Fair Labor Standards Act (FLSA): Know the Rules and Avoid Litigation

Fair Labor Standards Act (FLSA)

Records and Requirements

3rd in a 4-part series

In Exempt vs. Non-exempt Employees, we briefly went over the differences between exempt and non-exempt employees, as laid out in the FLSA.  Of course, these distinctions are much more complex than what we've provided in our series, and we hope you'll take the time to investigate further with an attorney who specializes in employment law.

Once you've noted which positions in your company fall under each category, you can begin keeping records for each employee.  Remember the Department of Labour auditors can review your timekeeping and payroll records at any time.  If you're found in violation of the FLSA, you could face steep penalties.

Here are the basics to keep your records on track:

Exempt Employees

  • Identifying information including employee’s name, home address, occupation, gender, and birth date if under 19 years of age
  • Time parameters defining the employee’s work week
  • Wages paid for the pay period
  • Date paid and the corresponding pay period

Non-exempt Employees

  • Identifying information including employee’s name, home address, occupation, gender, and birth date if under 19 years of age
  • Time parameters defining the employee's work week
  • Total hours worked per day and week
  • Total straight-time earnings
  • Regular hourly pay rate during any week that includes overtime worked
  • Total overtime paid
  • Any wage deductions or additions

The records described above must be accurate, and kept on file for at least three years.  Supplementary information must be saved for at least two years.

All time and payroll records must be kept at the place of business or in a central storage location.  Whether maintained on paper, in microfilm, or on a computer-based system, the data must be readily available in the event an auditor wishes to inspect them.

Consequences of Non-compliance

The Department of Labor has investigators in 400 offices around the country, who regularly engage in rigorous workplace inspections.  If you don't comply with FLSA regulations, you could be liable for back payments to employees as well as fines and/or criminal prosecution:

  • Firing or discriminating against an employee for filing an FLSA complaint can result in fines up to $10,000.  A second offense can result in a prison sentence
  • Failing to comply with FLSA youth labor laws exposes employers to criminal prosecution and fines up to $11,000
  • Wilful or repeated minimum wage or overtime pay violations may be subject to a civil penalty of $1,100.

Watch for our final chapter on FLSA, Make Timesheets Work for You to see how automated timekeeping software can help you avoid litigation!

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