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Federal Register / Vol. 86, No. 95 / Wednesday, May 19, 2021 / Rules and Regulations
1. Comments About the Deadline for Entering Time Seven commenters stated that the time period by which an employees time needs to be entered into the system should be by the end of the employees pay period usually every two weeks or bimonthly. One recipient commenter stated that it currently asks its staff to enter time at least every 14 days and that they believe this satisfies the current requirement that time records be entered contemporaneously with the work being done. Another commenter stated that having a deadline to enter as the end of the pay period would address the reality of legal work while providing a uniform definition.
NLADA did not specifically suggest that the end of the pay period be the deadline by which to enter time. Rather, they encouraged LSC to develop as long a timeframe as possible for employees to enter time. One commenter echoed this sentiment, asking for the deadline to be as liberal as possible, but no less than 30 days. According to this commenter, this would avoid instances of noncompliance and allow programs to meet requirements of various funders.
Response: LSC adopts the proposed rule as final with changes. LSC adopts a deadline for entering time that is the end of the recipient employees pay period.

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2. Comments About Proposed Section 1635.4a and Requirements for Timekeeping Records/Integrated Basis Three grantees and NLADA expressed concern about the proposed changes to this part of the section. The comments indicated that recipients share confusion about what integrated basis means. On top of that, the example provided in paragraph a7ii raised concerns that costs would need to be allocated to a specified funding source by every attorney at the moment the attorney enters time.
NLADA stated that its stakeholders did not know what LSC intended by the term integrated basis. However, they also said that if the term just means that LSC and non-LSC work be located in the same case management system, then they have no objection. One commenter said that if integrated basis means that LSC will require that other funds and other types of grants be integrated into a single payroll system, the requirement would be a problem for them.
The example that LSC provided in 1635.4a7ii said: For example, if a recipient employee conducts a legal information session on filing a pro se
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divorce petition, the employee could record pro se divorce group information session, 1.5 hours, LSC grant. Several commenters expressed alarm that this example indicated that LSC expected grantee employees to make funding allocations up front when they are entering their hours. They stated that this would be a problem because funding allocations are not made at that stage or by individual attorneys.
As a separate concern with this section, one commenter pointed out a discrepancy that arose in this section of whether matter includes indirect services. They wrote:
Section 1635.2 states that a Matter may include indirect services. Section 1635.4a7ii provides, however, that a recipients time system must contain for matters or supporting activities, the amount of time and type of activity on which a recipient employee spent time and sufficient information to link the activity to a specific award. This implies that matters include only direct services since indirect services may not be linked to a specific award.

One commenter, also noting this as a potential point of confusion, proposed changing the language of the rule to reflect how grantees allocate costs to link the activity to a specific award or indirect cost amount.
Response: LSC adopts the proposed rule as final with changes. LSC will clarify that LSC and non-LSC funds need to be integrated into the same case management system, not the same payroll system. LSC will remove the part of the example in 1635.4a7ii that describes the attorney entering and also allocating the time, as this does not reflect how time is allocated in recipient organizations. Finally, LSC will insert language in 1635.4a7ii clarifying that matter does include indirect services.
3. Comments About Paragraphs b and c NLADA, referring to paragraphs 1635.4b and c, took no position on whether to state DOLs regulations within LSCs regulations. They said that while it seemed unnecessary, it imposed no new burdens on LSC recipients.
They did discuss general concerns with looking towards Uniform Guidance to regulate recipients, as the relationship between LSC and its recipients is a unique one, and the Uniform Guidance will never be a perfect fit for LSC
programs. No other commenters addressed this section.
Response: LSC adopts the proposed rule as final without changes.

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4. Comments About Paragraph d and Recording Time in Particular Time Increments Most commenters were either silent on this proposed change or supportive.
NLADA endorsed LSCs removal of 15minute time increments but wanted LSC
to remove the language that it recommends still using increments of no more than 15 minutes. One commenter stated something similar, writing:
Essentially, by maintaining this language, LSC is continuing to encourage this inefficient practice. Also, a recommendation from LSC carries weight. It conveys that this is a best practice and this surely cannot be the intent here.

Response: LSC adopts the proposed rule as final without change. LSC will maintain the recommendation that grantees enter time in 15-minute time intervals, as this is an increment of time that is small enough to capture the minimum amount of time an employee spends on a case or matter, but not so small as to create a significant time entry burden on employees subject to part 1635.
5. Comments About Paragraph e, the Removal of De Minimis Language and Quarterly Basis Certification LSC received two comments about proposed paragraph e. NLADA and another commenter wanted LSC to clarify if the exception for de minimis activities still exists because the language was removed in the proposed revision. The commenter said that having the exception makes the rule clearer. They expressed the concern that in deleting the language, this might be interpreted as deleting the exception.
Response: LSC adopts the proposed rule as final with changes. LSC will reinsert the de minimis exception to clarify that the exception still exists.
1635.5 What are LSCs standards for ensuring the proper allocation of employee compensation costs across awards?
LSC proposed to create a new section requiring recipients to have a method for ensuring the accuracy of timekeeping records and proper allocation of salaries and wages charged to awards as direct costs.
Comments: Eight commenters raised significant concerns with LSCs proposed changes in this section.
NLADA flatly opposed the changes, saying:
The proposed 1635.5 is an overly prescriptive solution that attempts to impose a one-size-fits-all approach to direct cost allocation. It would require extensive
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