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Are You Accidentally Paying Employees for Lost Time?


Tracking employee time and attendance should be a fundamental process within any business. Yet many business owners don't track time, or they rely on manual self-reporting to capture workforce schedule details. It's easy to assume that you know how long your employees are working during a typical 9-5 day. But in many cases, assumptions don't correlate with reality and businesses lose significant value by paying employees for time that they didn't actually work. Let's take a closer look at how to determine if you're paying too much for time that your staff's not really working.

What is Lost Time?

For many businesses, the idea of lost time refers to employee vacations and sick days. But what managers and business owners often fail to consider is that it's also possible to lose time in much smaller increments that can add up significantly throughout the year. Consider, for example an employee who is habitually late by just ten minutes a day. A non-exempt employee who was ten minutes late to work or returning from a lunch break daily and worked twenty days per month all year would accrue 40 hours of pay for time not worked annually. Ultimately, you're paying that employee for a week of time that wasn't spent creating value for your business. When considering that impact over the course of years — or the cumulative losses from dozens or hundreds of employees — the financial impact can become staggering. What strategies does your business have for managing labor costs like lost time?

Why Manual Tracking Doesn't Work

If you've implemented a time and attendance system for your business, but you're using spreadsheets or another manual system, you're missing out on significant benefits. It's difficult to use manual time tracking and come up with accurate results. For example, how often do your employees report their timecards? How long do they spend each day or each week reporting that information? Are they capturing the details accurately as they happen, or relying on their memories?

Non-exempt employees could be spending five or ten minutes each day just reporting their time. Often, they're forgetting small details such as stepping out to take a personal phone call or having to leave a few minutes early. Whether these oversights are intentional or not, they happen and may lead to a resulting payroll margin of error that can ultimately cut into your company's profit margins.

time and attendance system that automates the process can offer many benefits. Employees are rewarded for the time that they work and don't have to spend time on arduous reporting tasks. Management has access to accurate records for payroll and performance reviews, without devoting valuable hours each month to a simple administrative process. The company as a whole can benefit because it's paying for time worked, which can translate into higher revenues and profits. This level of accuracy can allow your business to spend that saved money in a variety of ways — from hiring new staff to paying bonuses to your most productive team members.

Not sure how much money your business might save by switching from manual tracking? There's a time and attendance calculator for that.


This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.