Suppose a company employed some people in professional positions, for instance, scientists with master’s and doctoral degrees doing advanced technical work. The work requires independent judgment, irregular schedules, and occasionally attendance at meetings or other events during nights and weekends.
Suppose said company classified these employees as “exempt”, i.e. not entitled to overtime at time-and-a-half, and in fact did not pay these employees overtime at all except in special emergency situations when extra funds were available.
Then, suppose this company’s primary customer, which for certain reasons can exert tremendous pressure and in other situations has been able to excuse itself from many rules that others must obey, required the company to force its exempt employees to record daily time sheets showing work broken down to the nearest hour.
Can the company really require exempt employees to fill out hourly time sheets on a daily basis, notwithstanding the demands of the primary customer?
Yes, it can, and many companies do. Consider the situation where one employee may be working on projects for various clients. Even though the employee is exempt, his employer must be able to accurately bill the clients for his time.
Consider the situation where the supervisor wants to know how much time his employees are working on specific projects.
The company is entitled to require accountability of time spent from its employees, regardless of how they are paid.
Exempt employees are not required by law to have their time recorded, because exempt employees are not legally entitled to overtime laws, maximum hours in a day laws, etc. as laid out in the national Fair Labor Standards Act.
However, an employer can require any employee to fill out timesheets regardless of whether they are exempt or not. It has nothing to do with the law, but everything to do with effectively running a company. It’s about knowing where time is being spent. For example, how long does it take for project X? How much time is being spent on administrative tasks? How much time is being spent on education and employee development? Without time reporting, answers to these questions are pure guesswork.
In my company, all employees are required to fill out timesheet (online), even managers. There are two primary reasons for this: First, certain hours spent developing software is capitalizable which requires documentation of such hours; and second, some of our time is billable.
In the situation you describe, I can see how the customer would want to know how your company (the supplier) is spending your time on them. They simply want evidence that the hours being spent on them is legitimate. Recording time is the easiest way of providing that evidence.
I know the managerial reasons for wanting time records; I was asking about the legality of it. To be exempt, an employee must have discretion over how he spends his time. Requiring a time sheet to be filled out every day provides an employer with a tool and possibly an incentive to override that discretion.
Upon reviewing California labor law (my state), I think I have answered my question. To make a long story short, exempt employees may be required to fill out time sheets, but the time sheets cannot be used as a basis for calculating the salary.
I don’t think exempt means what you think it means.
Being an exempt employee does not necessarily mean they have discretion on how they spend their time. It only means that they are exempt from the Fair Labor Standards Act of 1938 (and amended in 1966 and 1986).
There are long lists of rules to use in determining whether or not a particular employee can be considered exempt or not. I’d list the basic rules, except it is irrelevant to your question.
As has been exhaustively covered here, exempts can be asked to fill out time sheets. However, in my experience, the more meaningless this requirement is, the more likely it is that this data will be noisy to the point of futility.
That is, if the employee know that some client is being billed by the hour for their time on a project, they’ll probably do a reasonably conscientious job of keeping track of their time. But if they suspect that it’s meaningless busy work or some administrator trying to justify his or her existence, then all the time sheets will appear suspiciously cut-and-pasted from the previous week, with project allotments randomly juggled to vaguely approximate what went on that week. And all the hours will mysteriously add up to precisely 40 (or 37.5 or whatever), mysteriously, week after week.
So true. So true. That’s why I have always advocated simplicity over all. Every time a manager wants a more detailed breakdown I ask them why. For what purpose are they going to use the data? Nearly every time, they back off from their request.
There is case law that talks about discretion specifically in relation to how many hours are spent on a particular task. If I have two different tasks to do in a week, I am allowed to decide whether to spend 10 hours on Task A and 30 hours on Task B, or 20 each, or whatever, within the maximum budgeted for each. An exempt employee cannot be told how many hours to spend on a given task. (He can, of course, be prevented from entering more hours on a timecard than the project budget permits, but that is bookkeeping only. The actual hours worked are up to the employee.)
I guess the key here is that having some discretion over how you allocate your time does not prevent your employer from requiring you to account for it.
I have worked for years as a contractor for various companies. Contractors are even more “exempt” (so to speak), including the stipulation that the contractor works on their own schedule. But virtually every client has required me to provide a detailed billing that shows how many hours were worked on each project – and often required me to record that information on their time reporting system as well as on my invoice.
Which makes sense to me. They want to be able to bill for billable time.
But beyond that, time records can be very beneficial for benchmarking. Managers can set better deadlines if they can look back and see how much time was spent on various aspects of previous, comparable projects. (Would that more managers actually did this!)
Bottom line: the law is designed to determine who has to be paid overtime. The law is not designed, and does not address, the issue of accounting for your time.
Hyperelastic, contrary to what my somewhat snarky comment earlier, I don’t mean to pick on you. I am just attempting to make sure that people correctly understand the differences between exempt and non-exempt employees. As the government tried to define these differences in the Fair Labor Standards Act of 1938, they did use the term “discretion” frequently to distinguish an exempt employee. Much, if not most, of this language still exists.
Therefore, I concede your claim that discretion is currently a criteria (one of many), that is used to determine whether or not a particular position is exempt or not. In some job definitions it is a necessary criteria, but in no case is it sufficient.
In reality, discretion is only a small part of what is used to make the determination. One problem is that in today’s world, most non-manufacturing jobs have a great deal of discretion. Hell, the maintenance guy in our office has as much discretion in how he spends his time every day as I do. As perhaps a consequence of this reality, the Department of Labor has recommended changes to Exempt definitions (2003), which eliminate some of this “discretion” criteria.
It occurs to me that you and I in fact may have a similar understanding of the subtleties. I am only expanding on this discussion to make sure that others aren’t inadvertently misled into a misunderstanding of what exempt means.
Again, all of this is only a tangent to your original time reporting query, which has been covered quite fully I believe.
