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THIS WEEK'S E-TIP: FLSA Recordkeeping Violations Bite Employers Q&A
Published by Personnel Policy Service, Inc.
"Your Policy and Compliance Experts Since 1972"
THIS WEEK'S E-TIP: FLSA Recordkeeping Violations Bite Employers Q&A

Sloppy wage and hour recordkeeping can result in big verdicts against
employers for unpaid wages and significant penalties. Do you know
what information you need to record about your employees' work time?
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THIS WEEK'S E-TIP: FLSA Recordkeeping Violations Bite Employers Q&A

Q: I recently heard at a seminar that employers can be liable for
recordkeeping violations under the Fair Labor Standards Act (FLSA).
Our wage and hour records are incomplete. Could this be a problem?

A: Absolutely. While most employers do not think of recordkeeping
violations as being a big issue, a recent district court verdict and
Department of Labor (DOL) settlement indicate that you could face big
penalties if you are not keeping accurate records of your employees'
work time.

Without proper records, you cannot be sure you are paying your
employees for all time actually worked, including overtime, and you leave
your organization vulnerable to expensive wage and hour claims. (Click
here for free FLSA Report
on computing employee hours worked.)

A district court in Maryland recently determined that a nonprofit
organization operating community living facilities owed over $525,000 to
almost 400 employees in back wages and penalties. The court found
that the organization failed to keep proper timesheets for employees and
did not pay wages and overtime owed. (See Chao v. Self Pride, Inc.,
2006 U.S. Dist. LEXIS 18865 (D.Md. 2006), affirmed, 2007 U.S. App.
LEXIS 11543 (4th Cir. 2007).

And, in 2005, the DOL settled a case against a New York convenience
store distributor for more than $831,000 in damages involving more than
100 employees. The DOL agreed with a court's determination that the
employer had failed to keep proper records and did not pay overtime
appropriately over a two-year period.

Clearly, recordkeeping violations can be expensive. So, you need to
make sure that you understand your obligations. Here is an overview of
the FLSA's recordkeeping requirements.

The FLSA requires covered employers to maintain basic payroll and
other records for each employee, explained in the FLSA regulations at
29 C.F.R. §§516.1, et seq. The regulations do not specify any particular
form of records.
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In general, 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 or symbol, 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. Sex and occupation;
  5. Time and day of the week when the employee's workweek
  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 additions to or deductions from wages for each pay period;
  8. Total wages for each pay period, date of payment, and pay
    period covered by the payment;
  9. Certain collective bargaining agreements, plans, and trusts;
    employment contracts; and notices of the Wage and Hour Administrator;
  10. Sales and purchase records for employees who are subject to
    minimum wage requirements.

In addition, 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 cards or sheets, and records of
    amount of work produced by each employee;
  3. Order, shipping, and billing records; and
  4. Records of additions to or deductions from wages paid.

As the employers found in the cases discussed above, if you do not keep
proper records of work hours, the DOL and courts may rely on employee
testimony to establish the number of hours worked. (Click here for free
FLSA Report
on computing employee hours worked.) Many state wage
and hour laws also require employers to keep certain payroll records and
should be consulted.

^^^^^^^^^^^^^^^^^^^^^ From Your HR Matters E-Tips Editors ^^^^^^^^^^^^^^^^^^^^^

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Subscribers to the Personnel Policy Manual and HR Policy Answers on
CD can find more information on the FLSA recordkeeping requirements
in Hours of Work, Chapter 207, note 22.

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