Exempt EE's working LESS than 40 hours in For Beginners Only Posted 4 hours ago · Report reply 3 hours ago, rfpro said: -They don't need to use "PTO" hours for that time because they are exempt and still get paid the full day, so what code should be used to fill the 2 missing hours from Monday? Or, Should I make people use PTO for that time? I have been in this business since Reagan was President. I have had many employers and been a consultant to many, many more companies. I have never, ever, seen a Government contractor permit an exempt employee to avoid using PTO by claiming that they still get paid for the full day, so why should they use PTO when they don't have to? (I have seen Comp Time banks used, but that's not your scenario.) Employees can "make up" time by working OT on other days in the week, but the number of recorded hours in a work week is never less than 40 (alternately never less than 80 in a two-week pay period). Given your scenario, the impact of the practice of not recording PTO to a Fringe Benefit account is to artificially decrease the Fringe Benefit rate and to increase the cost of the other labor hours. Depending on the labor distribution and contract mix, that practice could be inflating costs charged to certain contracts while decreasing costs charged to other contracts. Maybe; it's not possible to say with any certainty from afar. If I found a contractor using that practice, I would advise them that their timekeeping system was not adequate for cost-reimbursement or T&M contract types.