Employee management software for small business offices

The small office guide to employee management software

An office with eight or twenty people usually has no HR department. The office manager or a partner handles PTO, onboarding, reviews and payroll between other work, and most staff are salaried, so a time clock is not the problem to solve. This guide covers what employee management software for small business has to do in that setting, the federal rules behind exempt pay, PTO and hybrid work, the records to keep, and how to choose.

What employee management software needs to do for a small office

Five jobs. One record per person: pay basis, PTO balance, in-office days, documents and reviews. Time off with balances that are right and a view of who else is out. A new hire taken from offer letter to signed I-9 without paper. Reviews on a schedule, with what was signed kept. And one pay run that pays salaried staff their salary and hourly staff their approved hours. In Workzenly those are PTO, scheduling, onboarding, performance reviews, HR documents and payroll on one record.

The test for any system is whether the office manager can stop keeping a second copy. If balances still live in a spreadsheet because the accrual rules do not match your policy, the software has added a login without removing any work.

Exempt and non-exempt staff in the same office

Most office staff are salaried and treated as exempt from overtime, but exempt is a legal status, not a pay style. Under the Fair Labor Standards Act, the Department of Labor enforces a standard salary level of $684 a week ($35,568 a year) for the executive, administrative and professional exemptions; the job must also pass a duties test and be paid on a salary basis. A $62,400 staff accountant clears the salary level; whether the position is exempt depends on the duties. Several states set higher thresholds. Our exempt vs non-exempt guide walks through the tests job by job.

Non-exempt staff, often the receptionist, an administrative assistant or a part-time bookkeeper, must get at least minimum wage for every hour worked and 1.5 times their regular rate for hours over 40 in a workweek, and you must keep a record of their hours. For exempt staff the FLSA’s hours-worked records are not required; you keep the basis on which pay is set, and the Department of Labor says an exempt employee gets the full salary for any week in which they do any work, with only the deductions the regulations allow. A worked example: Lucia Quintero earns $24.00 an hour and worked 43.5 hours in the week of Nov 1, so 40 × $24.00 = $960.00 plus 3.5 × $36.00 = $126.00, or $1,086.00 for the week. Workzenly gives hourly people a clock-in button and salaried people none, and both land on the same pay run. Our salary to hourly calculator helps when you are deciding how to pay a new role.

PTO tracking for small business offices

No federal law requires paid vacation, so the rules come from your policy and your state. The parts that must be in the software, not just the handbook, are the accrual rate, any cap or carryover limit, and what happens at termination. In California, Colorado, Montana and Nebraska, earned vacation and vacation-style PTO cannot be forfeited and must be paid out when the job ends. California’s Labor Commissioner says vacation pay vests as it is earned, so a use-it-or-lose-it rule is not allowed there, a reasonable cap on accrual is, and unused vacation is paid at the final rate of pay. Our paid time off guide has the accrual math and the state sick leave rules a policy also has to meet.

For an exempt employee the salary does not change when they take a day; only the balance does. The Department of Labor allows an employer to charge an exempt employee’s PTO bank for an absence, even part of a day, as long as the full salary is paid for any week with work. That makes an accurate balance the whole job, which is why Workzenly accrues balances on its own and shows the balance before and after each request, to the employee and to the manager.

Hybrid work rules, briefly

A hybrid schedule does not change the Fair Labor Standards Act. The Department of Labor’s Field Assistance Bulletin 2023-1 applies it to telework: breaks of 20 minutes or less are paid wherever the employee is, a meal break is unpaid only if the person is fully relieved, and work the employer knows or should know about counts as hours worked, so an hourly employee answering email at 9 p.m. is working. Give hourly staff the same app to clock in at home and at the office, and say in the policy that after-hours work is recorded and paid. Exempt staff do not clock in for pay purposes; the salary basis rule applies at home too.

The rule that surprises small offices most is state income tax: states generally tax wages where the work is physically done, so a hybrid employee working from home across a state line may mean withholding in a second state, and New York applies a convenience-of-the-employer rule to some nonresidents. Our hybrid work schedule guide covers the models, a policy template and the tax detail. Settle withholding with your payroll adviser before approving an out-of-state arrangement.

Reviews, documents and how long to keep them

No law requires performance reviews, but if you hold them the anti-discrimination laws enforced by the EEOC apply: use the same job-related criteria for everyone in a role and keep what was written. EEOC regulations require employers to keep personnel and employment records for one year, and for one year from the date of an involuntary termination. The FLSA asks for payroll records for 3 years and the time records behind them for 2. Form I-9 Section 2 must be completed within 3 business days of the first day of work. Our performance review templates are a starting point, and the employee handbook templates cover the policies the handbook search will be answering.

Storing documents with the person is what makes the record useful: the review sits next to the goals it was measured against, an I-9 can be produced for an inspector without opening anyone’s pay letter, and a license is a number with an expiry date, not a photo. Workzenly lists licenses in one place; watching the expiry dates is still your job.

This guide is general information, not legal advice. Exempt thresholds, PTO payout rules and state tax rules change, so check the Department of Labor, your state labor department or an employment attorney for your situation.

How to choose

1. Start from the record, not the clock. Many tools are built around hourly shift work. Open the salaried employee’s view and check that it makes sense when no one clocks in. Our comparisons of the best HR software for small business and the best HRIS for small business cover tools built this way.
2. Run your PTO policy through it. Enter the accrual rate, cap and carryover rule and check one balance by hand. If the software cannot express your policy, you will keep the spreadsheet.
3. Hire one person in the trial. Send an offer letter and see what the new hire signs before day one and where the signed copies end up.
4. Check both kinds of pay. Put one salaried and one hourly person through a pay run; the overtime should come from recorded hours, not be typed in. Read how to process payroll for every step, and ask on the demo call who handles tax deposits and filings.
5. Look at the employee side. Open the app as a staff accountant would: balance, office days, pay stub, handbook. If people will not use it, the record goes stale.

If you want to see your own office in Workzenly, book a demo and we will set up a workspace with your firm’s name before the call. Plans and prices are on the pricing page.