In the complex world of government contracting, time tracking isn’t just an operational detail — it’s a cornerstone of compliance. Federal labor laws are designed to protect workers but can become a minefield for contractors who fail to track time accurately. As the article notes, “Time tracking errors for federal government contractors can hamper productivity and introduce potential financial risks owing to unintended non-compliance.”

Navigating Risks of Federal Labor Laws

‍Contractors working under federal statutes like the Davis-Bacon Act (DBA) and Service Contract Act (SCA) must meticulously document hours to ensure that employees receive prevailing wages and proper fringe benefits. Inadequate records can lead to back wage claims or Department of Labor investigations. As the piece underscores, “Inadequate recording of hours and leave tracking may invite claims for back wages, investigations by the Department of Labor, or disallowances during a Defense Contract Audit Agency (DCAA) audit.”

Federal rules on overtime, under the Fair Labor Standards Act (FLSA) and Contract Work Hours and Safety Standards Act (CWHSSA), add another layer of complexity. Non-exempt employees must be paid overtime for any work beyond 40 hours per week. Poor records can trigger fines and contract disputes.

Audits are no joke either. The Federal Acquisition Regulation (FAR) and DCAA guidelines require detailed, auditable records of labor hours and costs. “Non-compliance, including inadequate documentation, may cause a contractor to fail an audit, pay penalties, or even be debarred from federal contracting,” the piece warns.

Why Contractors Need a Better System

‍A time management system that slows down your team or fails to update in real-time can quickly turn compliance into chaos. In states like California, daily overtime rules and strict clock-in/clock-out requirements demand robust, real-time tracking and clear records. As the piece explains, “Nothing is more counterintuitive than a time management system that is time-consuming or a time tracking system that doesn’t update in real time.”

A reliable system should connect seamlessly with payroll, accounting and project management tools — and ideally automate tasks across them. Real-time insights empower contractors to monitor labor costs, project progress and workforce productivity without losing precious hours to manual corrections or compliance slip-ups.

Before cost-reimbursable contracts are awarded, DCAA may perform a Preaward System Audit (SF 1408) to verify the contractor’s accounting system can handle federal requirements, including proper labor hour tracking for both exempt and non-exempt employees.

With reputational risks, lawsuits and lost contracts on the line, investing in smarter time management is non-negotiable for contractors who want to stay in business — and out of legal trouble.

Don’t miss Workforce Reimagined on Aug. 26, a virtual event focused on building a federal workforce that’s prepared for today’s mission demands.

Originally reported by Raju Karki in Federal News Network.