Counting Hours - payroll vs w-2/ vacation payoff

Do employers generally track hours separately from pay, ie W-2 pay?

So W-2 reports pay for pay date 12/31 of the prior year, paid on 1/5.

Employee had 970 actual hours worked in the current year, but when hours are reported alongside payroll, there were 1010 hours worked. 

Say the 12/31 hours reported on the 1/5 payroll are not included, but the terminee has 40 hours of vacation pay.

In both those situations, what do companies generally do, count the hours?

I found this in DOL Reg. 2530.200-2(c):

(4) In the case of hours of service to be credited to an employee in connection with a period of no more than 31 days which extends beyond one computation period, all such hours of service may be credited to the first computation period or the second computation period. Crediting of hours of service under this paragraph must be done consistently with respect to all employees within the same job classifications, reasonably defined.

Basically I was looking to see whether the hours have to be specifically performed in the actual year, versus what's on the payroll records.  Typically I would have asked a sponsor to lock in on "the actual 12 months" (such as hitting 1000 in their first 12 months, or double-checking whether to credit vesting for someone who came over on a census file with 998), but perhaps that's not absolutely necessary as long as it's done consistently.

So if you do not count that overlap at year-end, make sure you include any prior year overlap that hit in the beginning of the year. Also, if vacation pay was for the current year then those hours should also be counted for the current year - plan's statutory definition of Hour of Service should be clear on that.

39 minutes ago, CuseFan said:

Also, if vacation pay was for the current year then those hours should also be counted for the current year - plan's statutory definition of Hour of Service should be clear on that.

CuseFan - are you saying that when counting hours included towards a vacation payout, you would only include those hours that were accrued during the current year?

I would think most (if not all) employers reports hours based on pay-date so the census can be tied to the W-2s due the limitations of most payroll systems.  For payroll systems, once 12/31 hits the system closes and resets to the new year.  Very few payroll systems can reports that cross years.

In your case, the employee would have 1010 hours.