Employee record keeping requirements must include proper time and payroll records for it's workers. The Fair Labor Standards Act, as well as most state wage and hour laws, are the ones who determine what is or is not “proper”.
In January, the USDOL (United States Department of Labor) announced that it had recovered $ 1 million in unpaid overtime from federal defense contracts in California. This recovered money was based, in part, on the DOL's findings that the contractors had violated the record keeping requirements, which are part of the Fair Labor Standards Act (FLSA). Specifically, the DOL found that the contractors in question had failed to maintain proper time and payroll records for it's workers.
The Fair Labor Standards Act sets minimum wage, overtime, record keeping, and youth employment standards. Unless exempt, covered employees must be paid at least the current minimum wage and not less than one and one-half times their regular rate for overtime hours worked.
Employers are also required to display an official poster outlining the provisions of the Fair Labor Standards Act
Every covered employer must keep certain records for each non-exempt worker. The Act requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the.wages earned. The law requires this information to be accurate. The following is a listing of the basic records that an employer must maintain:
- Employee's full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of week when employee's workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee's wages are paid (eg, “$ 9 per hour”, “$ 440 a week”, “piecework”)
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee's wages.
- Total wages paid each pay period.
- Date of payment and the pay period covered by the payment.
The US Department of Labor indicates that an employer must keep payroll records and collective bargaining agreements for a period of three (3) years. Additionally, records on which wage computations are based, time cards, wage rate tables, records of additions to or deductions from wages, and work and time schedules need to be retained for two (2) years. These records must be available for inspection by a DOL Auditor, who may the employer provide extensions, computations, or transcripts of the records.
Employers may use any timekeeping method that they choose, as long as those records are complete and accurate; acceptable methods include the use of a time clock, appoint a single employee to be a “timekeeper” and record the hours worked by all other employees, or tell their the employees that they are responsible for documenting the hours that they work.
For employees who work a fixed schedule that seldom varies, the employer may keep a record showing the exact hours worked on a daily and weekly hours and indicate that the specific worker did follow the schedule as shown. If, however, the employee works a shorter or longer period that the schedule shows, these hours must be documented as an exception.
From my own past experiences, a contractor who performs work on Federal or State funded construction project subject to prevailing wage / Davis Bacon laws should keep records for 3 years after the project is complete.