Hours Living in Three Systems
Payroll, scheduling and the benefits platform often disagree, and the regulations require hours from records of hours worked and paid. Reconcile the source before the window closes, not after.
The three things to know.
Why It Matters
Status depends on totals. A few hundred hours missing from a single system can move an employee across the line.
Pick the Record
Decide which system is the record for hours, and treat the others as checks.
The Fix
A scheduled reconciliation partway through the window and again at close surfaces errors while they can still be corrected.
Sources: 26 CFR § 54.4980H-3. General information, not legal advice.
A worked example.
The 200-Hour Gap
An employer’s time clock shows 1,480 hours for an employee over the window, payroll shows 1,690 and the scheduler shows 1,520.
What the Rule Produces
Which one is right decides whether he averages 28.5 or 32.5 hours a week, a difference between part-time and full-time. Reconciling the records before the window closes would have settled it.
Four steps to apply it.
1. Pick the record
Name payroll the source.
2. Compare monthly
Check each system against it.
3. Resolve differences
Fix errors early.
4. Lock the data
Freeze it at close.
Where it goes wrong. Waiting until after the window closes to find mismatches.
The questions that come up next.
Can we rely on scheduled hours?
Scheduled hours are not hours worked or paid. Use the actual records.
What about hours worked off the clock?
If hours are worked and paid they count. Gaps between the time clock and payroll are the usual source of disputes.
Who owns the reconciliation?
The employer. Payroll, HR and benefits should agree on who reviews it.
Which hours count?
Hours worked and hours paid, from the best records.
Who owns the reconciliation?
The employer, with payroll and HR agreeing on who reviews it.
Plan-specific questions belong with ERISA counsel, and we will bring them in.
Related pages on the look-back method.
Step 1: Decide Your Categories
Choose whether union, salaried, hourly and state-based groups get different treatment, and which method each group uses.
Step 2: Choose the Period Lengths
Set the measurement, administrative and stability periods, and confirm the stability period is at least six months and no shorter than the measurement period.
The Full Look-Back Guide
Every rule, example and source behind this page, in one place.
Talk it through with someone who runs this every year.
We help you choose the design, document it and reconcile the hours before the numbers reach your reporting.
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