Basic Wage Record Obligations
Under the Fair Labor Standards Act (“FLSA”), it is the employer’s duty to create and retain accurate records of hours worked each workday and each workweek for all employees who are not exempt from federal overtime requirements. This includes keeping timesheets or time clock records that accurately reflect the arrival and departure times, as well as, lunch or other breaks during the day that exceed 20 minutes in duration. It is important to note that breaks of 20 minutes or less in duration are considered incidental and may not be deducted from the workday.
Retention of such records is required for a period of three years because an employee or the Department of Labor (“DOL”) may go back as far as three years when seeking unpaid wages. Although there is no private right of action for an employee to enforce FLSA’s recordkeeping requirement, the DOL has the right to enforce this obligation. The failure to keep accurate records is itself a violation of the FLSA. Moreover, when an employee brings a claim for overtime or another violation of FLSA, it is the employer’s burden to come forward with evidence to challenge the employee’s claim.
When an employer does not obtain or retain records of hours worked, an employee’s calendar, diary, or testimony may be sufficient evidence of hours worked. For example, an employee could claim that he or she worked through the lunch hour consistently 3 times per week for 3 years. If an employer who wishes to challenge the assertion does not have time sheets reflecting hours worked, the employer will have a difficult time meeting this burden. Penalties for a company that cannot show it acted in good faith to follow the FLSA regulations will pay liquidated damages (2x the wages owed), plus attorney’s fees incurred by the claimant.
Other Statutory Requirements
- Unemployment Compensation – keep all records relating to employee wages and other compensation, including all unemployment tax records, for at least four years.
- I-9 Records – keep all I-9 records for a minimum of three years following the date of hire, or for one year following the employee’s date of last work, whichever is later. It is important to note that all I-9 forms must be signed by both the employer and by the employee representative to avoid a violation.
- IRS Payroll Tax-related Records – keep these records for at least four years following the time period covered by the records.
- Family Medical Leave Act (“FMLA”) Records – retain all payroll, benefit, and leave-related documentation for at least three years following the conclusion of the leave event.
- Disability-related documents (“ADA”) – retain these records for at least one year following the date the document was created or the personnel action was taken, whichever is later.
Employers should keep at least three types of files separate as follows:
- General employment file, which should contain the employment application, any disciplinary forms, evaluations, and similar basic employment information.
- I-9 Records so that they can be viewed more easily in the event of an agency audit. It is recommended that copies of the documents submitted for proof of identity and authority to work in the United States also be maintained with the I-9 forms.
- Medical records, including FMLA and disability-related documents, should be separated to protect confidential medical and related information. In the event that an employment file is requested in a court matter or for regulatory compliance, these records ordinarily would not be disclosed and should be protected.
Please note that the information contained in this article is not designed to address specific situations, and does not include rules or regulations that apply to all states. If you have questions concerning this topic, you should consult with legal counsel of your choice to obtain advice on various fact specific matters. You can also contact our attorneys for more information.
Robin Foret is a Partner in the Houston office of Kennedy Law, PC. She can be reached at firstname.lastname@example.org or by telephone at (713) 491-4644.