A one-hour check that shows where hours, pay and records do not match.
Time errors rarely show up on their own. A short monthly check catches patterns, such as the same missed punch every Friday, before they build up.
EZTime task management lets you assign one-time or recurring tasks to each shift and see them done.
| Employee | Scheduled | Punched | Paid | Note |
|---|---|---|---|---|
| A | 40.0 | 41.2 | 41.0 | Check rounding |
| B | 32.0 | 32.0 | 32.0 | OK |
| C | 40.0 | 38.5 | 40.0 | Pay above punches |
Save audit notes with dates. If you ever need to show how you review time, you will have the history.
If an employee was underpaid, correct it promptly and explain what happened. If someone was overpaid, talk to the employee and follow your policy and local rules on recovery. Either way, record the fix and update the process.
A good audit trail shows who changed a time entry, when and why. Without it, you cannot show that corrections were legitimate. A time system that records changes automatically makes audits much faster.
The audit is only valuable if repeated. Put it in the calendar, keep it short and track the number of issues found. Over a few months it should go down.
Imagine you audit five employees for the last four weeks. You pull their schedules, their punches and the hours that went to payroll. For each, you compare the three numbers. When all three match, you move on. When two match and one differs, you look for the reason: a late punch, a rounding rule or a manual change. Write each finding in a short list with a date and a note.
After the review, group your findings. If four of five issues are missed punches, the fix is reminders. If three are manual changes, the fix is a clearer approval process. Fixing the pattern beats fixing each case.
If you find large or repeated differences, ask a qualified payroll professional to review your process. A short outside review can find issues that are hard to see from inside the business.
The U.S. Department of Labor lists the records employers must keep for each non-exempt employee under the Fair Labor Standards Act. A time audit is a good moment to check them:
| Required record | Audit question |
|---|---|
| The day and time the workweek begins | Is it written down and the same in the time system and payroll? |
| Hours worked each day and each workweek | Do approved hours match punches, with every change explained? |
| Basis of pay and regular hourly rate | Are bonuses and differentials included in the regular rate for overtime? |
| Straight-time and overtime earnings | Is overtime paid for every week over 40 hours? |
| Additions to and deductions from wages | Is every deduction authorized and lawful? |
| Total wages, pay date and pay period | Does the pay stub match the payroll register? |
The DOL requires payroll records to be kept for at least three years, and time cards for at least two.
Under the FLSA, employees can generally recover unpaid wages for two years, or three if the violation is willful, plus an equal amount in liquidated damages. Small, repeated errors add up. A fictional example: a rounding setting that shaves 6 minutes a day from 20 employees earning $18.00 an hour.
| Step | Calculation | Amount |
|---|---|---|
| Per employee per day | 0.1 hour x $18.00 | $1.80 |
| Per employee per year | $1.80 x 250 days | $450 |
| All 20 employees per year | $450 x 20 | $9,000 |
| Two years of back pay | $9,000 x 2 | $18,000 |
| With equal liquidated damages | $18,000 x 2 | $36,000 |
The figures ignore overtime and state penalties, which can add more. An audit that finds the setting in month two costs an hour.
A random sample shows how the process works for typical employees. Add a few targeted picks each month: the employee with the most overtime, the one with the most corrections, anyone whose manager is new, and anyone who left during the month, whose final pay is a common source of errors. Rotate locations so each one is reviewed at least once a quarter.
EZTime keeps an audit trail of timecard corrections, including missed punch requests and who approved them, and monthly attendance reports can be signed digitally by employees. Both make the comparison step quicker, because the history is already in one place.
Monthly is a good habit, and quarterly at minimum.
Someone who does not approve the time themselves, if possible.
About an hour for a small sample once the routine is set.
Under the FLSA, generally two years, or three for willful violations, plus an equal amount in liquidated damages. Many states allow longer.
You can run the monthly check yourself. If you find large or repeated underpayments, bring in a payroll professional or employment lawyer to review past periods.
The sample, the period, each difference found, its cause, the fix and any amount paid. Keep it to one page, date it and store it with your payroll records.
If someone was underpaid, yes: correct it, pay it and explain what happened. Being open about the fix usually builds trust.
As soon as you have hourly staff, two jobs take more time than most owners expect: recording hours accurately and building a schedule everyone can see. Under the federal Fair Labor Standards Act (FLSA), employers must keep accurate records of hours worked and pay non-exempt employees overtime for hours over 40 in a workweek, and some states add daily overtime or meal-break rules. This is general information, not legal advice.
EZTime covers all three with a time clock app, employee scheduling and payroll-ready exports, from $2 per employee per month. See pricing and start a 14-day trial.
See how EZTime records start, stop and breaks so your reports are ready for payroll.