Timekeeping vs. Payroll
cb499
31 Posts
I'm trying to get my head wrapped around a process and the FLSA requirements. There have been many discussions on this topic so I hope I'm not repeating one I missed.
A govt. contractor is required to keep detailed timekeeping records, so everyone, regardless of whether they are on a contract or on overhead, logs hours worked on a daily basis. Pay periods are twice a month - 15th and 30th. If a salaried, exempt employee does not work a full pay period, they must use PTO to cover the balance to ensure a consistent salary (handbook policy). Conversely, if they work more hours than in the pay period, it appears they simply didn't come to work one day, when in fact they did, but they can't log hours over the standard pay period allotment (80/88/96).
Is it within the regulations to have the timekeeping and payroll systems joined at the hip in this manner for the exempt staff, or is it opening the door for treating salaried staff as hourly? I can provide additional more specific examples if that would help.
Thank you!
Comments
I'm trying to get my head wrapped around a process and the FLSA requirements. There have been many discussions on this topic so I hope I'm not repeating one I missed.
A govt. contractor is required to keep detailed timekeeping records, so everyone, regardless of whether they are on a contract or on overhead, logs hours worked on a daily basis. Pay periods are twice a month - 15th and 30th. If a salaried, exempt employee does not work a full pay period, they must use PTO to cover the balance to ensure a consistent salary (handbook policy). Conversely, if they work more hours than in the pay period, it appears they simply didn't come to work one day, when in fact they did, but they can't log hours over the standard pay period allotment (80/88/96).
Is it within the regulations to have the timekeeping and payroll systems joined at the hip in this manner for the exempt staff, or is it opening the door for treating salaried staff as hourly? I can provide additional more specific examples if that would help.
Thank you! [/quote]
There are a couple issues here:
TXHRGuy,
1. To reword: negative balances are not generally permitted but may be approved for emergencies. If a salaried ee doesn't work for an entire week and is out of PTO, they would take leave without pay. If a salaried ee works 82 of an 88 hr pay period, they may either use 6 hrs. of PTO or receive a reduced paycheck calculated on an hourly rate for 82 hours. So if a salaried ee consistently doesn't work the full hours in a pay period and has run out of PTO, can they be paid a reduced salary? I believe your answer was no, they would need to go in the hole for the difference. Their negative balance would continue to accumulate but their paycheck cannot vary. Correct?
2. If you're a govt. contractor, you don't get paid for more hours than are on the contract, which are generally calculated at 40 hrs/week...hence a stop to prevent it from going into overhead. That said, salaried ee's are allowed to work as much as they want/need, they just don't log the time once it goes over the number of hours in the pp. Does this signal anything other than they are keeping good timekeeping records?
3. I'm not clear when you say to not import their times by using the salary basis function of the payroll system. Maybe this goes back to #1...?
TXHRGuy,
1. To reword: negative balances are not generally permitted but may be approved for emergencies. If a salaried ee doesn't work for an entire week and is out of PTO, they would take leave without pay. If a salaried ee works 82 of an 88 hr pay period, they may either use 6 hrs. of PTO or receive a reduced paycheck calculated on an hourly rate for 82 hours. So if a salaried ee consistently doesn't work the full hours in a pay period and has run out of PTO, can they be paid a reduced salary? I believe your answer was no, they would need to go in the hole for the difference. Their negative balance would continue to accumulate but their paycheck cannot vary. Correct?
2. If you're a govt. contractor, you don't get paid for more hours than are on the contract, which are generally calculated at 40 hrs/week...hence a stop to prevent it from going into overhead. That said, salaried ee's are allowed to work as much as they want/need, they just don't log the time once it goes over the number of hours in the pp. Does this signal anything other than they are keeping good timekeeping records?
3. I'm not clear when you say to not import their times by using the salary basis function of the payroll system. Maybe this goes back to #1...?
[/quote]
Uno
My understanding of your current practice in managing salaried pay under item one violates the salary basis of pay as described in the statute and regs. Technically, if they work for 5 seconds and only 5 seconds on any given day normally scheduled for work, you owe them a day's pay. You may deduct the difference from their PTO balance under most conditions, but a failure to pay for the full day is a direct violation of the salary basis, which is one of the three pillars upon which rests the very nature of being exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act. The DOL will tell you that you need to work with the DOL to correct any shortages you have made in the past. Your attorney will probably tell you to skip the DOL and make good on any amounts you owe and get on with things. I advise you talk to an attorney. The longer you have been doing this, the more serious it is. Tying hours worked to pay received is the antithesis of the salary basis of pay. Only recently did it become clear that you could even hit the PTO bank in partial day increments and last I checked, it's not even clear that is universally embraced by the courts (insufficiently challenged at this point).
Dos
Billable hours and compensation hours are not the same thing. The salaried worker can work 50 hours and you still only bill the gubmint for 40 unless there's something specific about your arrangement with the gubmint that I don't understand. I confess that government contracting is not my strongest suit and I know there are twists and turns of it but why would the government prevent you from allowing a worker that you pay on a salary basis from working more than 40 hours and billing the government only 40 hours for that work? That makes no sense to me and it sort of defies the whole point of having an employee on a salaray basis of pay.
If you have an employee on a salary basis of pay, then their hours are not in the picture: they get paid a fixed amount every week without regard for the amount of work they perform or the quality of their work product. This sounds like a strange accounting game to me since the employee's hours are irrelevent to your payroll except in terms of the illegal practice covered in item Uno, above.
Tres
It sounds to me like you are essentially dealing with salaried employees in your payroll system by converting them to an hourly rate and paying them for a fixed number of hours to make their pay come out correctly. That's usually more complicated than what is required. It also sounds to me like you have your exempt employees clocking in and out, which is now okie dokie but was not clearly so at one time. Just because they clock in and out does not mean those recorded hours have to be considered in any way for payroll purposes, although they may be important for calculating billable hours for your client.