FLSA Recordkeeping Requirements: The Ultimate Employers Guide

If you’re an employer, you’re likely familiar with the FLSA recordkeeping requirements.

The Fair Labor Standards Act (FLSA) is a federal law that sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employees in the United States. 

In short, it’s the law that regulates how much employees get paid and how many hours they can work.

A core component of the FLSA is its recordkeeping requirements. If these recordkeeping requirements are overlooked by your business, it can be costly for you and your employees.

In this post, we’ll go over everything you need to know about FLSA recordkeeping requirements.

What does the FLSA say about recordkeeping?

The FLSA requires employers to keep accurate and complete records of their employees’ hours worked, wages earned, and deductions made. This means that, as a business owner, you must keep detailed records of:

• All hours worked
• Any overtime worked
• Pay rates for each employee

You must also keep records of any deductions made from employees’ paychecks, like taxes, social security, and Medicare deductions. 

These records have to be kept for a specific period, which we’ll discuss in more detail later.

Why are FLSA recordkeeping requirements essential?

Legal Compliance

Failing to keep accurate and complete records can result in legal consequences and penalties.

Dispute Resolution

Error-free recordkeeping can help resolve disputes between employers and employees. If one of your employees claims that they were not paid for all the hours they worked, you can refer to your records to verify the hours they worked.

Business Decisions

Accurate recordkeeping can help employers make informed business decisions. If you are considering whether to hire additional staff or offer overtime to current employees, you can refer to your records to determine how many hours your current staff is working.

Who do FLSA Recordkeeping Requirements Apply to?

FLSA recordkeeping requirements only apply to non-exempt employees. 

Non-exempt employees are those who are entitled to minimum wage and overtime pay protections under the FLSA. Non-exempt employees include: 

• Employees who are paid by the hour
• Employees who are paid on a salary basis, but are not exempt from FLSA requirements

The FLSA recordkeeping requirements do not apply to exempt employees. Exempt employees include:

• Employees who are paid a fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed
• Employees who are paid a minimum salary threshold of $684 per week
• Employees whose job duties primarily involve executive, administrative, or professional duties

For example:

Imagine you run a retail store, where you have both hourly and salaried employees. 

• Your hourly employees are non-exempt and entitled to minimum wage and overtime pay protections. 
• Your salaried employees who make less than $684 per week are non-exempt. 
• Your salaried employees who make more than $684 per week and are in executive and administrative roles are considered exempt. 

Note: The same rules apply regardless of whether work is being performed in person or remotely. With the rise of remote work, it’s more important than ever to ensure that your business is complying with FLSA recordkeeping requirements, even if your employees are working from home.

Check out this informative video for more information about FLSA recordkeeping requirements.

According to FLSA Recordkeeping Requirements, What Records Must Employers Maintain?

As we discussed, the FLSA requires employers to keep accurate and complete records of their non-exempt employees’ hours worked, wages earned, and deductions made. 

In this section, we’ll break down the specific types of records that you must maintain to stay compliant with FLSA recordkeeping requirements.

Employee Identification Information

Employers must keep records of their employees’ identification information. 

This includes: 

• Full name
• Social security number
• Address
• Birth date (if under 19 years old)
• Gender
• Occupation

Accurate employee identification information is critical for ensuring that employers are paying their employees the correct wages and taxes.

Hours Worked

Employers must keep detailed records of all hours worked by their non-exempt employees. 

This includes all time spent performing work-related activities, including time spent traveling for work, attending meetings, or completing job-related training. 

Employers must record the exact time that employees start and stop working each day, as well as any breaks or meal periods taken. If an employee works overtime, employers must also record the specific hours worked and the overtime pay earned.

Wages Earned

Employers must keep records of their employees’ pay rates, including any overtime pay. 

More specifically, they must record their employees’: 

• Regular hourly rate of pay
• Total number of hours worked each workweek
• Total amount of wages earned each workweek
• Overtime pay earned

If an employee is paid on a piece-rate basis, employers must keep records of the total number of pieces produced and the rate of pay for each piece.

Payroll Records

Employers must also keep payroll records for their employees. 

