Two of our teams do billable professional services for customers. Many of the people on those teams forget to enter their billable time occasionally. The best way we've found to catch those mistakes is to have them track non-billable time as well. That way if their total for the week is less than 40 hours (our standard work week), their manager can just ask them to go back and fill in the billable or non-billable time that they forgot.
This system works well, but now we have a concern that tracking all their hours might create a risk that they will be reclassified as non-exempt employees. They are all skilled professionals with a lot of control of their own schedules, so we think the risk isn't too large. But the employees don't want to lose the flexibility to work a bit extra one week because a customer needs them and a bit less the next week because their projects are done. And management doesn't want to worry about paying overtime, since we already work hard to maintain a 40-hour average for everyone to promote work-life balance.
Does anyone have alternate ideas to ensure that employees track their billable time consistently?
Scope what you want to measure, measure it and then digest the results. I would suggest a pilot, limited time period of eight weeks, maybe on one or two of your projects depending on size.
Part of me reads your post in a way that suggests your higher ups would like to swerve paying overtime. If I've read it like that, presentation of a study to your team probably needs to address that issue head on.
I'm not an attorney but....
Your company measuring time spent by employees shouldn't be a factor. In California at least, there are a variety of factors that go into "exempt or non-exempt" status. None of those factors are "does your employer keep track of your time spent working".
I have friends who are consultants at IBM and they have to track every minute, billable or not. They are all exempt.
Track time and don't worry about losing exempt status
I am a civil engineer and most individuals in my industry are exempt. Most individuals also work a little more one week and a little less the next week. On the private side where people bill their hours to clients, everyone tracks all their time. ("Everyone" and "all" are note hyperbole.) Exempt status is more about responsibilities than work hours. You are exempt if you are an executive or a professional. Check out this link for the definition of professional or executive: http://www.flsa.com/coverage.html. My industry also has metrics that are common to most private companies: ie, each staff member has a goal of billable hours per week. For some it is 100% so the annual goal can be 92%. For others it is only 40% (but they need to make sales goals). As a supervisor I received a report every Monday morning that showed the billable time for each of my employees - and it had to show 40 hours of work (or more) and therefore also had to include the non-billable hours.