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Calvin, Giordano & Associates, Inc. <br />Notes to the Statement of Direct Labor, Fringe <br />Benefits and General Overhead <br />December 31, 2017 <br /> <br /> <br />6 <br /> <br /> <br /> <br />Note F – Labor Related Costs (Continued) <br /> <br />Vacation time accrues beginning the first pay. Vacation can only be taken after the employee has <br />successfully completed six months of employment All regular full time and part time employees are <br />eligible for paid vacation time. Vacation time accrues as follows: <br /> Service Time Vacation Days per Year <br /> Less than 1 year 10 <br /> 5 years or greater 15 <br /> <br /> <br />Paid Overtime <br /> <br />The Company compensates non-exempt employees for overtime at a rate of time and one- <br />half for all approved hours worked over forty (40) hours per week. If the employee works <br />less than forty (40) regular hours, they are compensated at straight time for overtime hours. <br />Regular hours do not include sick, personal, holiday or vacation time. The Company also pays <br />straight time to exempt employees for time worked in excess of forty (40) hours per week. The <br />Company has elected to exclude Premium Overtime from the Direct Expense Rate and from the <br />Overhead Rate calculations, both for Home and Field. <br /> <br />Uncompensated Overtime <br /> <br />The Company did not pay certain salaried employees for time worked in excess of forty (40) hours <br />per week. The Company computes an average labor rate for each employee based on the <br />individual’s salary divided by the number of total hours. This rate is applied to all cost objectives <br />worked on during the period, including paid absences and indirect activities, to distribute salary <br />costs. The Company also pays straight time to exempt employees for time worked in excess of forty <br />(40) hours per week. <br /> <br />Highly Compensated Employees <br /> <br />We used 2017 National Compensation Matrix as our basis for estimating reasonable total <br />compensation for all executives. The circular uses position descriptions and functions, as well as <br />firm size, to determine reasonable compensation. There was a $2,290,966 disallowance for executive <br />compensation. <br /> <br />Bonuses <br /> <br />The Company paid bonuses. We looked at bonuses, and there were $1,896,244 of unreasonable bonuses <br />paid in the current fiscal year. <br />73