What Your Business Needs to Know About Federal Payroll Record Keeping

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No matter how many employees you have on staff, your organization needs to follow all federal laws. Unfortunately, each state/locality has their own requirements; therefore, you should know what is required of your organization to ensure you keep proper payroll records.

What Are The Federal Laws Governing Payroll Records?

The Fair Labor Standards Act (FLSA) requires an employer to keep certain records for each non-exempt worker. The Act requires no particular form for the records, but it does require the records include certain identifying information about the employee and data about the hours worked and the wages earned. Additionally, the law requires this information to be accurate and stored on-site or at a secure off-site facility.

Important Links To The U.S. Department Of Labor’s Website:

The Details To Your Payroll Records:

  • An employee’s first name, middle initial, last name and Social Security number.
  • Daily or weekly earnings.
  • Hours worked per week.
  • How an employee’s wages are paid, e.g., $15.25 per hour, $780 per week, piecework, etc.
  • If applicable, an employee’s hourly rate.
  • Overtime pay for the week.

Employers Must Keep Payroll Records For 3-Years

The FLSA requires every employer to preserve, for at least three years, its payroll records, collective bargaining agreements, sales and purchase records. Records on which wage computations are based should be retained for two years, i.e.:

  • Piecework documents/tickets.
  • Records of additions to or deductions from wages.
  • Time cards.
  • Wage rate tables.
  • Work and time schedules.

 Other Key Points:

  • If an employee performs both tipped and non-tipped work during a workweek, an employer must keep separate records for hours worked for each job classification.
  • These records must be open for inspection by the Division’s representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.

More About The FSLA

The Fair Labor Standards Act (FLSA) establishes a minimum wage, overtime pay, record-keeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments. That being said, the Act does dictate how an employer compensates and employees as well as files/stores its payroll records.

Two Final Notes: 

  • It is vital to protect the confidentiality and privacy of an employee’s information.
  • Each state has specific laws governing payroll records; therefore, it is imperative to research what is required by each state(s) (where you have employees).

Each state has specific laws governing payroll records; therefore, it is imperative to research what is required by each state(s) (where you have employees). To learn how we can help, contact Wendy Staz, Client Services Manager, Allegacy Payroll Solutions, at 336.659.5130. Copyright 2018 Drip Marketing, Inc. All rights reserved.

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