The document summarizes key topics related to FLSA compliance and employee timekeeping. It discusses exempt vs non-exempt employee classifications under the FLSA and the criteria for different exemption categories such as executive, administrative, professional, computer-related jobs, and highly compensated employees. It also covers the differences between employees and independent contractors, focusing on applying the economic reality test and factors such as degree of control, opportunity for profit/loss, skill requirements, permanence of relationship, and whether the work is integral to the business. Common FLSA compliance issues for nonprofits are also mentioned.
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FLSA Compliance Update
1. Avoiding Pitfalls with FLSA Compliance
and Employee Timekeeping
Gerard P. Panaro, Esq. Anna M. Hofmeister, CPA
Of Counsel Partner – Outsourced Services
Howe Hutton, Ltd. Tate & Tryon CPAs and Consultants
May 9, 2012
2. Agenda
9:00–10:15 am: Gerard P. Panaro, Esq., Of Counsel, Howe & Hutton
Overview of FLSA Requirements
Understanding Exempt vs Non-exempt employee classifications
The difference between employees and independent contractors
Common FLSA compliance issues for nonprofits
10:15–10:25 am: Break
10:25–11:20 am: Anna Hofmeister, CPA, Partner, Tate & Tryon
Best Practices in time and record keeping
Best practices in producing meaningful and accurate personnel cost
information
11:20 pm–11:30 am: Questions?
3. Fair Labor Standards Act:
Classes of exempt employees:
There are eight categories:
1. Executives (those who manage the business,
supervise 2 or more people)
2. Administrators (those who exercise independent
judgment and discretion on matters of importance
and who work in a line of the business (e.g., finance,
facilities management, food service, etc.))
3. Professionals (e.g., in-house counsel, CPA, doctor
(but not bookkeepers; not nurses (generally)))
4. Computer programmers (two exemptions: 1) paid at
least $455/wk or 2) paid at least $27.63/hr (the
equivalent of about $57,500 a year))
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
4. Fair Labor Standards Act:
Classes of exempt employees:
There are eight categories (cont’d):
5. “Creative” or artistic people (but not necessarily
graphics people or copyeditors or proofreaders)
6. “Highly compensated” employees (those who do
work such as the foregoing, but make at least
$100,000 a year)
7. Teachers or instructional employees
8. Athletic coaches
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
5. Criteria for exemption as an executive
employee:
1. Compensated on a salary basis at a rate of not less
than $455 per week
2. Whose primary duty is management of the enterprise in
which the employee is employed or of a customarily
recognized department or subdivision thereof;
3. Who customarily and regularly directs the work of two
or more other employees; and
4. Who has the authority to hire or fire other employees or
whose suggestions and recommendations as to the
hiring, firing, advancement, promotion or any other
change of status of other employees are given
particular weight.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
6. Criteria for exemption as an administrative
employee
1. Compensated on a salary or fee basis at a rate of not
less than $455 per week
2. Whose primary duty is the performance of office or
non-manual work directly related to the management or
general business operations of the employer or the
employer's customers; and
3. Whose primary duty includes the exercise of discretion
and independent judgment with respect to matters of
significance to the business. This means acting with
minimal supervision and being able to commit the
organization.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
7. Exercise of discretion and independent
judgment:
In general, the exercise of discretion and independent
judgment involves:
1. The comparison and the evaluation of possible courses of
conduct, and
2. Acting or making a decision after the various possibilities
have been considered
3. The exercise of discretion and independent judgment
implies that the employee has authority to make an
independent choice, free from immediate direction or
supervision.
