Companies that provide professional services rely on accurate project tracking and time allocation in order to scale their businesses. Many of these companies also use incentive programs and bonuses—some of which need to be applied to a prior month’s overtime.
Manual spreadsheet calculations are easy for companies that are just starting out, but as they grow they become vulnerable to all kinds of data entry mistakes and miscalculations. A misstep could impact profitability, fines from the government, or employee paychecks.
Incentive Pay Creates a Major Challenge
Like many professional services companies, Coastal Commerce Bank has overtime-eligible employees who can earn incentives throughout the year. To stay in compliance with the Fair Labor Standards Act (FLSA), these incentives need to be applied against overtime earnings in the period that the incentive applies to.
For example, Coastal Commerce Bank has a monthly “call-in” incentive. It’s posted in one month but it’s based on activity in the prior month. FLSA rules state that an employee who earns the “call-in” incentive is entitled to a pay adjustment for any overtime wages from the prior month—the month when the incentive was actually earned.
In addition, Coastal Commerce employees can earn quarterly and annual bonuses based on productivity. All of these different incentives need to be applied retroactively to the earned period to adjust overtime earnings.
Like many professional services companies, the payroll team at Coastal Commerce Bank was making these adjustments manually and with spreadsheets. In each pay period they spent days on this activity rather than investing into the company’s core business. And each time paychecks were issued, they risked handing out inaccurate paychecks.
It wasn’t clear at all how they would handle a potential audit.
Solution: Automating Payroll Processes
Coastal Commerce needed to automate their time and payroll services. Automation can free up to 12 hours per week so that you can focus on your core business instead of painfully entering manual calculations. It also provides accurate reporting to make audits easy.
Based on their business needs we worked with the payroll service to implement our Time Bank™ integration solution. Time Bank reads employee overtime hours and incentive pay across their three time frames (monthly, quarterly, annual). The application automatically calculates the proper overtime adjustments owed to the employees that factored in the incentives against prior period overtime pay.
Now, Coastal Commerce is confident that each employee gets their proper overtime earnings and eligible retroactive adjustments posted to their pay check. This automated process provides more accurate payroll, financials, and reporting in case of employee or government audit.
“IDI’s Time Bank fulfills our needs for FLSA overtime compliance by correctly calculating prior period adjustments,” said Brandy Markus, Human Resources/Marketing Coordinator at Coastal Commerce Bank. “The process works reliably each pay period and has become second nature to our team.”
Companies that use Time Bank never have to worry about miscalculated incentive pay or misallocating employee time. Time Bank automates it for them.
Check out this quick video to see how easy payroll can be.