Back to Basics: FLSA Recordkeeping/Timekeeping

Workin' 9 to 5, what a way to make a livin'

Barely gettin' by, it's all takin' and no givin'
They just use your mind and they never give you credit
It's enough to drive you crazy if you let it
9 to 5, for service and devotion
You would think that I would deserve a fat promotion
Want to move ahead but the boss won't seem to let me
I swear sometimes that man is out to get me!

—Working 9 to 5 by Dolly Parton

               One common provision of all wage and hour laws is a recordkeeping requirement. This allows the government to audit the employer’s compliance with the wage law. The Fair Labor Standards Act (“FLSA”), for example, requires employers to maintain certain payroll records. The following general records are required under that law to be kept for non-exempt employees:

·        Name and Social Security Number;

·        Home Address and Zip Code;

·        Date of Birth if employee is under the age of 19;

·        Sex and Occupation (which is used for purposes of determining, compliance with the equal pay requirements);

·        Time of day and day of the week on which the employee’s workweek started;

·        Hourly rate of pay and the basis of pay (hourly, daily, weekly), and the nature of each payment which is claimed as exclusion from the regular rate;

·        Total hours worked each day and each week;

·        Total straight pay (i.e. non-overtime or premium) ;

·        Total overtime pay;

·        Additions and Deductions made, including wage assignments

·        Total wages paid; and

·        Date of payments and pay period covered.

29 C.F.R. § 516.2(a)(1)-(12).

               There are also specific, albeit not as detailed, FLSA record-keeping requirements for exempt employees. Employees such as learners/teachers, apprentices, handicapped workers, students and messengers employed under special certificates, employees receiving overtime pay based on a commission, piece rate, Belo Plan or half-time plan, employees who receive gratuities or tips, and many others. See 29 C.F.R. §516.3.

               A common question is “How long must I keep these records?” Payroll records, collective bargaining agreements, and certain other records must be kept for at least three years. Wage computations records should be retained for two years. These includes timecards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions. Id. at § 516.5. Of course, given the up to three year statute of limitations under the FLSA, and the longer limitations period for some government contract wage and hour laws, a prudent employer should keep the records for a longer period of time.

               While the Department of Labor (“DOL”) regulations do require recordkeeping, they do not specify the form of records needed. Paper records are permitted but are not required. The DOL has long noted in several opinion letters that computers are an acceptable repository for FLSA records. Wage-Hour Opinion Letters dated Oct. 26, 1993, March 10, 1995, and Feb. 6, 1998. Of  course, that the information must be accurate, and records must be convertible into a form suitable for inspection. It is important that the records must be available for inspection by the DOL within 72 hours of DOL’s request. 29 C.F.R. §516.7(a). Keep in mind that a search warrant is not required for DOL to obtain access to the records required by FLSA regulation. Donovan v. Lone Steer Inc., 104 S. Ct. 769 (1984).

               There are many ways to store and record the hours worked by employees. The DOL stated in their Fact Sheet #21:

Employers may use any timekeeping method they chose. For example, they may use a time clock, have a timekeeper keep track of employee’s work hours, or tell their workers to write their own times on the records. Any timekeeping plan is acceptable as long as it is complete and accurate.

Even using checkmarks and other symbols to indicate a regular day’s work is permitted, provided a key to the symbol is furnished. Accordingly, employers use different variations or systems to record hours  of work. Examples include the following:

·        Timesheets completed by workers and then reviewed by either a supervisor and/or payroll staff;

·        A designated employee who reports the hours worked by other staff;

·        Punch -in time clocks; and/or

·        Time keeping by exception, whereby employees only report deviations from a fix schedule, and are otherwise assumed to have worked a set number of hours.

               The FLSA explicitly allows for the “rounding” of the workers’ starting and stopping times. DOL regulation expressly address the rounding practice and provide that:

[i]has been found that in some industries, particularly where timeclocks are used, there has been the practice for many years of recording the employee’s starting time and stopping time to the nearest five minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work.

29 C.F.R. 785.48.  Under this regulation, rounding hours work should not always benefit the employer. Employers should not round down every time in other words. DOL explained its views on this in the Wage and Hour Division Fact Sheet #53, which is available at https://www.dol.gov/whd/regs/compliance/whdfs53.pdf (setting forth varying rounding scenarios and discussing whether and why the rounding policy is compliant with DOL’s rules).

               The FLSA regulation which permits rounding does not require that every employee gain or break even with every pay period. Rounding is still suitable on average over the long-term and a policy is valid if it is neutral on its face and as applied to the employee. See, e.g., Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, 821 F.3d 1069 (9th Cir. 2016).