“Matters of significance” refers to the level of importance or
consequence of the work performed.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
8. In evaluating whether the requisite discretion and independent
judgment exists, the following job duties should be
considered:
[01.] Whether the employee has authority to formulate,
affect, interpret, or implement management policies
or operating practices;
[02.] Whether the employee carries out major
assignments in conducting the operations of the
business;
[03.] Whether the employee performs work that affects
business operations to a substantial degree, even if
the employee’s assignments are related to operation
of a particular segment of the business;
[04.] Whether the employee has authority to commit the
employer in matters that have significant financial
impact;
[05.] Whether the employee has authority to waive or
deviate from established policies and procedures
without prior approval;
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
9. In evaluating whether the requisite discretion and independent
judgment exists, the following job duties should be
considered:
[06.] Whether the employee has authority to negotiate and
bind the company on significant matters;
[07.] Whether the employee provides consultation or
expert advice to management;
[08.] Whether the employee is involved in planning long
or short-term business objectives;
[09.] Whether the employee investigates and resolves
matters of significance on behalf of management;
and
[10.] Whether the employee represents the company in
handling complaints, arbitrating disputes or
resolving grievances.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
10. What “discretion and independent judgment”
does not mean:
Must be more than the use of skill in applying well-
established techniques, procedures or specific
standards described in manuals or other sources.
Does not include clerical or secretarial work,
recording or tabulating data, or performing other
mechanical, repetitive, recurrent or routine work.
An employee who simply tabulates data is not
exempt, even if labeled as a “statistician.”
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
11. What “discretion and independent
judgment” does not mean:
“Matters of significance” do not mean merely that
the employer will experience financial losses if the
employee fails to perform the job properly.
Employee who operates very expensive equipment
does not exercise discretion and independent
judgment with respect to matters of significance
merely because improper performance of the
employee's duties may cause serious financial loss
to the employer.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
12. Examples of exempt/nonexempt administrative
jobs
Clerical duties are nonexempt:
Data entry for accounts payable and accounts receivable;
Modifying account names/attributes in accounting
software;
Word processing;
Sending notices;
Receptionist duties;
Ordering routine office supplies
(DOL Field Operations Handbook).
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
13. Meeting planner/Events coordinator is exempt
administrative position
There is no question that a meetings planner or
events coordinator meets the criteria for exempt
administrative status. According to the DOL Field
Operations Handbook (Rev. 661, revised 11/29/2010),
managers of convention and visitors service sales
are exempt
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
14. Criteria for exemption as a professional
employee:
1. Compensated on a salary or fee basis at a rate of not
less than $455 per week
2. Whose primary duty is the performance of work:
a. Requiring knowledge of an advanced type in a field
of science or learning customarily acquired by a
prolonged course of specialized intellectual
instruction; or
b. Requiring invention, imagination, originality or
talent in a recognized field of artistic or creative
endeavor.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
15. Criteria for exemption as a computer employee
1. Computer systems analysts, computer
programmers, software engineers or other similarly
skilled workers in the computer field
2. Compensated on a salary or fee basis at a rate of
not less than $455 per week or
3. Compensated on an hourly basis at a rate not less
than $27.63 an hour
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
16. Criteria for exemption as a computer employee
4. Primary duty consists of:
a. The application of systems analysis techniques and
procedures, including consulting with users, to determine
hardware, software or system functional specifications;
b. The design, development, documentation, analysis,
creation, testing or modification of computer systems or
programs, including prototypes, based on and related to
user or system design specifications;
c. The design, documentation, testing, creation or
modification of computer programs related to machine
operating systems; or
d. A combination of the aforementioned duties, the
performance of which requires the same level of skills.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
17. Computer network, internet and database
administration is an example of work “directly
related to management or general business
operations” and will therefore qualify as an exempt
administrative position
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
18. On the other hand, “information technology (IT)
support specialists” is not an exempt position, as far
as the DOL is concerned.
