Timing of Hours for Vesting

[effingeh]

Hello!

Participant was hired on 6/30/25. Company pays bi-weekly and the first payroll in the system was 7/18/25 and for just 80 hours. As of the end of the year, this employee only showed with 960 hours in the system because the final payroll that included 12/22/25 - 12/31/25 was issued on 1/2/26 and applied itself to the 2026 hours.

Client is requesting to move the 80 hours from the 1/2/26 payroll and apply them to 2025.

Is there any rule that dictates if the hours are required to be applied in one year versus the other? While I think the hours should count for 2025 since that is when they were worked, my biggest issue with this is that the compensation earned on the 1/2/26 check counts toward 2026 and I feel like that should line up - But based on hire date and working full-time, I also feel this employee should get the vesting credit as does the client.

My only other thought is asking them what happened for the 7/4/25 payroll and why the EE didn't get 40 hours for the half-week they "worked".

Thoughts?

[John Feldt ERPA CPC QPA]

DOL regulations indicate that hours are based on the date worked (or the day for which pay was earned). Thus, hours worked in 2025 count in 2025, regardless of the payroll dates. 
 

Compensation differs and has an optional provision. Compensation is based on the date paid, unless the plan is written to use the “first few weeks” rule or “post year-end compensation” provision to pull in comp after year end and push out comp paid right after the plan year began.