This includes records of any deductions made from their employees’ paychecks, including:

• Taxes
• Social security
• Medicare deductions

Additionally, employers must also keep records of any time off taken by their employees, including: 

• Sick leave
• Vacation time
• Holiday pay

Finally, employers must keep copies of any employment contracts or agreements signed by their employees.

Staying Compliant with FLSA Recordkeeping Requirements

Your business needs to stay compliant with FLSA Recordkeeping Requirements to avoid legal consequences and penalties. 

Here are a few tips to help.

1. Use a time tracking system. Time tracking apps like Workyard help to streamline the recordkeeping process and reduce time tracking errors by automating timekeeping.
2. Train your managers on FLSA recordkeeping requirements. They play a critical role in ensuring that accurate records are kept.
3. Conduct regular audits of your recordkeeping practice. Review your records to ensure accuracy. Make any necessary updates or corrections.
4. Keep records for the required length of time set by the FLSA. We’ll dive into more detail on this subject in the next section. 

According to FLSA Recordkeeping Requirements, How Long Must Employers Maintain Records?

As we mentioned earlier, the FLSA requires employers to keep accurate and complete records of their non-exempt employees’ hours worked, wages earned, and deductions made. 

But how long must employers maintain these records?

The FLSA federal standard is at least three years. But, it varies depending on the type of record. 

Let’s break it down.

Employee Identification Information

Employers must keep employee identification records for at least three years from the date of the employee’s termination. 

However, if the employee’s records contain exposure data related to toxic substances or harmful physical agents, employers must keep those records for 30 years.

Hours Worked

Employers must keep records of hours worked for at least three years. 

If an employer fails to maintain correct records of an employee’s hours worked, the employee may use his or her records to prove hours worked, and the employer may be subject to penalties.

Wages Earned

Employers must keep records of wages earned for at least three years. 

If an employee files a claim for unpaid wages, the employer may be required to produce these records as evidence in court.

Payroll Records 

Employers must keep payroll records for at least three years. This includes:

• Records of any deductions made from their employees’ paychecks (taxes, social security, and Medicare deductions)
• Any time off taken by their employees (sick leave, vacation time, and holiday pay)
• Any employment contracts or agreements signed by their employees

Note: Some states may have additional recordkeeping requirements beyond the FLSA. For example, California requires employers to keep payroll records for four years, and New York requires employers to keep payroll records for six years.

How Must Employers Keep Track of Records Required by the FLSA?

The FLSA does not require employers to use any specific timekeeping method. 

Employers are free to choose any timekeeping method that they prefer, as long as it allows them to comply with FLSA. Here are a few of the most popular timekeeping methods: 

Time-tracking App

Workyard’s GPS time-tracking app helps employers accurately track when and where each employee is. 

By recording actual site entry and exit times, Workyard gives owners the transparency they need to know their payroll is accurate.

Time Clock

Time clocks are a traditional timekeeping method that many employers still use today. 

Employees use a physical time clock to punch in and out, and the time clock records their hours worked.

Timesheet

Lastly, employers can choose to have their employees write their times down on a timesheet. 

Timesheets can be completed by hand or online, and employees must record the exact time that they start and stop working each day, as well as any breaks or meal periods taken.

Choosing the Right Timekeeping Method for Your Business

Choosing the right timekeeping method for your business can be challenging. 

You have to consider several factors, such as:

• The size of your workforce
• The nature of your business
• The complexity of your payroll

Let’s take a closer look at each of these factors.

Assess Your Needs

Think about the size of your workforce and the nature of your business. 

If you have a large workforce, a time-tracking app or time clock will probably work better for you than a timesheet, because it provides an electronic record of hours worked by each employee.

A time-tracking app or time clock can provide a more accurate and transparent record of employee hours worked. It also reduces the administrative burden for your business by automatically calculating overtime based on local state laws and sending break reminders to employees.

A timesheet can be easily lost, damaged, or manipulated, which can lead to inaccurate records and potential legal issues. 

Evaluate the Cost

Consider the cost of each timekeeping method, including any hardware or software required. 

A time-tracking app might cost more than a timesheet, but you’re saving time and money in human error and penalties you might receive from inaccurate records.

FLSA Compliance

Always make sure that the timekeeping method you choose precisely records all hours worked, including overtime, and accounts for any breaks or meal periods taken.