According to the DOL Field Operations Handbook:
An IT Support Specialist (renamed from Help Desk Support Specialist)
who is responsible for the diagnosis of computer-related problems,
conducts problem analysis and research, troubleshoots, resolves
complex problems either in person or by using remote control
software, and ensures timely closeout of trouble tickets is not exempt
as an administrative or professional employee.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
19. Case Study
Heffelfinger v. Electronic Data Systems Corp., 580 F.Supp.2d 933
(C.D.Cal., 2008)
Held: Information technology workers were exempt employees
Nature of work:
The information technology workers worked at different customer locations
and were charged with writing code, programming, and administering
databases or networks
Workers did more than “only installing and troubleshooting computer
systems.” One employee was responsible for the design and integrity of
database structures for a customer
Employee suggested various architectures and presented representations
of network design which the customer accepted upon the employee's
recommendations approximately 50 percent of the time
Second employee served as a technical team lead for a project which was
highly visible, important, and critical to the customer's business operations.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
20. Criteria for exemption as highly compensated
employee
An employee with total annual compensation of at
least $100,000 is deemed exempt if the employee
customarily and regularly performs any one or more
of the exempt duties or responsibilities of an
executive, administrative or professional employee
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
21. Employee vs. Independent contractor
FLSA uses an “economic reality” test.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
22. Factors to be considered:
1. The degree of control exercised by the employer
over the workers
2. The workers' opportunity for profit or loss and their
investment in the business
3. The degree of skill and independent initiative
required to perform the work
4. e permanence or duration of the working
relationship
5. The extent to which the work is an integral part of
the employer's business
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
23. Factors to be considered (cont’d):
6. No one factor standing alone is dispositive and
courts are directed to look at the totality of the
circumstances and consider any relevant
evidence.”
7. “[T]he final and determinative question must be
whether the total[ity] of the [circumstances
considered] establishes the personnel are so
dependent upon the business with which they are
connected that they come within the protection of
the FLSA or are sufficiently independent to lie
outside its ambit.”
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
24. Opportunity for profit/loss. The appropriate inquiry has to do
with relative investments, with control over larger aspects of
the business, and with like forms of initiative.
Degree of skill/initiative. Does work require extensive skill,
training, and expertise?
Permanence /duration of relationship. The more permanent
the relationship, the more likely it is that a court will find a
worker to be an employee.
Work integral part of business. Focus is on the work, not the
individual person’s role. Courts consider this factor because
independent contractor relationships often involve work that is
not integral to the business—for example, if a pipe bursts and
a plumber is hired to fix it, the plumber would typically be an
independent contractor
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
25. Interns and the FLSA
The Test For Unpaid Interns:
1. The internship, even though it includes actual operation of the
facilities of the employer, is similar to training which would be
given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works
under close supervision of existing staff;
4. The employer that provides the training derives no immediate
advantage from the activities of the intern; and on occasion
its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion
of the internship; and
6. The employer and the intern understand that the intern is not
entitled to wages for the time spent in the internship.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
26. Additional explanation: factors for/against
intern status (1)
1. In general, the more an internship program is
structured around a classroom or academic
experience as opposed to the employer’s actual
operations, the more likely the internship will be
viewed as an extension of the individual’s
educational experience (this often occurs where a
college or university exercises oversight over the
internship program and provides educational
credit).
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
27. Additional explanation: factors for/against
intern status (1)
2. The more the internship provides the individual
with skills that can be used in multiple employment
settings, as opposed to skills particular to one
employer’s operation, the more likely the intern
would be viewed as receiving training.
3. Under these circumstances the intern does not
perform the routine work of the business on a
regular and recurring basis, and the business is not
dependent upon the work of the intern.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
28. Additional explanation: factors for/against
intern status (2)
4. On the other hand, if the interns are engaged in the
operations of the employer or are performing productive
work (for example, filing, performing other clerical work,
or assisting customers), then the fact that they may be
receiving some benefits in the form of a new skill or
improved work habits will not exclude them from the
FLSA’s minimum wage and overtime requirements
because the employer benefits from the interns’ work.
5. If an employer uses interns as substitutes for regular
workers or to augment its existing workforce during
specific time periods, these interns should be paid at
least the minimum wage and overtime compensation for
hours worked over forty in a workweek.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
29. Additional explanation: factors for/against
intern status (3)
6. If the employer would have hired additional
employees or required existing staff to work
additional hours had the interns not performed the
work, then the interns will be viewed as employees
and entitled compensation under the FLSA.
