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[Author: Julie Taylor, Accountant/Human Resources Coordinator, 2015 | Keywords: Human Resources, Recordkeeping]

As an employer, poor recordkeeping could cost you serious penalties if you do not have accurate records of your employees’ work time. Read on to discover what records you are required to keep and for how long.

While many employers may not think of recordkeeping violations as being a big issue, without proper records, you cannot be sure you are paying for all time actually worked, including overtime. You may leave your organization vulnerable to both employee discontent and costly wage and hour claims, as a result.

Both state and federal wage and hour divisions take recordkeeping very seriously and are including penalties for recordkeeping violations when they find overtime and other wage and hour problems. Furthermore, the federal Department of Labor (DOL) has implemented initiatives that make it easier for employees to track their work hours, including a calendar (see link below) for employees to track their regular work hours, meals/break time, and any overtime hours. As a result, you need to put an eminent priority on getting your recordkeeping in compliance.

Generally, employers should retain for at least three years, from the last date of entry, payroll records containing the following information:

  1. Each employee’s name, as used for Social Security, and the employee’s identification number, if used in place of the name on any payroll record.
  2. Home address and zip code.
  3. Date of birth for employees under the age of 19.
  4. Occupation and sex.
  5. Day of the week and time when the employee’s workweek begins.
  6. Regular rate of pay for any week when overtime is worked, hours worked each workday and total hours worked each workweek, total daily or weekly straight-time earnings, and total overtime compensation for the workweek (this requirement applies only to nonexempt employees).
  7. Total deductions from or additions to wages for each pay period.
  8. Total wages for each pay period, date of payment, and pay period covered by such payment.
  9. Certain collective bargaining agreements, trusts, and plans; employment contracts; and notices of the Wage and Hour Administrator.
  10. Purchase and sales records for employees who are subject to minimum wage requirements.

Furthermore, you also should keep supplementary basic records for all employees for at least two years. These records include:

  1. Wage rate tables.
  2. Work time schedules, time sheets or cards, and records of amount of work produced by each employee.
  3. Order, billing and shipping records.
  4. Records of deductions from/additions to wages paid.

The record retention requirements stated in the FLSA are minimums. Most legal and HR experts suggest that employers maintain their payroll records through the worker’s employment plus an additional five to ten years to ensure they are accessible if a claim is filed.

Just in case you, as the employer, are not keeping accurate records, the DOL encourages employees to keep their own separate time records by providing the “Work Hours Calendar” for employees (online at http://www.dol.gov/whd/FLSAEmployeeCard/calendarR5Web.pdf ). The calendar was launched in 2010 “to help workers make sure they are properly paid at the end of the work week.” The Work Hours Calendar counsels employees to record when they arrive at work, actually start working, stop working, leave work, take leave, and take meal/other breaks. The Work Hours Calendar is even available as a free Apple smartphone app for employees.

Even if only one employee is alleging a single FLSA violation, it is important to remember that the DOL can, and often will, investigate all of your relevant records to search for other possible violations. Furthermore, if you are targeted as part of one of the DOL’s “ongoing enforcement initiatives,” all of your pay records may be fair game. In these situations, you may have to produce time and payroll records from the previous two or three years.

Remember, too, if your establishment is found to have violated the FLSA because you have inadequate records and cannot defend against an employee’s own time records, your establishment likely would face not only back wage payments but also civil monetary fines. And, just to make matters more interesting, the FLSA can impose personal liability for decision-makers, including imprisonment and fines for management employees found responsible for the violations. So, make sure your payroll records are accurate and in order. It could, very well, save you valuable time and money.