Why Time-Tracking Apps are Best for Compliance

When it comes to complying with the FLSA recordkeeping requirements we outlined above, time-tracking apps are the best option for employers. Here’s why.

GPS time clock apps take the guesswork out of recordkeeping.

GPS time clock apps use geofencing technology to automatically clock workers in and out when they enter and exit a job site. 

This eliminates the possibility of error when employees clock in and out manually.

Time-tracking apps streamline the timesheet reporting process.

With time-tracking apps, employers can easily review, edit, and approve employee timesheets on the go. 

This eliminates the hours of manual data entry required for paper timesheets.

Time-tracking apps help employers comply with labor laws.

Time-tracking apps like Workyard offer built-in features such as automatic wage calculations and overtime tracking to help employers comply with FLSA recordkeeping requirements and other labor laws.

How Workyard Can Help

Workyard is a time-tracking app that offers a range of features designed to help employers comply with FLSA recordkeeping requirements and other labor laws. 

Here’s how Workyard can help your business:

Accurate Time Tracking

Workyard captures every shift or hour worked accurately, ensuring compliance with FLSA recordkeeping requirements.

Automatic Overtime and Rest Break Calculations

Workyard automatically calculates overtime and rest breaks, helping employers comply with federal and state labor laws.

Precise GPS Audit Trail

Workyard’s GPS audit trail gives employers insight into the exact whereabouts of their employees, which can prove invaluable when dealing with disputes.

Mobile Timesheet Approval

With Workyard, employers can easily review, edit, and approve employee timesheets on the go, streamlining the timesheet reporting process.

Sign up for a free trial of Workyard today!

Penalties for Not Complying with FLSA Recordkeeping Requirements

We can’t stress the importance of complying with FLSA recordkeeping requirements to ensure that your employees are receiving the wages and benefits they are entitled to under the law. 

Failure to comply with these requirements can result in serious penalties and consequences for your business. Overlooking small details in the law can be costly for the business that you’ve worked hard to establish. If you violate any of the following requirements, you will be required to pay back wages and liquidated damages to your employees.

Common FLSA Recordkeeping Violations vs. Penalties

Violation #1: Failing to keep accurate records of hours worked.

Penalty: Up to $10,000

As an employer, you must keep accurate records of your non-exempt employees’ hours worked, including overtime, breaks, and meal periods. 

Violation #2: Failing to pay overtime.

Penalty: Up to $1,000

You must pay your non-exempt employees overtime for all hours worked over 40 in a workweek.

Violation #3: Misclassifying employees as exempt.

Penalty: Up to $1,000

You must properly classify your employees as exempt or non-exempt based on their job duties and salary. 

Employers who fail to do so may also face legal action, which can result in additional fines, legal fees, and reputational damage.

How to Avoid Penalties

While these all sound like costly mistakes, you can avoid them with plenty of research and organization within your business. To avoid penalties for non-compliance with FLSA recordkeeping requirements, you should take the following steps:

Understand the Requirements

Familiarize yourself with FLSA recordkeeping requirements and ensure that you’re keeping accurate and complete records of your non-exempt employees’ hours worked, wages earned, and deductions made.

Use an Accurate and Efficient Time-Tracking Method

Choose a timekeeping method that is accurate and efficient, like a time-tracking app. This can help ensure compliance with FLSA recordkeeping requirements and reduce the risk of errors and inconsistencies.

Train Employees

Train your employees on the importance of recordkeeping and provide them with the tools they need to record their hours worked.

Seek Professional Advice

If you’re unsure about your FLSA recordkeeping obligations, seek professional advice from an employment lawyer or HR consultant.

Who is Exempt from FLSA Recordkeeping Requirements?

While the FLSA applies to most employees in the United States, there are some exemptions.

Independent Contractors and Freelance Workers

Independent contractors and freelance workers are not covered by the FLSA because they are not considered employees. This means that employers are not required to pay them minimum wage or overtime, or keep records of their hours worked.

Note: It is important for employers to properly classify their workers as independent contractors or employees, as misclassification can result in penalties and legal action.

Salaried Employees

Employees who are paid a salary of at least $684 per week ($35,568 per year) and who perform certain job duties may be exempt from overtime pay requirements.