7. Conversely, if the employer is providing job
shadowing opportunities that allow an intern to
learn certain functions under the close and
constant supervision of regular employees, but the
intern performs no or minimal work, the activity is
more likely to be viewed as a bona fide education
experience.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
30. Additional explanation: factors for/against
intern status (3)
8. On the other hand, if the intern receives the same
level of supervision as the employer’s regular
workforce, this would suggest an employment
relationship, rather than training.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
31. WHD Advisory Opinion Letter on Volunteers
9. The internship should be of a fixed duration,
established prior to the outset of the internship.
10. Further, unpaid internships generally should not be
used by the employer as a trial period for
individuals seeking employment at the conclusion
of the internship period.
11. If an intern is placed with the employer for a trial
period with the expectation that he or she will then
be hired on a permanent basis, that individual
generally would be considered an employee under
the FLSA.
U.S. Department of Labor/Wage and Hour Division (April 2012)
Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
32. WHD Advisory Opinion Letter On Volunteers
1. Person is volunteer provided the services are not the
same type of service the employee is employed to
perform and take place outside of the employee’s
normal working hours.
2. The FLSA recognizes the generosity and public benefits
of volunteering and allows individuals to freely
volunteer time to religious, charitable, civic,
humanitarian, or similar non-profit organizations as a
public service.
3. Such a person will ordinarily not be considered an
employee for FLSA purposes if the individual volunteers
for such organizations without contemplation or receipt
of compensation.
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
33. WHD Advisory Opinion Letter On Volunteers
4. Paid employees may not volunteer to perform the same
type of services for their employer that they are
normally employed to perform.
5. The employee must also be a bona fide volunteer who
performs the services for civic, charitable, or
humanitarian reasons without coercion or undue
pressure.
Source: FLSA2006-18 (June 2, 2006)
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34. Stipends for volunteers:
1. A “volunteer” may receive “no compensation,” but may be paid
“expenses, reasonable benefits, or a nominal fee.”
2. A fee would not be considered nominal if it is, in fact, a substitute for
compensation or tied to productivity.
3. Generally, a key factor in determining if a payment is a “substitute
for compensation” or “tied to productivity” is “whether the amount
of the fee varies as the particular individual spends more or less time
engaged in the volunteer activities.”
4. If the amount varies, it may be indicative of a substitute for
compensation or tied to productivity and therefore not nominal.
5. Generally an amount not to exceed 20 percent of the total
compensation that the employer would pay someone for performing
comparable services would be deemed nominal.
Source:http://www.dol.gov/whd/opinion/FLSA/2008/2008_12_18_16_FLSA.pdf
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35. Common FLSA compliance issues for nonprofits
Misclassification of employees as exempt
Misclassification of workers as independent
contractors
Misclassification of workers as “interns” or
“volunteers”
Use of “comp time”
Improper timekeeping; accounting for overtime
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
36. Recordkeeping requirements for nonexempt
employees (1):
1. Name
2. Home address, including zip code
3. Date of birth, if under 19
4. Sex and occupation in which employed
5. Time of day and day of week on which the employee's
workweek begins
6. Regular hourly rate of pay for any workweek in which
overtime compensation is due
7. Explain basis of pay by indicating the monetary amount paid
on a per hour, per day, per week, per piece, commission on
sales, or other basis
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37. Recordkeeping requirements for nonexempt
employees (2):
8. The amount and nature of each payment which is excluded
from the “regular rate”
9. Hours worked each workday and total hours worked each
workweek
10. Total daily or weekly straight-time earnings or wages due for
hours worked during the workday or workweek, exclusive of
premium overtime compensation
11. Total premium pay for overtime hours
12. Total additions to or deductions from wages paid each pay
period including employee purchase orders or wage
assignments
13. The dates, amounts, and nature of the items which make up
the total additions and deductions
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
