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Wage and Recordkeeping Laws

This July, a Massachusetts grocery store made headlines when it was cited by the state attorney general for payroll and recordkeeping violations, totaling $313,915 in fines and restitution. Employees had complained that they were being underpaid, and the attorney general’s office conducted an investigation and even notified the store’s president of state wage requirements. But when the store did not correct its practices, the citation was issued.

The Federal Fair Labor Standards Act (FLSA) establishes requirements for employers to pay their employees (Federal minimum wage, $7.25 per hour), to pay their employees for hours worked beyond 40 hours in a single week (overtime, not less than 1.5 times the hourly rate, or “time and a half”), and to keep a number of employee records like time cards, wage rate tables and work schedules. (See our entry on 2019 minimum wage laws by state.) Employers are also required to post this information on the premises so that employees are aware of their rights.

Unlike payroll tax violations, which are under the jurisdiction of the Internal Revenue Service, wage and record-keeping standards are enforced by the Department of Labor’s Wage and Hour Division (WHD). While this department has offices throughout the country, it relies heavily on employee complaints to uncover violations. (Instructions for filing a complaint are available in a number of languages on the WHD’s website.)

“It is a violation to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under FLSA.”

In some cases, shoddy recordkeeping is a deliberate tactic by employers to remove evidence of minimum wage violations, which is why the laws also specify what records are required. There are no specific federal forms delineating these records, nor is there any one timekeeping method prescribed, but the FLSA clearly lists 14 basic points of information that must be maintained by the employer, for each employee, and they must be “complete and accurate.” These records must be made available to WHD representatives. The WHD website includes a sample timekeeping format.

Of course, the easiest way to ensure compliance is to hire competent and professional HR staff and/or to partner with a PEO that can fully manage your wage and payroll administration.

As of Jan. 24, 2019, Federal fines for wage and record-keeping violations have increased to account for inflation. Repeated or willful violations of minimum-wage or overtime statutes now carry a Federal penalty of $2,104 per violation, plus restitution.

Information on labor laws by individual state can also be found on the WHD website.

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