Payroll records and FLSA: Could I be personally liable?

Q. Let’s say I do the payroll for a company and know that we are misclassifying employees (exempt vs. nonexempt; independent contractors vs. employees). And let’s say I advised the owner, but he chose to leave it as is. Could I be held liable as the payroll administrator? — Anonymous

A. Under the Fair Labor Standards Act (FLSA) and certain state laws, individuals involved in making classification decisions can be personally liable for misclassifications. The FLSA defines “employer” broadly to include “any person acting directly or indirectly in the interest of an employer in relation to an employee.” (29 U.S.C. §203(d))

Whether you could be held liable likely depends on your role in determining the classification and your role within the company.

— Susan Lessack, Esq.

Violating FLSA timekeeping rules can be a costly error. 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.
  • 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.

Payroll Handbook D