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Complying with Payroll Recordkeeping Requirements

By November 27, 2018December 16th, 2022Legal

In the past, we have written about a variety of requirements and forms, from OSHA form to payroll and other accounting documentation. Today, we’ll cover some general guidance related to payroll recordkeeping. This task isn’t easy—although the requirements of the Fair Labor Standards Act (FLSA) are straightforward, other state and federal laws can be complicated and confusing. Additionally, most of them change from time to time.

As with so many workplace laws, one principle overrides all other considerations. To err on the side of caution, always follow the most “employee-friendly” laws and requirements. Other points to consider are:

  1. Complying with the FLSA is essential. Employers must record and maintain detailed information so they can demonstrate compliance, if necessary, with the FLSA provisions regarding minimum wage, overtime, equal pay and child labor. Records should comply with the DOL’s Fact Sheet #21 which lists the information that employers must maintain. (Requirements for tipped employees are more extensive. They are not covered by this fact sheet.) Should the U.S. Department of Labor request information, the firm must be able to provide it within 72 hours of the request.
  2. Multistate or national employers cannot make assumptions. Payroll recordkeeping laws vary from state to state, and even city to city, and company locations, rather than headquarters sites, dictate what laws must be followed. Employers with dispersed locations should work with a professional payroll expert or labor lawyer to determine what they need to store and where, and for how long.
  3. State laws are often more stringent than federal laws. For example, although the Department of Labor does not require organizations to provide pay stubs, 26 states require them to be provided in printed or electronic form. (Georgia is not one of them.) Some states also require employee records to be kept in an “unalterable form,” such as with written in ink on paper.
  4. Records management is the key: Whether the company manages its records in house or outsources them as part of the payroll function, having a structured records management plan is the best way to ensure payroll recordkeeping is done properly. If handled in house, such a program should dictate, not only when and by whom records are updated—and how and where they are stored, but also who has access to the records and what measures will be taken to ensure confidentiality.

In an increasingly complicated and dangerous world for business owners, all forms of recordkeeping—and especially those with sensitive information, like payroll records—must be handled conscientiously and with care. To do otherwise can literally put the company’s future at risk.

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