Make Workforce Management Work for Employers, Employees
Remember when we were kids and watched “The Flintstones”? At the beginning of each episode, Fred slid down and jumped off his dinosaur construction crane when the quarry foreman blew the whistle to stop work. At that time, employers like Mr. Slate could rely on a whistle or an old time clock to help track paid time worked (or in Fred Flintstone’s case a “bird siren”). However, time and attendance has certainly evolved since the prehistoric era of Fred Flintstone working at Slate Rock and Gravel Company.
When “The Flintstones” was first developed back in the early 1960s, workforce management wasn’t very sophisticated. At that time, the Fair Labor Standards Act of 1938 (FLSA) was the predominant wage and hour law of the land, and only a few states had their own overtime and minimum wage laws. The manufacturing industry dominated the U.S. economy, and unions were the most popular advocate for workers’ rights and benefits.
Fast forward to the early part of the 21st century, and we find the economic landscape quite different—not only in the United States but around the world. The economies of the developed world are now dominated by the service sector, and governments are the main employee advocate in most Western democracies. As a result, payroll expense as a percentage of total operating expense has increased over the years to make up as much as 50% of employer costs. In addition, as state and local governments continue to pass employee-friendly laws requiring additional benefits, employers can no longer rely on a whistle or time clock to track when employees start and stop their workdays.
In the same way payroll has evolved over the years, time and attendance is evolving into workforce management, encompassing not only time-tracking functions but also budgeting and scheduling, time-off tracking, and talent management, to name a few. Workforce management isn’t simply a new module in a payroll or human capital management (HCM) platform but a developing discipline requiring a specialized skill set to manage the various complexities of ever-changing regulatory requirements. Employers that embrace and invest in this new discipline may find a surprising return on their investments.
The former Speaker of the U.S. House of Representatives, Thomas “Tip” O’Neill, once said all politics is local, which has become the case for wage and hour laws. Over the past 15 years, state and local governments have passed wage and hour laws related to:
- Minimum wage and overtime
- Paid sick and family leave
- Parental leave
- Wage-theft protection laws
- Predictive scheduling
- Break time for nursing mothers
- Meal and rest breaks
- Split-shift hours
Workforce management processes and software need to adapt and incorporate the above regulations and house additional data to ensure employer compliance. For example, California requires employers to pay employees’ rest periods at the regular rate of pay for piece-rate employees, requiring integration among various software to collect and calculate the proper rate to feed payroll and ensure the rest-period time is paid correctly. Integration among workforce management, human resource, and payroll software will help employers manage regulatory changes in the years ahead by sharing various pieces of data needed to comply with new laws.
Sick and Tired
One of the fastest-growing regulatory requirements over the past few years has been the passage of paid sick leave laws. The lack of federally mandated paid-time-off (PTO) legislation has led to the passage of state and local paid sick leave laws to meet the demands of their workforces with two working parents or a single working parent. Currently, eight states and 31 cities and counties have passed paid sick leave laws, with more expected in the coming years. The common components of these laws typically fall into the following categories:
- Waiting period
- Re-hire reinstatement
- Accrual rate
- Accrual, carryover, and use limits
- Pay rate
Unfortunately, not all laws are consistent. Some require paid sick leave to be accrued at one hour for every 30 hours worked, while some require one hour for every 40 hours worked. Some limit accrued time to 40 hours per year, and some limit accrual hours to 72 hours per year. Employers need to ensure they have separate PTO plans set up in their time-off and attendance software to accommodate each of the different plans. If two plans are similar today, one jurisdiction may change the requirements in the future, causing issues if there is more than one jurisdiction assigned to one plan. It’s also a good idea to set up employee pay rates in the time and attendance system, so pay-rate calculations can be done before the amounts are imported into the payroll system. Many jurisdictions require paid sick leave to be calculated using the employee’s regular rate of pay, so having the hourly pay rate for base pay and shift differential will help with this calculation.
Timing Is Everything
Workforce management processes have dramatically changed over the years, based on laws enacted to protect employees. The ability to define workweeks, workdays, and employee shifts is crucial in workforce management systems, in case employee shifts cross workweeks and workdays. The most notorious state for wage and hour requirements is California. Overtime is calculated on a daily and weekly basis instead of simply a weekly basis as required by the FLSA. Shifts would need to be split among different workdays if they intersect to ensure daily overtime is calculated correctly. New York requires an additional hour be paid for employees working split shifts longer than 10 hours, as described in Part 142 of the Minimum Wage Order for Miscellaneous Industries and Occupations. Oregon is the first state to pass a statewide predictive scheduling law, Senate Bill 828, which only impacts retail, hospitality, and food-service employers with at least 500 employees. The requirements become effective July 1, 2018, so it’s important for employers in these industries with employees working in Oregon to be prepared for the new requirements. Below are some of the requirements impacting workforce management:
- Good-faith estimate of work schedule
- Voluntary standby list
- Advanced notice of work schedule
- Right to rest between shifts
- Right to input into work schedule
- Compensation for work-schedule changes
New York City, San Francisco, and Seattle have already passed predictive-scheduling ordinances.
By taking advantage of properly configured workforce management processes and software, employers can find ways of leveraging new wage and hour laws. For example, employers could give employees greater flexibility to set their own hours and swap shifts with their coworkers if something comes up. Most companies offer PTO benefits typically managed by workforce management software. Approval for PTO usually falls on the employee’s manager and, most times, the approval is granted as long as there is coverage for the employee’s area of responsibility. Many software features include the ability to configure notifications that automatically alert managers of coverage issues. For example, if an employee submits a PTO request and someone already has PTO approved for the same time, the system could notify the employee that the time they are requesting may need additional approval. In those instances, the employee may choose to request a different time period off, sparing the manager from denying the request. The ability for the system to automatically notify managers about a gap in coverage would save time and reduce errors because managers wouldn’t have to manually track their employees’ PTO requests, which are often tracked in spreadsheets.
Flexibility is the key to an effective workforce management program. While the software should be configurable enough to allow for the various regulatory requirements mentioned above, that’s not the only consideration. Employees should understand that the primary goal for everyone in the company is to make the business run well. Without a profitable business, no one would have a job. Employers should understand employees have their own lives to manage and sometimes have to attend to personal obligations outside of work. Management flexibility with these requirements would engender greater trust among employees. Workforce management bridges the two sets of requirements by setting guidelines for both employers and employees. Increasing productivity and regulatory compliance from an employer’s point of view and work-life flexibility from an employee’s point of view should be the main goal for every workforce management program. Yabba dabba doo!
Brian Garrett, CPA, CPP, is Compliance Advisor for Ultimate Software and a member of the Board of Contributing Writers for PAYTECH.