Wage and Hour Recordkeeping Requirements
Federal and state wage and hour laws may subject you to recordkeeping requirements. If you or your employees are covered, you'll want to familiarize yourself with the required information that must be kept, how long it must be kept and if a specific method of retention is required for compliance.
If you're an employer who is covered by the federal Fair Labor Standards Act (FLSA), or if you have employees who are covered by federal wage and hour provisions, you are subject to rules that require you to maintain and preserve records. If your employees or independent contractors are exempt from the federal law, you'll have to keep records to prove that fact. Employers must also be sure to comply with recordkeeping requirements pursuant to state wage and hour laws, which may differ from federal requirements.
To properly comply with FLSA recordkeeping requirements, you need to know what kinds of information you should retain for nonexempt and exempt workers, employees who work at home, and tipped employees, as well how to store and keep your records.
Employers who are subject to the FLSA only for individually covered employees need to keep records only for those employees who are engaged in commerce or the production of goods for commerce.
On the other hand, employers covered by the FLSA on an enterprise basis must keep records for all of their employees, including those whose activities are not tied in with commerce or production for commerce. All the employees of a covered enterprise are encompassed by the law; even if they come within a particular exemption, special records are required.
Records For Nonexempt Employees
Federal wage and hour laws require that your records show the following for each nonexempt employee (in other words, those who must be paid at or above the minimum wage, and who must be paid time-and-one-half for overtime):
- name in full, as used for Social Security recordkeeping purposes, and, on the same record, the employee's identifying symbol or number if used in place of name on any time, work, or payroll records
- home address, including zip code
- date of birth, if the employee is under 19 years of age, for child labor purposes
- gender of the employee (employee's gender identification is related to the equal pay provisions of the FLSA)
- occupation in which employed
- time of day and day of week on which the employee's workweek begins (if all employees have a workweek beginning at the same time on the same day, a single notation of the time of the day and the beginning of the workweek for all employees will suffice)
- regular hourly rate of pay for any workweek in which overtime compensation is due, including:
- an explanation of pay by indicating the monetary amount paid on a per hour, per day, per week, per piece, commission on sales, or other basis
- the amount and nature of each payment that is excluded from the regular rate
- hours worked each workday (any fixed period of 24 hours) and the total hours worked each workweek (any fixed regularly recurring period of seven consecutive workdays)
- total daily or weekly straight-time earnings or wages due for hours worked during the workday or workweek, not counting premium overtime compensation
- total premium pay for overtime hours (which excludes the straight-time earnings for overtime hours referred to in the previous item)
- total additions to or deductions from wages paid each pay period, including employee purchase orders or wage assignments; also, in individual employee records, the dates, amounts, and nature of the items that make up the total additions and deductions
- total wages paid each pay period
- date of payment and the pay period covered by the payment
- if the employees are working under a special certificate that allows you to pay them a sub-minimum wage, your records must note that fact
Exempt Employee, Homeworkers and Tipped Employee Recordkeeping
Different recordkeeping requirements apply to exempt employees, homeworkers and tipped employees under federal wage and hour law.
Exempt Employee Records
Even though you may have employees who are exempt under the federal FLSA, you are not exempt from keeping records on them under the FLSA. Records are required to determine whether you have met the necessary conditions in classifying an employee as exempt.
If your employees qualify as exempt because they are classified as executive, administrative, and professional employees, you must keep the following information on them:
- home address
- date of birth, if under 19 (to comply with child labor provisions)
- gender (to comply with equal pay provisions)
- time of day and day of week on which the employee's workweek begins
- total wages paid each pay period
- date of payment and the pay period covered by each payment
Because these employees are not paid by the hour, you do not — and should not — keep track of the number of hours they put in. Doing so could make it seem to a wage-hour auditor that you are indeed basing pay on the number of hours worked, which would mean that the employee was not exempt and that you might end up being liable for overtime for that employee.
A homeworker is any person who produces goods for an employer from a home, apartment, or other residential establishment. Where the homeworker gets the materials--either from the employer or elsewhere--does not change the homeworker's status.
You must keep the following records on each of your homeworkers:
- home address
- date of birth, if under 19, to comply with child labor requirements
- with respect to each job or lot of work:
- date on which work is given out to worker and amount of work given out
- date on which work is turned in and amount of work turned in
- type of articles worked on and operation performed
- piece rates paid
- hours worked
- wages paid
- Social Security deductions made
- date of wage payment and pay period covered
- with respect to each week:
- hours worked
- wages earned
- extra pay due for overtime
- total wages earned each week
- Social Security deduction made
- name and address of each agent, distributor, or contractor and the name and address of each homeworker who works with each agent, distributor, or contractor
- record of retroactive payment of wages
Records For Tipped Employees
If you have any employees who customarily receive tips from customers, patrons, or other third parties, in addition to the information you would keep for nonexempt employees, you're required to keep the following:
- a symbol, letter or other notation placed on the pay records that identifies each tipped employee
- weekly or monthly amount of tips reported by the employee
- the amount by which the wages of each tipped employee have been deemed to be increased by tips
- hours worked each workday in any occupation in which the employee does not receive tips and the total daily or weekly earnings for those times
- hours worked each workday in any occupation in which the employee receives tips and the total daily or weekly straight-time earnings for those times
Employee Record Retention and State Recordkeeping Rules
Federal law requires you to retain your wage and hour records for a specific length of time and accessible for inspection. Your state may also have recordkeeping requirements based on wage and hour laws.
Preserving and Retaining Your Records
Your FLSA records must be kept for three years from the date of the last entry you made on them. Supplementary records (including basic employment and earnings records; wage rate tables; order, shipping, and billing records; and records of additions to or deductions from wages paid) must be kept for two years.
The federal payroll tax laws require you to keep records related to payroll and withholding for a minimum of four years after the due date of the relevant tax return. Therefore, it will generally be easier to just keep everything for four years (or even longer, if your state's law requires it).
The federal government has certain requirements related to how and where you keep your records. According to those requirements, you must:
- Keep your records at your place of business or at an established central recordkeeping location.
- Keep your records safe, accessible, and open to inspection and transcription at any time by auditors from the Wage and Hour Division.
- If your records are kept at a central location apart from your place of business, make the records available at the place of inspection within 72 hours after notice from the Wage and Hour Division.
- Make any extensions, re-computations, or transcriptions of your records and submit them to the Wage and Hour Division, if the auditor makes such a request in writing.
The law does not specify what form your records should take. Whatever method you use is sufficient if the records establish the information or data required by law. You may choose to keep the records on paper or on your computer.
If you keep your records on your computer, make sure you have a backup copy. It's a simple way to avoid the devastating implications of losing this important information!
Keeping "adequate" records. Organization is key in keeping records that are considered adequate. Records will not be considered adequate if the specified information must be computed from scattered, unrelated, or unintelligible sources. So, having a bunch of sticky notes in a folder that record your employee's information will not be considered proper recordkeeping.
State Laws on Recordkeeping
In addition to federal recordkeeping requirements, some states have their own requirements for keeping and storing records related to their wage and hour requirements.
Be aware that your state's requirements are separate from federal law, and one will not override the other. If your state requires you to store records for a longer time period, only those records related to complying with your state's wage and hour requirements must be retained beyond the federal FLSA requirement of three years. However, for practical purposes, it's best to keep all your records for the longest time period specified by the laws that apply to you. In other words, if your state's requirements are less demanding, you must still keep all necessary records for three years to comply with federal law.
Consult our state map for wage and hour recordkeeping laws in your state.
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