Download RecordKeeping

Recordkeeping and Retention
Maria Egbuji, CPP
August 2014
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Where Does It Start?
• Pre Employment
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Job Postings
Applications
Interviews
Offer letter
References/Background Checks
I-9 ( Right to Work)
Drug testing
Confidentiality Agreements
Employee handbook
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Federal and State Wage and Hour
Laws
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Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) establishes 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.
FLSA Does not Require:
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Vacation, holiday, severance, or sick pay
Meal or rest periods, holidays off, or vacations
Premium pay for weekend or holiday work
A discharge notice, reason for discharge, or immediate payment of
final wages to terminated employees
– Any limit on the number of hours in a day or days in a week an
employee at least 16 years old may be required or scheduled to work
– Pay raises or fringe benefits
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Who is Covered?
The FLSA provides for a broad coverage of employers and employees to meet its stated
goal of eliminating “conditions detrimental to the maintenance of the minimum standard
of living necessary for health, efficiency, and general well-being of workers.” The two test
to determine coverage are:
Enterprise Coverage
1.At least two employees of the
business are employed in jobs
closely related and directly
essential to interstate commerce
or the production of goods for
interstate commerce; and
2.The business has an annual
gross sales of at least $5,000,000.
Individual Employee Coverage:
Under the individual employee coverage test,
employees are covered by the FLSA if they are
engaged in interstate commerce or in the
production of goods for interstate commerce.
Interstate commerce is any trade,
transportation, or communication between
one state and another state or a foreign
country.
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Basic Provisions and Requirements
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Minimum Wage- Federal law requires a
minimum wage of 7.25 per hour for all
employees of companies subject to the
law.
Exceptions/Exemptions Specific to
Minimum Wage:
– Business may hire youth workers at 4.25
hourly for the first 90 consecutive
calendar days of employment, so long
as no other workers are displaced by
the youth worker.
– Tipped employees must be paid at least
2.13 an hour, and the combination of
the hourly wage plus tips must equal
regular minimum wage.
– Employers may pay employees on a
piece rate basis as long as they receive
the required minimum hourly rate and
overtime for hours worked in excess of
40 hours in a workweek.
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Basic Provisions and Requirements cont..
The Act permits the employment of
certain individuals at wage rates
below the statutory minimum wage
under certificates issued by the DOL:
– Student learners (vocational
education students)
– Full time students in retail services
or services establishments,
agriculture, or institutions of
higher education
– Individuals whose earning or
productive capacities for the work
to be performed are impaired by
physical or mental disabilities,
including those related to age or
injury
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Question
Name the four items regulated by
the Fair Labor Standards Act.
• Minimum Wage
• Overtime Pay
• Recordkeeping
• Child Labor
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Question
What is the current minimum wage?
• $7.25 hourly (as of July 2009)
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Notices, Posters, Recordkeeping,
and Reporting
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Notices and Posters
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All employers of employees subject to the
FLSA’s minimum wage provision must post,
and keep posted a notice explaining the ACT
in a conspicuous place in all of their
establishments.
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The FLSA poster is available in English,
Spanish, Chinese, Russian, Thai, Hmong,
Vietnamese, and Korean. Employers are only
required to post the English version.
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Covered employers are required to post the
general Fair Labor Standards Act poster;
however, certain industries have posters
designed specifically for them. Employers of
Agricultural Employees and State and Local
Government Employees can post either.
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Every employer who employees a worker
with disabilities under special minimum
wage certificates is also required to post the
Employee Rights for Workers with
Disabilities/Special Minimum Wage Poster
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Recordkeeping
Every employer covered by the
FLSA must maintain certain
records for each covered,
nonexempt worker. Most of the
data is the type that employers
would generally maintain in
ordinary business practices.
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There is no required form for the
records. However, the records
must include accurate
information about the employee
and data about the hours worked
and the wages earned.
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Employees full name, as used for Social Security
purposes
Address, including zip code
Birth date if younger than 19
Sex and occupation
Time and day of week when employee’s
workweek begins
Hours worked each day and total hours worked
each week
Basis on which the employee’s wages are paid
(e.g., $9 per hour, $440 a week)
Regular hourly pay rate
Total daily or weekly straight time earnings
Total overtime earnings for the workweek
All additions or deductions from the employee’s
wages
Total wages paid each pay period
Date of payment and the pay period covered by
the payment
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Recordkeeping
• Maintain at least three
years:
– Payroll records
– Collective bargaining
agreements
– Sales and purchase records
• Maintain for two years
(Records on which
wages/computations are
based):
– Time cards and piece work
tickets
– Wage rate tables
– Work and time schedules
– Records of additions to or
deductions from wages
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Reporting
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The FLSA does not contain specific reporting requirements; however, records must be open
for inspection by the Wage and Hour Division who may ask the employer to make extensions,
computations, or transcriptions.
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The records may be kept at the place of employment or in a central records office.
