PunchDo Salaried Employees Have to Track Their Hours? A 2026 Timekeeping Guide
Do Salaried Employees Have to Track Their Hours? A 2026 Timekeeping Guide
The short answer: It depends on classification, not on the salary. A salaried employee who is nonexempt still earns overtime, and federal law requires you to keep an accurate record of every hour they work. A salaried employee who is properly exempt does not have to be tracked for pay, but you are allowed to track them anyway, and doing so does not put the exemption at risk as long as you never dock their pay by the hour. The label "salaried" answers how someone is paid. It does not answer whether their hours have to be recorded. Punch records both salaried and hourly staff on the same screen, so the record exists no matter which category a worker falls into.
Owners ask this question because a salary feels like a clean deal. You agreed on a yearly number, the work gets done, and hours seem beside the point. For some employees that is true. For others it is a wage-and-hour claim waiting to happen. Here is how to tell which is which, and what the law actually requires once you know.
Start With the Classification, Not the Salary
The Fair Labor Standards Act splits every employee into two buckets: exempt and nonexempt. Nonexempt employees are covered by the overtime and minimum-wage rules. Exempt employees are not. A salary does not decide the bucket. Duties and pay level do.
To be exempt from overtime under federal law, an employee has to clear all three parts of a test at once. They must be paid on a salary basis, meaning a fixed amount that does not change with hours or output. They must earn at least the salary level, which in 2026 is $684 per week, or $35,568 per year. And their actual job duties have to fit an executive, administrative, or professional role.
That $684 figure is worth a note, because it moved around and then moved back. A 2024 Department of Labor rule tried to raise the threshold to $844 per week and then to $1,128 per week. A federal court in Texas vacated that rule in November 2024, the Fifth Circuit dismissed the final appeal on May 5, 2026, and the Department formally rescinded the 2024 rule effective May 15, 2026, restoring the 2019 levels. So the number to use in 2026 is $684 per week, with a highly compensated employee threshold of $107,432 per year.
Paying someone a salary above that line still does not make them exempt on its own. Miss the duties test and you have a salaried nonexempt employee, which is the case that surprises the most owners.
Salaried Nonexempt: You Have to Track Every Hour
A salaried nonexempt employee is paid a fixed weekly amount and is still owed overtime for hours past 40 in a workweek. The salary covers a base, not an unlimited number of hours. When the week runs long, you owe an overtime premium on top of the salary, and there is no way to calculate that premium without knowing the exact hours worked.
Federal law makes the record mandatory. Under the FLSA recordkeeping regulation at 29 CFR Part 516, every employer has to keep accurate records of hours worked each day and total hours each workweek for every nonexempt worker, salaried or not. The Department of Labor expects payroll records to be kept for at least three years, and the underlying timekeeping records, the ones your wage math is built on, for at least two.
This is where a salary quietly becomes a liability. An owner assumes the fixed pay closes the book, keeps no record of hours, and then a salaried office coordinator or a salaried lead who is really nonexempt works 48-hour weeks for a year. If that worker files a claim, the burden of proof on hours falls on the employer who failed to keep records. With no timesheet to counter it, the employee's own estimate tends to carry the day. Recording the hours from the start is the entire defense.
Salaried Exempt: The Law Does Not Require It, But You Can
For a properly exempt employee, the FLSA does not require you to track hours at all. Their pay does not depend on hours, so there is no overtime to calculate and no federal record of daily hours to keep.
That does not mean you are forbidden from tracking them. The Department of Labor is clear that requiring an exempt employee to record their hours does not, by itself, jeopardize the exemption. Plenty of employers do it for reasons that have nothing to do with overtime: billing clients for project time, allocating labor to jobs, tracking paid time off, or simply knowing who is on site. All of that is allowed.
The line you cannot cross is using those hours to reduce the salary. Which brings us to the one rule that matters most.
The Salary-Basis Rule That Protects the Exemption
An exempt employee has to receive their full predetermined salary for any week in which they perform work, regardless of how many hours that took. Dock the salary because the office was slow, or because they left two hours early on a Wednesday, and you have likely broken the salary basis and destroyed the exemption. Lose the exemption and the employee becomes eligible for overtime retroactively, which is exactly the bill you were trying to avoid.
The regulation at 29 CFR 541.602 allows only a short list of deductions from an exempt salary. Full-day absences for personal reasons. Full-day absences for sickness or disability when you have a bona fide paid-leave plan and the employee has used it up. Full-day disciplinary suspensions imposed under a written policy. Partial-day deductions based on hours are not on the list. An employer with an actual practice of improper deductions can lose the exemption for a whole group of employees.
So track exempt hours if it helps you run the business. Just make sure the number you collect feeds attendance, PTO, and job costing, and never feeds a formula that shaves the paycheck. Keeping the time record and the pay amount separate is the safe pattern, and it is easier to hold that line when the tool itself treats a salaried worker's hours as information rather than as pay input.
Why Owners Track Salaried Staff Anyway
Even when the law does not force it, most owners who run a mixed crew end up wanting a record for every person on the payroll. A few reasons come up again and again.
Job costing is the big one. If you want to know the true labor cost of a job, you need the hours from everyone who touched it, including the salaried supervisor who spent three days on the site. Leave the salaried people out and your cost per job is understated.
Paid time off is the second. Salaried employees take vacation and sick days like everyone else, and someone has to track the balance. A single system that logs a time-off request against the same profile that holds the person's hours keeps the whole picture in one place.
Attendance and coverage is the third. On a field or service team, knowing who punched in this morning matters whether that person is hourly or salaried. The salary does not tell you they showed up. The record does.
How Punch Handles Salaried and Hourly on One Screen
Punch is built for the mixed crew, where a salaried lead and an hourly helper work the same job on the same day. Each person carries a pay type on their profile, salary or hourly, and both punch in and punch out the same way from their phone or a shared iPad. The record is captured to the minute either way.
For nonexempt staff, that minute-level record is the input every overtime calculation needs, and Punch flags hours over the threshold using overtime presets for more than 50 countries. For salaried staff, the same punches roll up into Reports and job costing without touching their fixed pay, so you get the labor picture and the attendance record while the salary stays exactly what you agreed to. Time-off requests, manager approvals, and weekly or bi-weekly pay periods all work across both pay types. When it is time to run payroll, owner and manager Reports export to QuickBooks Online or to a CSV your payroll provider can read.
Punch verifies a punch with a job-site geofence, never a camera in your crew's face, because a location check confirms someone is on site without turning timekeeping into surveillance. And because every plan includes every feature, tracking your salaried staff never costs extra, and owners are always free. Competitors that bill per user turn a mixed crew into a per-seat invoice that grows every time you add a supervisor. Punch charges a flat price per organization, so the office coordinator, the salaried foreman, and the hourly apprentice all sit in the same account for one price.
The Bottom Line
Do salaried employees have to have their hours tracked? If they are nonexempt, yes, and the record is your legal shield. If they are exempt, the law does not require it, but you may track them and it does not endanger the exemption as long as you never dock the salary by the hour. The safest position, and the simplest one to run, is to keep a clean time record for everyone and keep it separate from how each person is paid.
Punch puts salaried and hourly staff on one screen, captures every punch to the minute, and exports the hours your payroll needs. Start free, keep owners free forever, and give every worker on the crew a record that holds up.