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Jul02

payroll question

Is it legal to estimate hours worked for a full day in order to process payroll early because of a holiday?

We were told not to mess with employees time cards yet then told to estimate all Friday time on Thursday and submit payroll so that they can process payroll Friday night and not have to work late on a holiday weekend….

This is a gray area. Technically, under the federal FLSA the employer is responsible for keeping accurate track of all hours worked by non-exempt employees, and paying the employees accordingly.

However, many companies have the policy or practice of estimating payroll on the Friday before a holiday, so that payroll clerks, accountants and mangers can go home early. This is not strictly illegal per se, as long as the employer estimates the payroll accurately.

Suppose Cindy Lou is scheduled to work 8 hours on the Friday before a holiday weekend. Her manager is eager to get payroll done early and estimates that Cindy Lou will work 8 hours. If Cindy Lou does work 8 hours or works 7.75 hours, everything is fine. The employer is well within the law. However, if Cindy Lou works 8.5 hours, she is entitled to payment for an additional 1/2 hour (and may be entitled to payment for 30 minutes of overtime.) In a few states such as Illinois, by law this amount must be paid on payday. Cindy Lou could demand that she be paid the extra 30 minutes on her next scheduled payday. An employer who did not comply would be in violation.

In practice, however, this is done frequently without repercussions. If Cindy Lou works 8.5 hours when her manager estimated only 8 hours, Cindy is paid for the additional time on her next paycheck. If that puts her into overtime in this payroll week, she is paid for 0.5 hours of overtime on her next paycheck. Many employees are willing to go along with this, especially if it means they can leave a few minutes early and still be paid for the entire day. In most states, this would be legal.

A better way to handle this is probably for the employer to arrange the payroll week so that payroll is routinely submitted on a weekday like Wednesday or Thursday.  

 

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This entry was posted on Friday, July 2nd, 2010 at 3:12 pm and is filed under
Compensation.
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