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You should be tracking your team’s time to understand how much time is spent on tasks and projects and be able to balance workloads, but also to comply with FLSA’s timekeeping requirements.
Not complying with FLSA’s timekeeping rules can land your business in legal trouble. Non-compliance can be penalized by up to $1,000 per violation, plus any backpay, liquidated damages, and attorney fees owed.
Keep on reading to learn what you need to do to stay compliant with FLSA timekeeping regulations.
The Fair Labor Standards Act (FLSA) establishes regulations for minimum wage, overtime pay, youth employment standards, and record-keeping for employers in the private sector as well as for federal, state, and local governments.
To be compliant with FLSA’s timekeeping rules, businesses need to keep employee and time records and make these available for inspection by representatives of the U.S. Department of Labor Wage and Hour Division.
While the FLSA doesn’t penalize businesses for timekeeping issues specifically, not recording employee's work hours accurately can lead to non-compliance when it comes to paying employees for overtime.
Non-compliance with FLSA’s overtime regulations can be very costly. An employee who hasn’t been paid for overtime worked can sue the company and be awarded one of the following:
Backpay – The total amount of money the company owes an employee for overtime worked.
Liquidated damages – Employees who are awarded liquidated damages receive double the amount of backpay they’re owed.
Reasonable attorney fees – FLSA allows for plaintiffs also to recover attorney fees.
Some types of employees are exempt from FLSA rules. Whether an employee is considered exempt or non-exempt depends on the type of work they do, how much they’re paid, and how they’re paid.
Employees with executive job duties (such as supervising two or more employees or having the ability to hire or fire employees) are considered exempt. The same is true for those performing professionally exempt work, such as lawyers, dentists, doctors, and teachers.
Employees with administrative duties (such as office work directly related to management or the employer’s business operations) are also considered exempt.
Salaried employees are exempt as well. Employees paid less than $23,600 per year, as well as those paid on an hourly basis, are considered non-exempt.
While it’s not hard to stay compliant with FLSA’s timekeeping requirements, it’s important that you know everything the FLSA requests employers do when it comes to keeping employee time records.
To stay compliant with FLSA’s rules, you’ll need to decide on a way to track employees’ daily and weekly hours, track all the required information, and store the records for an adequate amount of time. You’ll also have to make sure that you’re using time rounding properly.
The FLSA doesn’t force employers to use a specific method of timekeeping. You can track employees’ actual hours any way you like, as long as it results in precise and accurate time records.
Official FLSA documentation mentions the following timekeeping methods as examples of how employers could track the time employees spend working:
Time clock - A device that records when employees start and finish working for the day. Depending on the device, it might require employees to swipe a magnetic stripe card, scan a barcode, or use a biometric reader to clock in and out.
Timekeeper - A person put in charge to record the time employees spend working, enter time records into a time management system, and approve timesheets.
Time tracking software - A software solution that can track employees’ time and generate accurate timesheets. Advanced time tracking tools, such as Hubstaff, also allow you to create and manage employee schedules, invoice clients, and automate payroll.
Employers are required to track all hours worked by employees. The FLSA’s definition of “hours worked” includes any time an employee needs to be on duty or on the employer’s premises, as well as any time that they’re suffered or permitted to work.
Time spent in job-related meetings or training, commuting to work sites, or on any other job-related travel during regular work hours also constitutes hours worked. While the FLSA doesn’t require employers to offer breaks or meal periods, it’s mandatory to track time spent on them when they’re offered.
Additionally, if an employee performs work that benefits the employer, this time needs to be tracked and paid regardless of whether the work was authorized by the employer or done before or after their shift.
Employers are required to keep the following information on all non-exempt employees:
Date of birth
Sex and occupation
Time of day and day of the week when the employee's workweek begins
Regular hourly rate of pay
Hours worked every workday and total hours worked each workweek
Total daily or weekly straight-time earnings, excluding premium overtime compensation
Total overtime pay
Total additions to or deductions from wages paid each pay period
Total wages paid each pay period
Date of payment and the pay period covered by the payment
For exempt employees, employers only need to keep basic records, which include items 1 through 5 and 11 through 12.
The FLSA allows time rounding, but under the following rules:
Between 1 and 7 minutes, time is rounded down and excluded from the time report
Between 8 and 14 minutes, time is rounded up and included in the report as 15 minutes of working time
Additionally, time rounding needs to be averaged. In other words, it shouldn’t always be done in a way that favors the employer, nor in a way that only favors the employee.
You need to avoid always rounding up or always rounding down. This will ensure employees are compensated fairly for their time.
The FLSA doesn’t specify a form the records need to be kept in. You can use paper records but aren’t required to do so.
Records can be kept at the place of employment or at a central record-keeping office. When records are kept in a record-keeping office, they need to be made available for inspection within 72 hours of receiving notice.
Employers are required to preserve payroll records, employment contracts, and any collective bargaining agreements for at least three years.
Time cards, wage rate tables, piecework tickets, records of additions or deductions from wages, as well as work and time schedules should be kept for at least two years.
Hubstaff is an FLSA-compliant software solution you can use to track your team’s time, clock team members in and out automatically, and generate detailed and accurate timesheets.
It also supports creating and managing employee schedules, measuring productivity, and payroll automation.
With Hubstaff’s free 14-day trial, you can test out the software completely free of charge and see if it’s the right fit for your business.
Track time, generate accurate timesheets, and streamline payroll. Free for 14 days.