
While employers covered by this extension may be breathing a
sigh of relief, they shouldn’t forestall putting in place one of the key action
items for ACA compliance – the careful tracking of employees’ working hours. The ACA has two requirements that
necessitate tracking hours: (1) to
determine whether an employer is subject to the coverage mandate; and (2) if
so, to determine which employees have to be offered coverage:
·
Are You Subject to the Mandate? Whenever this requirement kicks in for your
company, the ACA mandates that an employer with an average of 50 or more full-time employees per month provide health
insurance to employees working more than 30 hours per week. Under the mandate, employers can’t just count
regular full-time equivalent employees (FTEs) to figure out if they’re covered
by the ACA. Instead, they have to
consider the number of employees who, when their hours are combined, add up to
an FTE. To determine the number of its FTEs
under the ACA, an employer has to consider: (1) the number of full-time
employees (meaning employees who work more than 30 hours per week); and (2) the
number of hours worked per month by employees who work fewer than 130 hours per
month, divided by 120. The number of
FTEs of the employer is the sum of these two groups of employees.
·
Who Do You Have to Cover? Employees who work 30 hours a week or more,
on average, have to be offered coverage under the mandate. There are detailed rules about crediting
part-time, variable-hour, and seasonal employees for their time to determine
whether they get coverage.
To determine whether you have a mandate and who is covered
by the mandate, you have to know how many hours employees are working per
month and you need to know this before your compliance deadline kicks in. So, that means you can’t wait until 2016 to
begin tracking hours and determining your ACA coverage obligations.
This may seem pretty basic, but many companies, especially
smaller companies who may just bump up against 50 FTEs, aren’t always careful
about tracking working time. This is now
necessary in light of the ACA. In
addition, there are other potential obligations to track working time. Here are a few:
·
When a
non-exempt employee claims they’re not getting paid enough overtime. Wage and hour laws require time records for
non-exempt employees. In addition, when
a non-exempt employee claims they are owed overtime pay, the burden is on the
employer to show compliance with the law.
It’s difficult to show that you’re paying an employee appropriately if
you don’t know or can’t document how much they’re working. Of course, the employee has to accurately
report his or her working time, but employers should have—and follow—policies
that demand accurate time reporting. You
should also manage supervisors and managers who inappropriately expect employees
to work off the clock or unilaterally alter employee time records.
·
When the
Department of Labor comes calling.
You’ll want written time records
for non-exempt employees if either the state or federal Department of Labor comes
knocking. Certain industries are at
particular risk for Department of Labor audits, including industries that
customarily utilize alternative pay methods, like pay for piece work, Belo
plans, or similar arrangements that calculate pay for non-exempt employees
based on something other than (or in addition to) the number of hours worked.
·
Determining
FMLA eligibility. Employees may
be eligible for up to 12 weeks of protected leave under the federal Family and
Medical Leave Act (FMLA) if they have work for a covered employer for 12 months
and worked at least 1,250 hours in the previous 12 month period. Tracking work time is necessary to figure out
whether an employee has put in the requisite time to be FMLA eligible, but it
is also needed to determine the amount of an employee’s protected leave
entitlement. “Twelve weeks” of FMLA leave
for an employee who is less than full-time is based on their typical part-time
schedule and is different than the full 12 weeks of leave available to a
full-time employee.
·
Tracking
worker productivity. Another reason to track non-exempt employee time
is to measure productivity. Are employees
showing up on time and getting the job done while at work? Or, are there folks who incur a lot of
overtime, because they’re not efficient during the work day? Do you have employees who are working off the
clock without reporting their hours? The
answers to these questions may be found in accurate time recording and
tracking.
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