38. Recordkeeping requirements for nonexempt
employees (3):
14. Total wages paid each pay period
15. Date of payment and the pay period covered by payment
16. Record and preserve, as an entry on the pay records, the
amount of retroactive payment of wages/compensation paid
under supervision of WHD to each employee, the period
covered by such payment, and the date of payment
17. Prepare a report of each such payment
18. Preserve a copy as part of the records
19. Deliver a copy to the employee
20. File the original with the WHD within 10 days
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
39. Recordkeeping requirements for nonexempt
employees (4):
21. With respect to employees working on fixed schedules, an
employer may maintain records showing instead of the hours
worked each day and each workweek, the schedule of daily
and weekly hours the employee normally works
22. In weeks in which an employee adheres to this schedule,
indicates by check mark, statement or other method that such
hours were in fact actually worked by him
23. In weeks in which more or less than the scheduled hours are
worked, shows that exact number of hours worked each day
and each week
Source: 29 CFR §516.2
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
40. Recordkeeping requirements for exempt
employees (1):
1. Name
2. Home address, including zip code
3. Date of birth, if under 19
4. Sex and occupation in which employed
5. Time of day and day of week on which the employee's workweek
begins
6. Total wages paid each pay period
7. Date of payment and the pay period covered by payment
8. The basis on which wages are paid in sufficient detail to permit
calculation for each pay period of the employee's total
remuneration for employment including fringe benefits and
prerequisites
Source: 29 CFR §516.3
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41. Records to be kept for three years:
Payroll records.
Certificates, agreements, plans, notices, etc.
(collective bargaining agreements, plans, trusts,
employment contracts, individual contracts, written
agreements or memoranda summarizing the terms
of oral agreements or understandings,
Sales and purchase records.
Source: 29 CFR §516.5
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42. Records to be kept for two years:
Basic employment and earnings records. All basic
time and earning cards or sheets
Wage rate tables
Order, shipping, and billing records
Source: 29 CFR § 516.6
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43. Where records show insubstantial or
insignificant periods of time
1. In recording working time under the Act, insubstantial or
insignificant periods of time beyond the scheduled working
hours, which cannot as a practical administrative matter be
precisely recorded for payroll purposes, may be disregarded
2. This rule applies only where there are uncertain and indefinite
periods of time involved of a few seconds or minutes
duration, and where the failure to count such time is due to
considerations justified by industrial realities
3. An employer may not arbitrarily fail to count as hours worked
any part, however small, of the employee's fixed or regular
working time or practically ascertainable period of time he is
regularly required to spend on duties assigned to him
4. 10 minutes a day is not de minimis
Source: 29 CFR §785.47
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44. Use of time clocks (1)
Time clocks are not required
Employees who voluntarily come in before their regular
starting time or remain after their closing time, do not
have to be paid for such periods provided, of course,
that they do not engage in any work.
Their early or late clock punching may be disregarded
Minor differences between the clock records and actual
hours worked cannot ordinarily be avoided, but major
discrepancies should be discouraged since they raise
a doubt as to the accuracy of the records of the hours
actually worked
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
45. Use of time clocks (2)
1. “Rounding” practices. There has been the practice
for many years of recording the employees' starting
time and stopping time to the nearest 5 minutes, or
to the nearest one-tenth or quarter of an hour
2. For enforcement purposes this practice of
computing working time will be accepted
3. But it must not result, over a period of time, in
failure to compensate the employees properly for
all the time they have actually worked
Source: 29 CFR §785.48
Gerard P. Panaro Howe Hutton 1901 Pa Av NW DC 20006 301-518-9267 (cell) 202-466-7252 x 102 (o) gpp@howehutton.com
46. Speaker Biography
Gerard P. Panaro, Esq. is of counsel to Howe &
Hutton, Ltd. in its Washington, D.C. office. He has
over 30 years of experience in the practice of
employment law and representation of nonprofit
organizations in the District of Columbia and Maryland.
