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Why New Overtime Laws Are Driving Employers to Analyze Labor Hours

“Labor Hours” is the amount of time an employee spends working and getting paid. Measured as a unit of work carried out by one person in one hour, you can think of labor hours as effort = outcome.

Historically, labor hours are measured to evaluate workforce productivity and the resulting cost to a company. More recently, companies are measuring labor hours because of potential liabilities. New laws that go into effect December 1, 2016 governing previously exempt employees’ rights to overtime pay have employers on alert. ZeroedIn clients are asking for workforce analytics on labor hours to look for places where they may be liable for overtime pay.

Labor Hours Metrics

What gets measured when we talk about labor hours? Metrics are related to salary and all the employee payment categories included in a company’s benefits:

  • Exempt and non-exempt employee regular hours
  • Overtime and/or double-time hours
  • Vacation hours taken
  • Vacation pay received (this benefit obligates companies to double pay: labor hours + vacation hours accrued but not taken as hours off)
  • Holiday hours
  • Sick leave
  • Jury leave
  • Bereavement leave

With the salary threshold for overtime pay doubling next month, companies are seriously looking across all those labor-hour categories. They are turning to workforce analytics to justify paying for overtime, looking to see where the labor hours are accruing and why, and where they can contain costs.

Identify Exposure to Overtime Through Employee Analytics

For example, we have an insurance company client that is using ZeroedIn to monitor overtime labor hours in functional areas (verticals) such as benefits paid out to clients. By measuring at this macro aggregate level, we are helping them identify potential areas of concern. One interesting early outcome is that, by simply announcing to employees that the company is measuring overtime, managers have reacted by reducing overtime labor hours among their supervisees already.

Workforce Analytics Identify The Problem

What does your company want to learn about its labor force? Contact ZeroedIn to learn how the workforce analytics we provide can help your company contain costs.