In this new article series, we will provide a refresher on the basics of the Fair Labor Standard Act’s (FLSA’s) requirements. In this article, we will review employers’ recordkeeping obligations under the law and how employer practices were impacted by the Lilly Ledbetter Fair Pay Act of 2009.
Every employer covered by the FLSA must keep certain records for each covered, nonexempt worker. There is no required form for the records, but the records must include accurate information about the employee and data about the hours worked and the wages earned. The following is a listing of the basic records that an employer must maintain:
- Name and social security number
- Home address, including zip code
- Date of birth, if under age 19
- Sex and occupation
- Time of day and day of the week on which employee’s workweek begins
- The hourly rate of pay
- The basis of pay
- Total hours worked for each day and each week
- Total straight (i.e., non-overtime or premium) pay
- Total overtime pay
- Additions and deductions made, including wage assignments
- Total wages paid each pay period
- Date of payment and pay period covered
Under the Act, all records that constitute the primary sources of this information must be preserved for a period of 3 years, for all current and former employees. Such records include payroll records, work certificates, collective bargaining agreements, and individual employment contracts.
Supplementary records—documents serving as the source documents for other payroll records maintained by an employer—must be preserved for at least 2 years. Supplementary records may include timecards, production cards, wage rate tables, piece-rate schedules, and work-time schedules.
Although not required under the FLSA, it is a good idea to retain job descriptions, performance reviews, internal memorandums, postings, handbook policies, and other materials pertaining to wage classifications and pay practices, which you may use to justify your pay practices during an audit, for a period of at least 3 years.
The FLSA requires that all records be kept at the place or places of employment or at one or more established central recordkeeping offices where such records are customarily maintained. If kept at a central recordkeeping office rather than the place of employment, the records must be available within 72 hours following a request by the DOL.
Federal regulations also require covered employers to post notices in the workplace stating the requirements of the FLSA.
Applicable law: 29 C.F.R. § 516.2-7.
Recordkeeping After the Lilly Ledbetter Fair Pay Act
Some employers keep records even longer than required, especially since the 2009 passage of the Lilly Ledbetter Fair Pay Act (Ledbetter Act). Though the Ledbetter Act does not contain specific recordkeeping requirements, it has changed the landscape of employee record keeping since its passage.
The Ledbetter Act provides that when an employee is affected by a discriminatory pay decision or practice, then each paycheck that is issued based on that pay decision or practice constitutes an individual discriminatory act in itself. The practical effect of this law is that each time an employee is paid (where that pay has been affected by unlawful discrimination), then the employee’s time limit to file a claim for pay discrimination resets.
The recordkeeping issue arises if the original decision upon which the employee’s pay was based occurred many years in the past. For example, in the case upon which the Lilly Ledbetter Act was based, the discriminatory pay decision had occurred more than 20 years in the past. However, Lilly Ledbetter argued—and the Ledbetter Act now holds—that every subsequent paycheck she received was a new act of discrimination stemming from that decision made 20 years in the past.
The Act creates a difficult recordkeeping burden for employers, as an employer now in a position to defend against such a charge of discrimination would be required to prove that no discrimination occurred—a process that could require unearthing records related to a payroll decision made well outside federal or state statutory record retention requirements, as well as records related to similarly situated employees who may have long since left the company.
As a result, employers concerned about defending charges of pay discrimination may opt to preserve personnel records—particularly those related to pay decisions such as promotions or evaluations—for a longer period than the statutory requirements.