Exception time reporting
/What is Exception Time Reporting?
It is useful to exclude employees from the corporate time tracking system. Instead, create a standard amount of hours worked, and only have them record their time worked if it varies from the predetermined amount. This is time tracking by exception, and works well for many positions where employees engage in essentially the same activities every day, and for the same period of time.
Another form of employee exclusion is to switch employees from being paid on an hourly basis to being paid on a salaried basis. By doing so, you eliminate the need to track their time at all, at least for the purpose of computing their pay. However, if an employee is salaried but his time is billed to customers (as is the case for a consultant), then you must still track his time; in this situation, it makes no difference if the person is classified as hourly or salaried, since you must still track his time.
Example of Exception Time Reporting
A company has a standard 40-hour workweek for full-time salaried employees. Instead of requiring employees to log their hours every day; the company assumes they work 40 hours unless they report otherwise. Employees only report time variations, such as overtime, early departures, sick leave, or vacation days.
John is a full-time project manager at Bird Corporation. He typically works 40 hours per week, Monday through Friday. His company uses exception time reporting, so he does not need to submit a timesheet unless his hours differ from the standard schedule. His time reporting over a three-week period is as follows:
Week 1 time reporting. John works his usual 40-hour schedule with no changes. He does not submit a timesheet.
Week 2 time reporting. On Wednesday, John leaves work two hours early for a doctor’s appointment and takes paid time off for those hours. He submits an exception report indicating he worked 38 hours and used 2 hours of paid time off.
Week 3 time reporting. John works 42 hours, staying late on two days to complete a project. He submits an exception report stating he worked 42 hours, noting the extra two hours as overtime.
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Guidelines for the Salary Designation
Converting an employee to salaried status will likely only apply to a very small proportion of employees, since this status is governed by federal regulations. The key guidelines for designating a person as being eligible for a salary are as follows:
Administrative. Those in charge of an administrative department, even if they supervise no one, and anyone assisting management with long-term strategy decisions.
Executive. Those who manage more than 50% of the time and supervise at least two employees.
Professional. Those who spend at least 50% of their time on tasks requiring knowledge obtained through a four-year college degree (including systems analysis, design, and programming work on computer systems, even if a four-year degree was not obtained). The position must also allow for continued independent decision making and minimal close supervision.
Advantages of Exception Time Tracking
Time tracking by exception is an excellent solution when employees do not see the need to continually submit time reports that document the same activities; in this situation, employees are much less likely to submit their timesheets on a timely basis, so the payroll staff must spend extra time reminding them to do so.
Disadvantages of Exception Time Reporting
Even if you have identified an employee as being potentially convertible from an hourly to a salaried position, the employee may perceive this as an attempt to deny him overtime pay. If so, you may have to offer a higher salary in order to mollify the employee, which may be a sufficiently large pay raise to negate any possible efficiency improvement from having to no longer track the person’s hours worked. Thus, converting employees from hourly to salaried pay is an interesting concept, but is only applicable in a minority of situations.