your completed checklist with notes on what changed: new rates, PTO decisions, holidays and settings. Next December, you'll start from a record instead of from memory, and the review will take half the time. Put a reminder on the calendar for early December so it happens before the holiday rush.

Who Should Own the Checklist

Assign the checklist to one person, usually the payroll or office manager, with the owner reviewing pay rates and PTO decisions before they're entered.

Give them a deadline in mid-December and a final review date the week before the first 2027 payroll, so nothing waits until the last minute.

Final Thoughts

A little time clock setup at the turn of the year prevents the most common January payroll problems. Confirm pay periods and your workweek, check overtime rules by state, apply your PTO policy, add holidays, update pay rates and minimum wages, clean up employees and managers, check locations and devices, test payroll export and save last year's records. Then tell employees what changed, and your first payroll of 2027 can run as smoothly as your last one of 2026.

Set Up 2027 With Updoot

Updoot's employee time clock handles pay periods, daily, weekly or California overtime, five categories of PTO, pay rates and multipliers with gross pay in the export, GPS, photo capture and kiosk mode, manager approvals with an audit log and payroll-ready export to Gusto, ADP, Paychex and more. It's all in Time & Attendance Essentials at $4 per user per month, with a 14-day free trial of every tool.

Sources

• U.S. DOL: Fact Sheet #21, Recordkeeping Requirements Under the FLSA
• U.S. DOL: Overtime Pay
• California DIR: Overtime FAQ
• U.S. DOL: Holiday Pay
• California DIR: Vacation FAQ

Frequently Asked Questions