Jerry advises tax-exempt organizations and small
businesses and negotiates on their behalf on matters Gerard P. Panaro, Esq.
related to employment, corporate and tax matters, Of Counsel
antitrust and administrative law. He is the author of Howe Hutton, Ltd.
Washington DC - Chicago IL
Employment Law Manual (1998), and writes a - St. Louis MO
newsletter on employment law for Aspen/Panel Press.
Mobile: 301-518-9267
He also does writing, training and seminars on Office: 202-466-7252 x 102
employment law matters for clients and has done E-mail: gpp@howehutton.com
webinars for BankersonLine.com. www.howehutton.com
47. Overview:
Accounting requirements
Reliable financial information
Effective & efficient internal controls
Grant requirements
What to look for in timekeeping & payroll
systems
49. Reliable Financial Information
Labor is often the largest expenditure
Daily time recording
Signed by the employees and approved by their
supervisors
Payroll recorded based on timesheets
Benefits recorded based on personnel
Well documented and communicated
procedures
50. Effective Internal Control
Following should occur and have confidence of
staff that it is in operation:
Time is tracked accurately
Transactions are authorized and approved
Segregate the timekeeping, payroll preparation,
payroll approval, and payment functions
Information is properly and promptly retained
Applicable risks are weighed to ensure errors
and omissions are minimized
51. Effective Internal Control (continued)
Meet needs of users
Monitor the results/outputs for accuracy
Clearly written and communicated policies and
procedures setting forth responsibilities
Applying available technology and concepts to
achieve efficiency and effectiveness
52. Grant Requirements
Acceptance of grant creates legal obligation
OMB Circulars
Grant agreement
53. Grant Requirements (continued)
Overview
Segregate federal grant/contract program costs
Support all payroll and fringe benefit costs
Consistent application
Ensure no expenses claimed were misused
Administrative or financial capability to manage
grant/contract funds
Awareness to document labor expenditures
54. Grant Requirements (continued)
Personnel Activity Reports:
Must reflect after-the-fact determination of true activity
Must account for total activity for which employee is
compensated
Must be signed by the employee and responsible
supervisor
Approvals must be visual with an audit trail
Must be prepared daily and coincide with one or more
pay periods
Must reconcile to dollars charged to grant/contract
55. Grant Requirements (continued)
When Audited
Substantiate federal grant/contract expenditures.
Appropriate timekeeping procedures are in place
Procedures are documented
Appropriate accounting and payroll tracking system in
accordance with government agency directives are in
place
56. Efficient Internal Control
Weigh cost vs. benefit of processes and details
required
Integrated timesheet, payroll and accounting
systems
Reminders
Programmed approval process
57. What to Look for in a Tracking System
Compliance with applicable legal requirements
Compliance with grant requirements
Reliable financial information
Be effective
Be efficient
58. What to Look for in a Tracking System (cont.)
Multiple approvers
Lock out codes
Deactivate codes
Adjust rates based on hours worked
Export capabilities
Syncing to other systems
59. What to Look for in a Tracking System (cont.)
Remote access
Reminders
Reports
Back-ups
61. Speaker Biography
Anna. M. Hofmeister, CPA is the partner in charge of
Tate and Tryon’s Outsourced Accounting Services
department and has more than 20 years of experience
servicing the accounting, consulting, audit, and tax needs
of the nonprofit industry. She is responsible for
overseeing all phases of our outsourced accounting
engagements.
In her role as an interim or permanent CFO, Ms.
Hofmeister frequently presents to finance committees and
boards of directors on topics such as financial results, key
performance indicators, improving financial performance, Anna M. Hofmeister, CPA
Partner - Outsourced Services
cash flow projections, cost allocations, U.S. and foreign Tate & Tryon CPAs and
operations and unrelated business income. Some of the Consultants
most notable clients she oversees include the Alexander Direct: 202-419-5103
E-mail:
Graham Bell Association for the Deaf and Hard of ahofmeister@tatetryon.com
Hearing, American Association of Poison Control Centers, www.tatetryon.com
Global Health Council, and National Court Reporters
Association.