The Fair Labor Standards Act (which sets the federal minimum wage, mandates overtime pay, and limits child labor) requires that employers keep records of the hours worked and wages earned by non-exempt employees. Generally, a non-exempt employee is almost any employee who is not a salaried manager/professional or working on commission. The form of the records is up to the business, but must include for each employee:

1. identifying information (full name, social security number, address, birth date for employees younger than 19, sex, and occupation)
2. statistics on work time (hours worked each day and total hours worked each workweek, as well as the start and end dates of the workweek)
3. regular hourly pay rate
4. payroll information broken down by categories for each workweek (total straight-time earnings, total overtime earnings, all additions to or deductions from the employee's wages, total wages paid, date of payment, and the dates of the pay period covered by the payment)

Action Steps
The best contacts and resources to help you get it done

Download and display FLSA poster

Employers are required to display an official poster educating employees about the Fair Labor Standards Act. An employee break room, or over the time clock if you use one, is an excellent place to hang it.

I recommend: The poster is available at http://www.dol.gov/osbp/sbrefa/poster/main.htm.

Keep accurate weekly records of work time

The FLSA mandates that employers keep records of the actual time worked by employees, broken down by day and by week. These records must be “complete and accurate,” but the FLSA puts no restrictions on how this is accomplished. Employers may use a system as sophisticated as biometric access or as simple as having workers pencil in their hours on a sheet of paper. Small businesses with multiple employees may find that timesheet software solutions which integrate with payroll programs reduce administrative effort.

I recommend: Time and attendance software systems such as iEmployee, TimeClock Plus, Virtual TimeClock, and Timeclock Solutions are available. A variety of physical time clocks along with their corresponding supplies – including traditional punch-card systems, electronic badge-reading systems, and biometric systems – can be obtained from Global Time Systems, Time Clock Sales and Service Co, or Employee Time Clocks. A free Excel-based time sheet sample is available at The Spreadsheet Page: Employee Time Sheet. A number of other time sheet templates are available, also for free, from Microsoft.

Keep accurate weekly records of wages paid and deductions

In order to comply with the FLSA, payroll records should show each employee’s regular hourly pay rate (or weekly salary, if that is the basis on which they are paid); total straight-time earnings (per day or week, as appropriate); total overtime earnings for the pay period; any deductions or additions (examples include taxes withheld, health insurance deductions, or holiday bonuses); and the overall total of wages actually paid. The records must show both the date on which payment was made and the dates of the pay period covered.

I recommend: Payroll software can enable a small business to easily keep their own books and issue their own checks – QuickBooks, CheckMark, and PenSoft Payroll are among the options. You can also outsource your payroll to a variety of service providers, including Intuit Payroll, PayCycle, ADP Small Business Services, and Advantage Payroll Services.

Store records safely for required length of time

Payroll records must be kept for three years, says the Fair Labor Standards Act. So must collective bargaining agreements, if your workforce is unionized. Time cards or time sheets (or piece work tickets for employees paid by the piece), work schedules, documents showing wage rates for nonexempt jobs, and any records concerning additions to or deductions from wages must be kept for two years. The Department of Labor’s Wage and Hour Division can inspect these records or ask for copies of them.

I recommend: A commercial records center will store required documents for you; a local records center can be located through nonprofit professional association publications such as PRISM’s Resource Guide or ARMA International’s vendors list. It is also possible to outsource all of your record management functions through a company such as TAB. If you use a payroll service, record storage may be included as part of that contract.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If your employees generally work a fixed and regular schedule, record-keeping can be made easier. The FLSA allows employers to use the standard schedule as a default, marking down on a weekly basis that it was kept. This way, only exceptions to the standard schedule, such as sick time or swapped shifts, need to be separately entered into the records.
• •  Electronic records are easier to work with and store. An integrated software system which includes time sheets, payroll functions, and a search function for later record retrieval will make FLSA compliance simple, and your office more efficient.