Lesson 1 of 7
01 / THE FOUNDATION
A schedule is not a timesheet.
A schedule describes planned work. A timesheet captures what actually happened.
Someone may start early, stay late, complete an unplanned task or work through an interrupted break. Those hours must not disappear because the schedule did not anticipate them.
Illustrative comparison. Applicable wage-and-hour rules determine compensable time.
Record actual hours promptly and investigate differences without substituting the scheduled shift.
02 / THE TIMESHEET
What every timesheet should capture.
An intelligible timesheet connects a person, a date, actual work time and an activity.
Record the employee, work date, actual start and end, qualifying meal periods and total worked hours. Add an assignment or project reference when useful. Record leave separately from hours worked.
| Activity | Reference | Worked hours |
|---|---|---|
| Client assignment | Project A / Task 02 | 5.0 |
| Internal administration | Operations | 2.0 |
| Staff training | Training / Session 01 | 1.0 |
| Actual worked hours | 8.0 | |
*Assumes the worker was fully relieved of duties and the deduction is lawful. Elapsed time: 8.5 hours; worked time: 8.0 hours.
Define the required fields, recording frequency and when a project or task reference is expected.
03 / COST CLASSIFICATION
Understand direct and indirect labor.
Direct labor is often a major cost of delivering a service or project. Indirect labor is equally important to understand: it supports the organization beyond any one assignment.
Accurate time classification helps managers see the resources used to deliver work and the support required to sustain it. The categories depend on the nature of the activity, the accounting policy and any contract terms.
Work attributable to a service or project
Examples include customer delivery, field service, design, installation or a project-specific report. Where relevant, record a unique project and task.
Work supporting the wider operation
Examples may include general administration, internal operations, training or business development, classified consistently under the organization's policy.
Direct cost can provide the allocation base.
Organizations commonly allocate indirect costs using a rate applied to a defined cost base, such as direct labor. The rate may be calculated from recorded indirect expenses or established under an applicable contractual arrangement, subject to the terms and approval requirements of that arrangement. Accurate timekeeping supports the direct labor amounts used for allocation.
Use the same type of allocation base in both calculations. Rates, permitted costs and bases vary by organization and agreement; direct labor is not universally the base. An allocated amount is not proof of actual indirect spending or automatic authorization to bill a client. Keep supporting cost records.
Nonbillable does not automatically mean indirect. Project work can still be direct even when it cannot be charged to a customer. Approved leave should also be distinguished from active worked hours.
Define direct work, indirect activities and leave; record them distinctly; and explain the cost-allocation method used by the business.
04 / ACTUAL WORKED TIME
Breaks and exceptions need accurate records.
Unscheduled duties, overnight work and interrupted breaks can affect payable hours.
Early starts and late finishes
Record the actual working interval, including unexpected duties and time crossing midnight or the organization's defined workweek boundary.
Meal periods and rest breaks
Document breaks actually taken. Never automatically subtract unpaid time when the employee worked or the deduction is not permitted.
Overtime, paid-rest periods, sleep-time arrangements and meal deductions depend on applicable law and the circumstances. Check your jurisdiction; do not apply one state's thresholds to all workers.
Explain how workers report interrupted meals, unscheduled duties and overnight work, and who reviews each exception.
05 / CONFIRMATION AND APPROVAL
Give every stage a clear owner.
A useful approval process shows who entered the time, who confirmed it and who reviewed it.
Employee enters actual time.
Employee reviews and submits.
Supervisor checks exceptions.
Payroll verifies the source hours.
Weekly attestations and separate supervisor approvals are useful controls, not universal legal mandates. Some contracts require specific timing or sign-offs. Smaller firms can document an independent check where roles overlap.
Document responsibilities, review deadlines and how employees can question or correct a record.
06 / CORRECTIONS
Correct mistakes without losing the history.
An accurate correction explains what changed, why, when and by whom.
Before payroll, return errors for an accountable correction and renewed review. If payroll has been processed, examine whether wages, cost allocations, books or invoices need a controlled adjustment. Preserve the original evidence.
No silent changes. Make corrections traceable and ensure the affected employee can review them.
07 / PERIOD CLOSE
Reconcile what was recorded, paid and allocated.
The same underlying hours should be explainable across employee timesheets, payroll and the organization's cost records.
Recorded work
Reviewed hours
Paid hours and rates
Direct and indirect allocation
Check missed shifts, overtime, breaks, pay changes and corrections before final pay processing. Where the organization maintains job costing, reconcile coded hours and allocations to supporting accounting or billing evidence. Monthly reconciliation can be a useful control; specific contracts may require it.
Keep the policy current
Approve, date, explain and periodically update the written policy. Train new employees and supervisors.
Keep records for the required term
Retention depends on law and contracts. Washington payroll records generally require at least three years; other rules or open claims may require longer.
Could your organization trace worked hours from the original entry through pay and any relevant direct or indirect cost allocation?