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Payroll records: What to track (and for how long)

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in Leaders & Managers,Management Training

Here’s a cautionary tale to consider if you’re planning to upgrade your time card to a high-tech electronic system: A Pennsylvania branch of United Cerebral Palsy did such a switch, but because of a glitch, more than 100 employees either weren’t paid at all or had mistakes in their checks.

Plus, because the system failed to track employees’ hours, the organization was unable to bill clients. The lesson: Have a backup system ready to go to track employees’ hours.
If you’re like most employers, your payroll is strewn with misclassified employees and other FLSA mistakes – ticking time bombs that could cost you a fortune. Ensure your payroll records are legal and accurate. Here's how...

Violating Fair Labor Standards Act (FLSA) timekeeping rules can be a costly error, as the hospital in the case above discovered. The FLSA requires employers to keep at least the following basic payroll records for nonexempt employees:

  • Full name, address and Social Security number.
  • Sex, birth date (if under 19) and occupation.
  • Time/day of week when employee's workweek begins.
  • Hours worked each day, and total hours worked each workweek.
  • Basis on which employee is paid (e.g., "$6 an hour," "$220 a week").
  • Regular hourly pay rate, and total daily or weekly straight-time earnings.
Did you know that you can be held personally liable if you sign off on payrolls? Make sure you're in compliance with this comprehensive guide on managing overtime, FLSA Compliance Guide: A Practical Reference Tool on Wage-and-Hour Law
  • Total overtime earnings for the workweek.
  • All additions to or deductions from the employee's wages.
  • Total wages paid each pay period, and date of payment.

Retention periods: Preserve your payroll records and collective-bargaining agreements for at least three years. Records on which wage calculations are made (timecards, work schedules, etc.) should be retained for at least two years.

To see if you’re walking into an FLSA trap, test your knowledge:
  • When an hourly employee travels across town or across the country, which hours are paid? What if a delayed flight causes an unexpected overnight stay?
  • If employees are required to change into a uniform at work, must you pay them for that time? If so, how s-l-o-w-l-y can they change clothes while the clock is running?
  • No matter how many times you tell employees to punch in and out, they occasionally forget. What recourse do you have with repeat offenders?
  • Your exempt employee went on vacation but occasionally checked e-mail from the beach. Can that later be used as evidence in an overtime case?
  • A management trainee works alongside hourly workers for his first week. Does that put his FLSA exemption in jeopardy?
Get these answers when you get the guide...

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