Under the Fair Labor Standards Act (FLSA), employers must follow the record-keeping requirements needed to produce a fair and accurate payroll based on the hours employees worked and the wages earned. By law, employers must keep this information for at least three years.
It is the responsibility of the employer to ensure that all timekeeping methods used by the company are accurate. Employees may be required to write down their start and stop times on their timesheets, but other options such as using a time card with a time clock, having a dedicated timekeeper, or implementing a comprehensive time & attendance system may also be used.
Gathering the Information
Employees who are required to fill out a timesheet on a regular basis, whether it be daily, weekly, or bi-weekly, must complete it with accurate information and submit it for payroll processing. Regardless of the system used, it is essential for employees to submit their timesheets to ensure that they are paid correctly and on time.
Timesheet Best Practices
The rules of the FLSA require that the following employee time-tracking information be kept along with the timesheet information. These employee records need to be securely stored and protected from unauthorized access.
- Name of Employee
- Social Security number
- Birth date (only if younger than 19)
- Time and day of the week when the employee's workweek begins
- Basis for pay rate (such as per hour, per week, or piecework)
- Regular wage rate (must meet minimum wage requirements if any apply)
- Overtime rate (a minimum of one and one-half times the regular rate)
- Daily hours worked
- Total hours worked for each work week
- Total regular earnings
- Total overtime earnings
- Any additions or deductions from an employee's wages
- Total wages paid for each pay period
- Date of payment and the pay period covered by each paycheck
- Optional: Track paid time off (PTO) if this benefit is offered to employees
If employees are self-reporting and submitting their work-hours information, be sure to have them certify the records' accuracy by using a sign-off procedure. An employer must keep accurate records for employees covered by the FSLA who are not exempt.
There are many categories of exempt workers, such as agricultural workers and food service workers, who earn tips. Food Service workers must earn $2.13 per hour as a minimum wage and receive tips that make up the difference of the federal standard minimum wage of $7.25 per hour. If the tips are not enough, the employer must pay the difference.
Some salaried white-collar workers who receive minimum weekly salary payments of $684 or higher are exempt. Blue-collar workers and first responders are never exempt. No matter their hourly wage, these workers must be paid overtime for working more than 40 hours per week.
Failure by an Employer to Keep Accurate Records
Enforcement of the FSLA rules is conducted by the Department of Labor, Wage and Hour Division. There are civil penalties, fines, and sanctions for violations. Employers who violate the FLSA may have to pay back wages, liquidated damages, court costs, and legal expenses.
In addition to requiring compliance under federal laws, time recordkeeping must also comply with state and local laws. For example, it is common for some states to have a minimum wage that is higher than the federal minimum wage.
Using Timesheets for Salaried Employees
Although there are no legal requirements for keeping timesheet records for salaried employees, this process can be beneficial for internal accounting purposes. Salaried employees may find it useful to track their time to analyze their productivity and account for billable hours.
Additionally, allocating expenses to specific clients or projects can be facilitated through employee time tracking, including salaried employees. Managing employee timesheets, even for salaried employees, may be necessary for project or cost accounting purposes.
Frequent Work Time Reporting Reduces Errors
To avoid human errors, it is important for employees to promptly complete their timesheets instead of waiting until just before the payroll department needs them. This can help ensure accuracy and avoid mistakes.
Problems that may arise include the following:
- Overpay or Underpay: Inaccurate hourly reporting causes problems with payroll
- Project Cost Inaccuracies: Trouble with project management from failure to accurately allocate labor resources to a project
- Damage to Client Trust: Issues with clients who are invoiced based on billable hours
The best practice for collecting timesheet information is using a real-time tracking system. With a system like CAVU’s, employees may even use a smartphone app to clock in and clock out. The system can collect the time, date, and even GPS location. It sends real-time data to update the centralized employment records. Employers know when employees clock in and out and where they are physically located when they do so.
Establishing a regular and consistent timesheet submission frequency is essential for accurate payroll, project management, and labor cost analysis. The correct frequency depends on the nature of the job, industry practices, and company-specific needs. However, utilizing tools like CAVU's Time & Attendance Solution can streamline and simplify this process for both employees and managers.
Contact us to learn more about managing time and attendance for your business.