Employee Timecard Review: Preventing Payroll Errors Before Approval

The Critical Audit Window: Why Timecard Review Matters

Payroll errors are rarely the result of calculation failures in modern software; they are almost exclusively the result of poor data entry at the source. For a CPA or payroll manager, the timecard review process is the final defensive line against FLSA violations, overpayments, and tax filing discrepancies. A systematic review ensures that gross pay calculations are based on verified, compliant data.

Step 1: Auditing for Missing and Overlapping Punches

Before calculating totals, you must identify structural data gaps. Missing out-punches are the most common cause of inflated labor costs. Systematically flag the following:

• Open Sessions: Any shift exceeding 14 hours without a manual override should be flagged for verification.
• Overlapping Shifts: Ensure employees are not clocked into two different cost centers or departments simultaneously.
• Short-Shift Anomalies: Punches lasting less than 5 minutes often indicate a technical error or a double-punch that needs deletion.

Step 2: FLSA and State-Specific Compliance Checks

Payroll approval requires more than just verifying hours; it requires verifying the nature of those hours. Failure to account for state-specific labor laws can lead to significant back-pay liabilities.

Meal and Rest Break Compliance

In jurisdictions like California or New York, missing meal breaks can trigger penalty pay. Review timecards to ensure that unpaid breaks meet the minimum duration (usually 30 minutes) and occur before the fifth hour of work. If a break is missing, verify if a waiver was signed or if penalty pay must be manually added.

Overtime Thresholds

Ensure the system is correctly aggregating hours across the workweek, not just the workday. Be vigilant for "split shifts" where an employee works two separate periods in one day, as some states require a split-shift premium.

Step 3: Managerial and Employee Attestation

A legally defensible payroll process requires a two-tier verification. Never approve a timecard that has not been digitally signed by both the employee and their immediate supervisor. This attestation serves as a primary defense in the event of a wage and hour audit, confirming that the employee agrees the hours recorded are accurate and that no work was performed "off the clock."

Step 4: Reconciling Exceptions and Adjustments

Manual adjustments are the highest-risk area for payroll errors. When a manager edits a timecard, ensure there is a mandatory "Reason Code" attached. Common adjustments to audit include:

• Rounding Policies: Ensure that rounding (e.g., to the nearest 15 minutes) is applied consistently and does not favor the employer over time, which is a violation of federal law.
• Travel Time: Verify that non-exempt employees are compensated for travel between job sites, even if they are not at their primary location.
• PTO Integration: Confirm that sick leave or vacation hours do not inadvertently trigger overtime premiums, as PTO hours generally do not count toward the 40-hour OT threshold.

Final Approval Checklist

Before hitting "Submit" for payroll processing, perform a final variance report. Compare the current period’s total hours against the previous period. Any variance exceeding 10% for the total workforce or 20% for an individual employee should be manually investigated for data entry errors.