21st Century Payroll for Adagio Tutorials - Payroll

Hours of Service Report

The Hours of Service report can be used as a tool for complying with the Affordable Care Act. The report can be run for various time spans, up to twelve months, depending on the ACA measurement period needed. You can select individual employees or view the report for different work hours classifications.

Section 1 – Employee Hours

Section 1 shows each of the selected employees’ actual “hours of service” on a calendar month basis as well as their classification with respect to full-time/part-time. For employees on weekly or biweekly payroll, the hours total for each calendar month is calculated using the weekly rule.

If an employee appears to have been classified incorrectly for the months shown on the report, that information will be noted in red on the report. For example, if an employee has worked full time hours (greater than 130 hours per month) for the span of the report, that will be noted in red. You can examine this information for accuracy and make corrections using Employee Adjustments.
If an employee is classified as ‘Variable’ but has worked for the full initial measurement period, then that employee’s work/hour classification should be changed to part-time or full-time.
For audit purposes, you can run the report for full time and part time employees only. (Variable employees generally aren’t counted for most measurement periods.)

Section 2 – Full Time Equivalent hours

The second section uses the information from Section 1 to calculate the number of employees. The number of employees determines if an employer is a “large” or ALE employer and therefore subject to ACA regulations. The number of employees is calculated by adding the full time (FT) and full time equivalent (FTE) employees.
Full time equivalent employees are determined by adding the hours worked per month of part time employees, capped at 120 hours per month and divided by 120. The report then shows the average number of FTEs for the number of months shown.
(Reference §54.4980H-2 Applicable large employer and applicable large employer member, section (c)(2) Calculating the number of FTEs.)