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Recordkeeping Requirements under the Fair Labor Standards Act and How to Avoid Them

The Fair Labor Standards Act (“FLSA”) is a federal labor law. The FLSA covers more than 143 million American workers. The FLSA creates the right to a minimum and time-and-a-half overtime compensation for certain employees who work for more than forty hours. The FLSA also establishes record keeping requirements which employers must follow. The Department of Labor (“DOL”) Wage and Hour Division(“WHD”) is responsible for administering and enforcing the FLSA’s rules, among them the record keeping requirements. Frequently, FLSA complaints are discovered through an investigation of wage and hour complains. WHD enforces record keeping violations through fines, which may bring serious monetary penalties for an employer.

The FLSA’s record keeping requirements are set out in 29 CFR Part 516. These requirements apply to covered employees. There are two ways in which an employer can be considered a “covered” employer: “enterprise coverage” and “individual coverage.” Essentially, most employers will fall under either enterprise and individual coverage. Thus, chances are, if you are an employer, you are mostly likely a covered employer and must abide by the FLSA. Those employers who are unsure of their status as a covered employer should seek professional legal guidance.

The FLSA does not require any order or form of timekeeping records. However, every covered employer is required to maintain records containing certain information and data. These records may be maintained and preserved on microfilm or a basic data processing memory (such as Word) as long as the information is clear and identifiable by date or pay period, and that it can be made available upon request. For those employees who are eligible for overtime compensation,employers must maintain the following information for each employee:

(1) name in full;

(2) home address, including zip code;

(3) date of birth, if under 19;

(4) sex and occupation in which employed(this information is used for purposes of the FLSA’s equal employment opportunity provisions);

(5) time of day and day of week on which the employee’s workweek begin (Note: If the employee is part of a workforce or employed in or by an establishment all of whose workers have a workweek beginning at the same time on the same day, a single notation of the time of the day and beginning day of the workweek for the whole workforce or establishment will suffice);

(6) (i) regular hourly rate of pay for any workweek in which overtime compensation is due;

(ii) explain basis of pay by indicating the monetary amount paid on a per hour, per day, per week, per piece, commission on sales, or other basis; and

(iiii) the amount and nature of each payment which is excluded from the regular rate;

(7) hours worked each workday and total hours each workweek;

(8) total daily or weekly straight-time earnings or wages due for hours worked during the workday or workweek,exclusive of premium overtime compensation;

(9) total premium for overtime hours;

(10) 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 which make up the total additions and deductions),

(11) total wages paid each pay period, and

(12)date of payment and the pay period covered by payment.

For those employees who are not subject to the FLSA’s overtime provisions,employers must maintain the same information described above, except as required by items 6 through 10. In addition, the employer must maintain records on the basis on which wages are paid in sufficient detail to permit calculation for each pay period of the employee’s total remuneration for employment including fringe benefits and prerequisites.

The length of time an employer is required to preserve the records depends on the type of document. The following are examples of the types of information that must be preserved for at least three years:

(1) payroll records:

(2) employment contracts; and

(3) written agreements with certain employees.

The following are examples of the types of information that must be preserved for at least two years:

(1) basic employment and earnings records;

(2) wage rate tables; and

(3) records of additions to or deductions from wages paid.

These records must be kept in a manner that is safe and accessible and at the place or places of employment, or at one or more central record keeping office where these types of records are customarily maintained. If the records are maintained at a central record keeping office,other than in the place or places of employment, such records shall be made available within 72 hours following notice from DOL or WHD. Thus, these records must be kept in a manner which allows them to be readily available for inspection and transcription by the DOL/WHD.

In conclusion, employers should make sure they abide by the FLSA’s time keeping requirements. Keeping accurate and clear records will ensure that an employer is able to correctly calculate an employee’s pay, which prevents wage and hour complaints from arising. Maintaining adequate records is thus an important first step that the employer must take to prevent FLSA claims before they may occur.

Mario G. Perez, Jr., Associate Attorney