The most common exempt job duties include:

• Executive: Employees who manage the company or a department, supervise two or more employees, and have the authority to hire and fire employees.
• Administrative: Employees who perform office or non-manual work directly related to the management or general business operations of the employer, and whose primary duty involves the exercise of discretion and independent judgment.
• Professional: Employees who perform work that requires advanced knowledge in a field of science or learning, and whose primary duty involves the exercise of discretion and independent judgment.
• Outside sales: Employees who regularly work away from the employer’s place of business and whose primary duty involves making sales or obtaining orders or contracts for services or facilities.

Highly Compensated Employees

Highly compensated employees who earn at least $107,432 per year may be exempt from FLSA recordkeeping requirements if they customarily and regularly perform one or more of the exempt job duties listed above.

Seasonal and Recreational Establishments

Seasonal and recreational establishments, such as amusement parks and ski resorts, are exempt from FLSA recordkeeping requirements for certain employees who work on a seasonal basis. 

Specifically, employers are not required to keep records of hours worked by employees who are under 18 years old and who are employed by seasonal or recreational establishments.

Do FLSA Recordkeeping Requirements Supersede State Laws?

While the FLSA provides a baseline of protections for employees, many states have their own labor laws that provide additional protections. 

So, do FLSA recordkeeping requirements supersede state laws?

The answer is no. 

In many cases, state recordkeeping requirements are more stringent than those under the FLSA. As an employer, you must comply with both federal and state laws, and in cases where the laws conflict, you must follow the law that provides greater protection to employees.

Here are a couple of examples of state recordkeeping requirements that are more stringent than the FLSA:

Meal and Rest Breaks

The FLSA does not require employers to provide meal or rest breaks to employees. 

However, most states have laws that require employers to provide these breaks. 

Example: California labor laws require employers to provide a 30-minute meal break for every 5 hours worked and a 10-minute rest break for every 4 hours worked.

Sick Leave

The FLSA does not require employers to provide paid sick leave to employees. 

All laws that require employers to provide sick leave are decided at the state level.

Example: In New York, employers are required to provide up to 40 hours of paid sick leave per year.

Record Retention

While the FLSA requires employers to keep records for a certain length of time, some states require employers to keep records for longer than the FLSA.

Wage Theft Prevention

Some states have wage theft prevention laws that require employers to provide employees with written notice of their wage rates and other terms of employment. 

Example: New York requires employers to provide written notice of pay rate, payday, and other terms of employment at the time of hire and whenever there is a change in any of the terms.

Overtime Pay

While the FLSA requires employers to pay non-exempt employees overtime pay for hours worked over 40 in a workweek, some states provide additional protections. 

Example: California requires employers to pay non-exempt employees overtime pay for hours worked over 8 in a day or 40 in a week, whichever is greater.

The Bottom Line on FLSA Recordkeeping Requirements

Understanding the FLSA recordkeeping requirements is essential for employers.

FLSA recordkeeping requirements dictate that employers must keep accurate records of employee identification information, hours worked, wages earned, and payroll records. The amount of time employers must maintain these records varies slightly depending on the type of record. Penalties for not complying with FLSA recordkeeping requirements can range from monetary fines to legal action.

Employers need to keep complete and accurate records for non-exempt employees, regardless of whether work is performed in person or remotely. Any timekeeping method is acceptable/legal as long as it follows those guidelines.

Using time-tracking apps like Workyard can help employers meet FLSA recordkeeping requirements by capturing every shift or hour worked accurately, automatically calculating overtime and rest breaks to help comply with federal and state labor laws, and providing a precise GPS audit trail for valuable employee location data.

As an employer, you should keep in mind that FLSA recordkeeping requirements do not supersede state laws, and in most cases, state laws provide additional protections for employees.

By understanding the types of records that must be maintained, how long they must be kept, and the consequences of not complying, you can avoid potential legal issues and protect yourself and your employees. Remember to consult with an employment lawyer or HR consultant to make sure you are completely compliant with the FLSA.

Take the time to understand FLSA recordkeeping requirements and implement effective recordkeeping practices in your workplace. By keeping accurate records, you can make informed decisions and improve your business operations.