Three Legal Reasons for Tracking Employee Hours

Have regulatory changes made tracking employee service hours an essential business process for all employers?

In this article, we address three regulations that have turned up the heat on employers, necessitating the adoption of company-wide systems for tracking employee time.

FLSA: The Fair Labor Standards Act (FLSA) sets standards for classifying employees as either exempt or non-exempt status. FLSA does mandate in some states, such as New York, that employers track all non-exempt employee hours for purposes of determining appropriate compensation.

In the event that an employer has misclassified an employee, righting the ship is a much easier process when there is a recordkeeping mechanism to refer back to for the total hours worked each workday and each workweek. The hours worked will be the determining factor for whether an employer owes said employee back wages for unpaid overtime. In the unfortunate case of an audit, the DOL will obtain the employee’s hours one of two places; the employer or the employee.

FMLA: Eligibility for the Family and Medical Leave Act (FMLA) is triggered when an employee has 12 months of service with an employer.   Service need not be consecutive, as long as the employee totals 52 weeks of service. The employee must have worked a minimum of 1,250 hours during the 12-month period prior to requesting leave (roughly 24 hours of work/week).

Of note, tallying the minimum hours follows the standard set by the FLSA, meaning that PTO, vacation, holidays, etc. (paid or unpaid) do not count toward the minimum 1,250 hours. For all of your exempt employees, they are presumed eligible for FMLA by their FLSA status. For all non-exempt employees, employers need to identify when those employees cross the minimum hours threshold.

What we typically see with regard to FMLA requests is that employers that are not tracking employee hours err on the side of approving FMLA leave requests for the sake of avoiding potential lawsuits. Integrating a time tracker into an employer’s total workforce management suite empowers managers to make informed legal determinations on requests and avoid FMLA lawsuits and abuses.

Affordable Care Act: Under Obamacare, employees who average 30 hours/week (130 hours/month) of work during a given measurement period are eligible for employer-sponsored health care. Applicable Large Employers (ALEs) are required to identify their full-time population and must make qualifying offers of coverage to 95% of their full-time population or risk penalties under the Employer Shared Responsibility Mandate.

Unlike the FLSA or the FMLA, where compliance is checked when an audit is triggered, the ACA has annual reporting requirements. Under section 6056 reporting requirements, ALEs are required to report the monthly totals of their full-time population, and whether or not they offered members of that full-time population affordable and minimum value coverage. Tracking the movement of variable-hour employees in and out of that full-time population will require a system for tracking employee hours.

Related Blog: Obamacare Data Collection: Essential Elements of FIlling Out the 1095-C

In short, given the various regulatory stipulations now tied to employee hours, there are increasing legal justifications for investing resources in online time tracking and maintaining clear records of employee hours worked. Keeping HRIS systems streamlined, paperless, and integrated consolidates this audit-worthy information in a universal system for easy reporting and presentation of an organization’s time and labor data.