Uncompensated Overtime & How It Impacts Government Contractors
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Uncompensated Overtime & How It Impacts Government Contractors 
construction; government contractor and technology  business advisory 

 

By: Kristen Soles
Abstract:

Many government contractors have found themselves in a “discussion” with DCAA auditors regarding uncompensated overtime at one point or another. Uncompensated overtime is the unpaid hours worked over the standard 40 hours for exempt employees. DCAA is concerned about how these hours are recorded. Total time accounting requires all hours worked to be recorded and prorates the salaried cost of the individual across all charges.

 

This is the standard amongst defense contractors for recording time and the most accepted method by DCAA. Without a total time accounting policy, it is up to the employee’s discretion how hours will be charged to the government. This flexibility leaves the door open for the possibility of unfairly increased profit margins, distorted pool bases, and irritable DCAA auditors. Total time accounting is the standard for a reason.

Without a total time accounting policy, it is up to the employee’s discretion how hours will be charged to the government.

 

 

The DCAA audit manual, or DCAM, cites in that “If it is determined that government contracts are being overcharged by a material amount due to an inequitable allocation of costs because the contractor does not Labor Accounting for Government Contractors record all time worked, the contractor should be cited as being in noncompliance with FAR 31.201-4 and CAS 418.” Download the PDF of the full article below.