HR Q&A – Can I Track Hours Worked by Exempt Employees?

Yes, you can track the hours worked by exempt employees — but it’s generally recommended doing so only when there’s a clear and legitimate business reason.

For many exempt employees, not having to punch a clock is one of the key expectations (and perceived benefits) of their role. Requiring time tracking without a clear purpose can create frustration, damage morale, and raise unnecessary questions from employees who are used to being evaluated on results rather than hours.

That said, there are valid and common business reasons where tracking exempt employee hours makes sense, including:

  • Client or project billing, where time must be allocated accurately

  • Grant or funding compliance, especially in nonprofit or public-sector environments

  • Family and Medical Leave Act (FMLA) tracking, where accurate leave usage is required

  • Workload or staffing analysis, to better understand resource needs

When tracking is used thoughtfully and for a defined purpose, it can be a helpful management and compliance tool.

However, it’s critical to understand how that information is used.

If you choose to track exempt employee hours, the data should not be used to reduce pay or make improper deductions, unless those deductions are specifically allowed under both federal and state law. Exempt employees are generally paid on a salary basis, not by the hour. Improperly prorating salary based on hours worked can jeopardize an employee’s exempt status and potentially expose the employer to wage and hour claims.

APlus Tip: If you’re tracking exempt hours, make sure your managers understand why you’re tracking and how the data can — and cannot — be used. Clear communication and consistent practices go a long way toward avoiding problems.

As with many payroll and HR decisions, the right approach depends on your business needs, your workforce, and your compliance obligations. If you’re unsure whether tracking exempt employee hours is appropriate for your situation, your HR by Mineral portal will be a great help.

This blog does not constitute formal HR or legal advice and does not address state or local laws. Our HR Resource Center by Mineral offers further guidelines for this and many other topics. For a small additional fee you can also speak to a live HR Specialist. Contact your friendly APlus Payroll CSS for further information (including login details) or login here. Want to know how we can help your Payroll or Time & Labor process? Please contact us here. Consultation is friendly and free!