Inquiry: What would you call time that contract employees work one week but can take off the next week?
This is for Gov contracts and we can't call it comp time. They don't get paid overtime for this contract so they have to take the time off. We need to track the time on the time sheet for contract reasons to name a few. Do you have any suggestions?
Response: In response to your inquiry, first we must determine what you mean when you say "contract employees." The answer depends on a person's interpretation of the terminology.
Do you mean contract employee as you have contracted with a consultant, or are these purchased labor type employees, or do you mean they are your company exempt employees, or company non-exempt employees that are dedicated to a contract? There could be a difference based on each.
In most of the cases above, except for the last one, there is typically no compensatory time off. If someone works 50 hours one week then the employee would only work 30 hours the next. Period! Nothing else to record.
This is the case for an Exempt company employee that gets paid the same each week regardless of how many hours are worked. 50 hours one week, 30 hours the next, 20 the next, 70 the next, etc. All hours are being recorded, and the exempt employee is being paid the same wage weekly.
For a Contract Consultant, or Purchased Labor (provided by an agency), you are typically paying an hourly rate for time worked so there is only a need to record actual hours worked. Why would you want to record any other hours? Your time records will still provide reports, in hours, the variances in time each week, by person, so you will still be able to evaluate the way hours are being worked.
You are not paying overtime premiums in these situations. Therefore, if your contract has a "No Overtime" requirement, in my opinion you are meeting it. It appears you are actually operating in a "Flextime" environment. This means various hours during a pay-period yet the overall time balances out to normal.
Therefore, in each of the above situations I do not see the value or purpose in recording time not worked. Nor do I see the need to call anything Comp Time, Leave without pay (LWOP), or anything else.
Now for a situation where they are your "Company Employees" your inquiry requires more information. First, it is important to know if the people are Exempt or Non-Exempt (Hourly or Salary).
For exempt employees it is typically straightforward: The hours they work, they record, regardless of how many or how little. If I work 50 hours one week, I record 50 hours and bill 50 hours. If I work 30 hours the next week, I record 30 hours and bill 30 hours. I am going to receive the same weekly salary regardless. There is no need for me to track or record any additional hours except for Leave ( Holiday, Vacation, Sick, etc.).
For Non-Exempt Employees: It is different story if they are non-exempt. Generally, the time they work one week, but plan on taking off the next week or even later, could be called something like "CTO" (Compensatory Time Off).
According to the FLSA, non-exempt employees must be paid for all time worked unless the Employee Agrees to take compensatory time off.
So, if they "do not" agree, then you would have to pay them for, lets say 50 hours one week. If they then work only 30 hours the next week, (offsetting the previous weeks hours), they would get paid for 30 hours. That's it. There is nothing else to record. If you choose to account for the other 10 hours, you could call it LWOP (Leave without pay) or make a memorandum entry.
Now if the employee "does" agree to compensatory time off, then you would track it accordingly. If 50 hours are worked one week and you only pay them for 40, then there is a liability to the company for the 10 additional hours. If an employee terminates or leaves, the company is still liable to pay them for this time, right. Right!
Therefore, if I were the auditor, I would have no problem with the recording and billing of the 50 hours worked during the period it is actually worked, or one week: 40 hours regular, 10 compensatory time earned (CTE). The following week, 30 hours regular, 10 compensatory time used (CTU).
The hours billed to a contract in this situation would be 50 for the first week and 30 for the second week.
For tracking purposes: If you choose not to track compensatory time manually or with a memorandum entry, you should consider setting up additional "payroll items" to include items that will tract and account for employee compensatory time earned and used.
For example:
When earned, a compensatory time earned (CTE) payroll item could be setup to charge (increase) an Employee Compensatory Liability (ECL) type account as due and payable, while the offset to the entry would show as a charge to the appropriate Direct or Indirect Labor Expense account (increase). Hence, a contract would still be charged for the 10 hours, if applicable.
When used, a compensatory time used (CTU) payroll item could be setup to reduce the same Employee Compensatory Liability (ECL) type account (paid), while the offset to the entry would show as a charge to the appropriate Bank Cash account. Here's what the entry might look like:
Debit Credit
When Earned
Liability Account (ECL) $100.00
Direct Labor for 10 hrs $100.00
_______________________________________
When Used
Liability Account (ECL) $100.00
Cash $100.00
Therefore, if you do not pay them during the week for time worked over 40 hours and, based on the employee agreement, you allow them to take time off the following week or a later date, then that time off "must be compensated for." This is called Compensatory, or Comp time off.
I do not see why the government should have a problem with this. As long as you are tracking the time for all hours worked you should be okay. That is what is required when we look at the guidance. "Track all hours worked." What you call it should be irrelevant. If I were the auditor I would be more interested in how you explained and showed me, through your system, how the hours and wages are adequately tracked, recorded, billed, and reported.
That would include taking the timesheet (with the hours as your policy describes they should be charged), payroll item list, accounts assigned to the payroll items, and the liability and expense accounts charged. It would also include any Job Cost reports that support the appropriate charges of the time and wages, if applicable.
Remember, there are more in-depth Department of Labor (DOL) issues that you must be aware of for non-exempt employees.
For example, as discussed above, if a non-exempt employee works more than 40 hours they typically still have to be paid Time-and-a-Half for those hours, or an equivalent time off. You cannot just have them take Comp time off the following week without paying or accounting for the Overtime Premium.
I could go on, but alas time does not permit. For example, the cases where employees are considered Exempt Hourly or Non-exempt Salary. That is why it is important to understand the DOL guidelines.
That is about all I can provide at this limited knowledge level of your question.