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Penalties
• When the Wage and Hour Division finds violations, they recommend
change in employment practices to bring the employer into compliance,
and they request the payment of any back wages due to employees.
• Willful violations may be criminally prosecuted and fined up to $10,000. A
second violation may result in imprisonment.
• Employers who willfully or repeatedly violate the minimum wage or
overtime pay requirements are subject to civil penalties of up to $1,100
per violation.
• Employers may file an appeal to the determination within 15 days of
receipt of the notice. This is referred to an Administrative Law Judge for a
hearing a determination as to whether the penalty is appropriate. If no
appeal is filed, the penalty becomes final.
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Federal and State Relationship
When both the Act and a state law apply, the law
setting the higher standard must be observed. Some
examples include:
FLSA does not restrict
FLSA states overtime
hours for employees
FLSA requires a
over the age of 16. If a
must be paid at 1 ½ an
minimum wage of 7.25
municipality has curfew
employees regular rate
hourly. Some states
laws that require
after 40 hours in a
have a higher minimum
“workweek.” California
anyone under the age
wage (e.g., Florida’s
of 18 to be home by 12
law requires overtime
minimum wage is 7.93
am, the employee may
to be paid after 8 hours
hourly).
not work past these
in a day.
hours.
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Question
How long must an employer
keep payroll records?
Two Years
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Question
When an employee is covered by both
federal and state laws, which must an
employer follow?
The law that provides the greater benefit to the
employee
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Federal Legislation
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Federal Legislation
• Civil Right Act of 1964 (Title VII)
o Resumes, application, interview notes, reference checks, test results,
job postings, all records related to hiring, promotion, transfers, layoff,
terminations; payroll records including rates of pay and other
compensation, request for accommodation; and records related to
selection for training apprenticeship ( 1 yr. retention)
o The recordkeeping requirements under Title VII are also applies to
employers covered by the Americans with Disabilities Act which is
administered by Equal Employment Opportunity Commission (EEOC).
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Federal Legislation
• Family Medical Leave (FMLA)
o Detailed payroll and employee identification data, records showing
dates of FMLA leave taken by eligible employees and, for intermittent
leave, hours of all leave taken, copies of al employee notice and
documents describing FMLA and polices related to benefits and
unpaid leaves, records related to premium payments made by
employees on FMLA leaves, copies of requests for leave and notices to
employees responding to request for leave and designating leaves as
FMLA, records of any disputes regarding the designation of leave as
FMLA ( 3 yr. retention)
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Federal Legislation
• Immigration Reform and Control Act (IRCA)
o Employee eligibility verifications forms (INS form I-9) completed and
signed by each newly hired employee and the employer. It is
recommended that employers’ keep copies of supporting
documentation presented by each employee as proof of eligibility to
work in the United States. Since the US Department of Labor may
inspect forms at any time, it is recommended that forms be kept
separately from each employee’s personnel file. ( 3 yr. retention after
worker is hired or 1 yr. after termination)
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Tips for Better Recordkeeping
• Have written policy on recordkeeping that outlines what documents are to
be created, by whom, what records should be retained, for how long and
by whom, and where those records are to be stored
• Create a map or index to retrieve records when necessary
• Devote time ad resources to implement the policy
• Train managers about the recordkeeping policy
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State Requirements
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State Unemployment Insurance
• Must be retained for certain
number of years (varies by
state)
• Must be available for
inspection and copying by
state employment security
office
• General requirements listed
on right but each state may
have additional
requirements
• Name
• Social Security Number
• Dates of Hire, separation,
rehire, reinstatement
• Compensation by pay
period
• Pay period start and end
dates
• Paydays
• Date and reason for
termination
• Time lost due to employee’s
unavailability to work
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State Wage and Hour
• Similar to FLSA. Generally maintain
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Name
Address
Position
Hours worked daily/pay period
Amounts of compensation and rates of pay
Age (minor)
Retention periods vary by state. If state does nor specify,
recommendation is at least 3 years.
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Miscellaneous
• Escheat Laws
o Govern unclaimed wages. Abandoned wages must be reported to
state. Requirements vary by state
• Direct Deposit, Electronic Pay Statements &
W2s
o Laws and requirements vary by states
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RETENTION PERIOD
Hints
Two Words/2
Years
Fours Letters/ 3
Years
Three Letters/4
Years
Time Sheets
FLSA
IRS
Billing Records
IRCA
SSA
Wage Deductions
FMLA
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Question
You arrive at work on Monday morning greeted by a US Department of Labor
investigator. He demand s he be allowed to inspect your company’s I-9 forms
immediately. You believe the Department of Labor does not have the right to
interrupt your business operations in the manner without a reasonable notice.
Are you correct?
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Yes you are correct. The US Department of Labor and other
authorized agencies, must give employers three business days
notice prior to an inspection of I-9 Forms
Employers should ensure that sure forms are properly maintained
and easy to locate as any delay in producing the forms at the
scheduled inspection is a violation of the retention requirements
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QUESTIONS?
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