Preparing a Time and Labor Management (TLM) system for the year ahead is one of the most underrated ways employers can optimize scheduling, reduce costs, and strengthen compliance. A modern employee time tracking system influences everything from payroll precision to leave management to workforce analytics.
The transition into a new year is the perfect time to update holiday calendars, verify PTO accrual rules, align pay codes, and close out 2025 time data cleanly. Following a practical checklist to year-end preparation can ensure success and help turn a TLM system into a strategic advantage.
A TLM system, or an employee time tracking system, is the combined set of tools used to track employee hours, manage schedules, record attendance, govern PTO accrual, and send data directly into payroll. Beyond that, a modern employee time tracking system will also include forecasting, reporting, and absence management features.
A time clock captures punches. A TLM system turns those punches into payroll-ready time by applying rules such as overtime, rounding, schedules, PTO accrual, exceptions, and approvals, then reporting on those results.
Formal TLM systems are everywhere. HR Executive reports that 85% of employers use some form of time or attendance platform. That doesn’t mean they’re being used effectively, however. In the same report, only 21% of users say these systems consistently meet business needs. The most commonly cited issues are a lack of customizability, sub-functional capabilities, and insufficient reporting.
As a result, more than half of organizations either intended to replace, or are in an active process of replacing, existing TLM systems.
And no wonder: the stakes are high. Wage and hour laws rely on accurate data. Payroll syncs rely on clean records. Scheduling rules rely on systems that can handle overtime, shift changes, and emerging predictive scheduling regulations. A well-prepared TLM system reduces compliance risk, supports fair labor practices, and saves significant administrative time. An inadequate one will cost time and money. For example, advisory firm EY reports that just one type of common error (incorrect or missing time punches) costs about $78,700 per 1,000 employees every year.
In fact, a good TLM system is an enormous multi-layered cost saver:
Employers that modernize their employee time tracking system also typically gain access to improved analytics and extremely valuable workforce data via labor and time records. HR Dive reports on one company that used their TLM to determine why their engineers ended up spending 1,500 hours on a project estimated to require only 1,000 hours.
Year-end is an ideal period to do an internal audit of your TLM system and its data, ensure that it’s meeting your needs, and identify any opportunities for improvement. Without this preparation, employers risk payroll delays, inconsistent schedules, or compliance issues tied to state and local labor laws. A disciplined year-end process also helps organizations capture the full business value of their employee time tracking system.
Begin by confirming how PTO accrual will function in 2026. A TLM System with outdated PTO accrual settings can create immediate downstream errors in payroll, benefits reconciliation, and employee trust.
Holiday calendars need to be updated every year and often time codes do, too. A well configured employee time tracking system makes these updates visible to supervisors and employees so there is no last-minute confusion.
Before closing the year, run a full audit of 2025 timecards. Look for missed punches, unapproved overtime, unverified shift swaps, or discrepancies in PTO accrual balances. The audit should compare scheduled hours with worked hours so the employee time tracking system and payroll system remain synced. Clean year-end data strengthens the reliability of 2026 reporting and reduces time spent investigating corrections later.
A TLM System should evolve as your workforce, policies, and scheduling patterns change. The best way to confirm that your system still fits your needs is to evaluate its functionality, user experience, and reporting accuracy at least once a year.
If you want support preparing your TLM System for 2026 or need help optimizing your employee time tracking system, contact us today. CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with every aspect of HR administration, benefits, payroll, and compliance. Learn more about our integrated time and attendance solution.
**The information provided on this website is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and completeness of the information, we make no guarantees about its correctness, completeness, or applicability to your specific circumstances. Laws and regulations are subject to change, and you should consult a qualified legal professional before making any decisions based on the information provided here.