Accurate timekeeping is important to most businesses, but for federal government contractors, it is crucial to compliance and continued success. While timekeeping may seem like a straightforward and simple task, it can be daunting for those responsible for developing and implementing appropriate processes, systems, and audit trails. Improper procedures can quickly lead to reporting inaccuracies and audit nightmares! A well-designed process, accompanied by an accurately designed system and a well-documented and communicated policy, is critical.
Why Timekeeping Is the Backbone of Government Contractor Compliance
In our article, “Why is Timekeeping so Important and What do Auditors Expect?,” we provide an excellent summary of the Defense Contract Audit Agency’s expectations regarding timekeeping. It outlines the importance of the federal government contractor’s ability to support the hours and labor qualifications of the employees charging to the contract. This applies to all employees, including exempt, non-exempt, direct, and indirect staff.
In addition to those considerations, the Human Resources team is focused on accurate timekeeping related to:
- Fair Labor Standards Act (FLSA): Applicable to all employers, FLSA provides a laundry list of recordkeeping requirements. One key element of these requirements is to ensure that you capture all hours worked to accurately pay non-exempt employees for all compensable hours, including appropriate overtime payments.
- Service Contract Act (SCA) and Davis-Bacon Act (DBA): In addition to the requirements under the FLSA, SCA and DBA have the added importance of segregating hours worked while on these covered federal contracts. This is to ensure that these hours are considered when paying minimum required wages, determining and calculating the required health and welfare (bona fide benefits and/or cash-in-lieu), vesting of vacation and holiday pay, and accrual of sick leave.
- Benefits Administration: Benefit plans are designed with eligibility requirements that are supported by employee classification or full-time versus part-time status. In addition, applicable large employers under the Affordable Care Act (ACA) must be able to precisely monitor full-time equivalency and look-back measurement periods.
In an audit situation, failure to prove compliance may result in significant back wage payments to employees, withholding of contract funds, contract suspension or debarment, or even criminal prosecution under the False Claims Act.
There is a plethora of timekeeping systems, many with impressive bells and whistles, and UKG Ready is certainly at the top of the list. Of utmost importance with all systems is ensuring an efficient and compliant implementation. As the old saying goes, “junk in is junk out.” Conducting thorough research and selecting a system that can effectively handle the required complexities your team faces is vital. Equally important is partnering with and leveraging an implementation team of compliance experts. The system, coupled with accurate implementation, is key to future compliance success.
What a Compliant Timekeeping System Should Look Like
A DCAA-compliant timekeeping system includes well-documented and easy-to-understand procedures and guidelines. Though not exhaustive, this should include:
- Ability to independently record all time by task or charge code (direct, indirect, paid time, etc.)
- Assignment of charge codes based on specific authorization
- Appropriate editing and approval mechanisms, always with audit accountability
- Ability to ensure the employee is entering time for him/herself and approval is performed by the assigned supervisor
- Suitable safety structure (only employees and those with specific authority may access)
While not required, the following are worth considering for the “wish list”:
- Automated workflows to assist with approvals and notifications
- Dashboards for easy reference and reporting, approvals, leave requests and missed time entries
- Robust features that automatically enforce your policies and legal requirements
- Auto-generated reminders and reporting
- Easy to access via laptop or mobile app
- Clock in/out “button” features
- Geo-fencing (the ability to limit employees to clocking within a certain distance of IP addresses)
- Expense reporting
- Automatic feed to payroll
Red Flags in Timekeeping That Indicate a Problem
Identifying and addressing timekeeping issues early can save you from headaches and costly corrections down the road. Here are a few signs that it may be time to revamp your timekeeping system:
- Employee complaints or excessive time spent in manual or cumbersome processes
- Frustration related to the complexity of timekeeping or access to the system
- Frequent time corrections
- Uncertainty as to why corrections are being made and/or who made the corrections
- Inability to determine which project or cost center the hours are attributed to
- Payroll not reconciling to time records, resulting in delayed processing and future corrections
- Inability to identify work hours versus paid leave types
- Inability to identify hours worked on SCA and/or DBA contracts
Improper processes and inaccurate timekeeping records can quickly undermine the integrity of your data, create inefficiencies, generate compliance risks and ultimately impact your bottom line.
How Redstone Government Consulting, Inc. Supports Compliance-First Timekeeping
At Redstone Government Consulting, Inc., we understand that an HRIS is only as effective as the processes and configurations behind it, especially when compliance is at stake. That’s why we don’t just offer consulting; we provide a complete solution. As an authorized partner of UKG™, we sell, implement, and provide ongoing support for UKG Ready, helping clients build a timekeeping system that meets the operational demands of government contracting.
Our team works with clients to configure HRIS platforms with compliance built in from the start by addressing labor charging structures, SCA requirements, audit trails, and integration with payroll and accounting systems. Whether you’re implementing a new system or reevaluating your current setup, Redstone GCI ensures that your timekeeping processes support accurate reporting and long-term compliance.
