Federal law on timesheets: Recordkeeping requirements that all businesses must follow

The Fair Labor Standards Act (FLSA) has been making headlines recently, with 14 restaurants in Los Angeles County getting fined this week for FLSA violations. The U.S. Department of Labor also found that these restaurants weren’t keeping the required employee time card records.

And, clearly, the businesses also received a ton of bad press — which you can see here, here, here, and here — that may even eclipse the fines. And these are all within the past three days of this article’s posting.

Homebase can help keep you compliant with the Fair Labor Standards Act by storing employee timesheet data for four years on our Homebase Plus, Essentials, and Enterprise plans. That’s well beyond the Department of Labor’s two-year storage requirement.

If you’re an existing Homebase user, you can log in to your account and confirm you’re on the right plan, or reach out to our support team for help. Once you’re on the right Homebase plan, there’s nothing else you need to do. We automatically store the records, and you can access them at any time.

But even if you don’t use Homebase, avoid the fines and bad press — store your employee time card data!

With Homebase, we’ll even store time card edit history. This is extremely valuable if the DOL conducts an investigation under the FLSA. It’s also generally useful for you and your team. You can see when a timesheet was edited, and by whom.

If you aren’t familiar with the FLSA, we’ve put together a quick primer.

What is the Fair Labor Standards Act?

According to the Department of Labor, The Fair Labor Standards Act “establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.”

What businesses are required to follow the FLSA?

The law applies to businesses with sales exceeding $500,000 (less for retail and certain other businesses). It also applies to those who are engaged in interstate commerce. You can double-check to make sure your business must comply with the law on the DOL website, but practically speaking, virtually every business does. Many laws are dependent on the size of the business in question. Read Homebase’s page on federal employment laws by employer size for more information.

Are timesheets mandatory?

Yes, timesheets are mandatory. According to federal law, an employer must keep a record of the work hours for each of its employees. 

When tracking hours worked, an employer can round up to the nearest 15 minutes. The Wage and Hour Division of the DOL recommends that if you round down your employees’ time, you should also do so for rounding up so that employees are not shortchanged. 

The time tracking method you choose for tracking the number of hours worked (time clock, time card, or timesheet software) doesn’t really matter, as long as the record is accurate and you comply with the law.  

What should timesheets include?

Timesheets should include employee’s name, pay period covered, data and day worked, total workweek hours worked, and overtime hours, if any.

If an employee works the same day at two different times, you can list this as one day worked, or split it into two separate entries. 

If an employee starts work late or leaves early, it should be reflected on the timesheet. Meal periods don’t count as hours worked for hourly employees. However, if an employee works during a break, this should be included in the total number of hours worked. 

Timesheet rules for hourly and salaried employees

Let’s take a look at some specific timesheets and timekeeping rules for hourly and salaried employees.

Hourly employees

Off the clock” work is illegal and if an hourly employee works overtime, their employer must pay them 1.5 times their regular hourly rate for all overtime hours worked.

So if an employee works 20 hours at $10 per hour, the employer would owe this employee $200. If the same employee worked 10 hours of overtime, they would be owed an additional $150.

When tracking time records you must the date and time an employee starts and ends work, amount of hours they worked in a day, and total hours they worked each week.

Clock-in and clock-out times, overtime hours, and breaks should all be included.

Salaried employees

When it comes to salaried employees, the law states that they must receive their regular rate of pay regardless of the number of hours they worked in a workweek. If for some reason an employee is away for less than the full workday, they are still entitled to their full day’s salary. On the other hand, employees must complete all the tasks expected of them during their workweek regardless of the actual time it takes.

Exempt and nonexempt employees

The FLSA also differentiates between exempt and nonexempt employees. Exempt employees are salaried employees that are paid at least 455$ a week and perform executive, administrative, or professional duties. Nonexempt employees are hourly employees who are not salaried and are entitled to overtime pay.

How long do I need to keep employee time cards to remain compliant?

According to the Department of Labor, businesses must keep employee time card records for two years: “Records on which wage computations are based should be retained for two years. These include time cards, wage rate tables, work and time schedules, and records of additions to or deductions from wages.”

You’ll need to keep other records too, generally related to payroll (payroll records), and for a longer period of time. You can find the full list, along with exceptions, on the DOL website.

There’s also a handy fact sheet on the DOL website that lists the records you need to keep for each employee, along with some samples.

What are the penalties if my business found in violation of the FLSA?

If there are wage violations, you’ll most likely have to pay those to the impacted employees. But there are often penalties for not keeping employee time card records for the required two years.

According to the DOL website, “Willful violators may be prosecuted criminally and fined up to $10,000. A second conviction may result in imprisonment.”

It’s absolutely worth protecting yourself and your business against potential FLSA recordkeeping violations! The easiest way to do that is on Homebase Plus, Essentials or Enterprise. If you’re an existing Homebase user, you can log in to your account and confirm you’re on the right plan, or reach out to our support team for help.

Remember this is not official legal advice. If you have any concerns, it’s best to consult an employment lawyer. 

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