Sec10: Recordkeeping and Record Retention Flashcards
The basic federal payroll recordkeeping requirements (other than those dealing with federal income or employment taxes) are contained in regulations issued by
The Wage and Hour Division of the Department of Labor under the FLSA. Retained for 2 or 3 years
Records that must be kept for each employee for at least three years after their last date of entry include:
- Name, as it appears on the employee’s social security card
- Home address, including apartment number, if any, and Zip code
- Date of birth, if under age 19
- Sex and occupation (for use in determining Equal Pay Act compliance)
- The beginning of the employee’s workweek (time and day)
- Regular rate of pay for overtime weeks, the basis for determining the rate, and any payments excluded from the regular rate
- Hours worked each workday and workweek
- Straight- time earnings (including the straight- time pay portion of overtime earnings)
- Overtime premium earnings
- Additions to and deductions from wages for each pay period (e.g., bonuses, withheld taxes, benefits contributions, garnishments)
- Total wages paid for each pay period
- Date of payment and the pay period covered
Records that must be kept for at least three years from the last date they were in effect include:
- Collective bargaining agreements
- Certificates authorizing the employment of industrial homeworkers, minors, learners, students, apprentices, and handicapped workers
- Records showing total sales volume and goods purchased
Records that must be kept for at least two years from their last date of entry include
- Basic employment and earning records supporting the data for each employee’s hours of work, basis for determining wages, and wages paid (e.g., time or production cards)
- Order, shipping, and billing records showing customer orders, shipping and delivery records, and customer billings
- Records substantiating additions to or deductions from employees’ wages, including purchase orders, operating cost records, wage assignments, and garnishments
Records that must be kept for at least two years from their last effective date include:
- Wage rate tables and piece rate schedules
- Work time schedules establishing the hours and days of employment
Records for exempt white collar employees
For employees who are exempt from the minimum wage and
overtime provisions of the FLSA because they are bona fide executive, administrative, or professional employees employers need not keep records related to such employees’ regular rate of pay, hours worked, straight- time earnings and overtime pay, and deductions from wages
Hospital employees
In addition to other required records, hospitals and residential care facilities whose employees have a work period of 14 consecutive days (rather than seven for other employees) must keep records of the time and day on which the 14-day period begins, hours worked each day and each 14-day period, and straight- time and overtime premium earnings paid in each 14-day period. They also must keep a copy of the written agreement between the hospital and the employee allowing use of the 14-day work period or a memorandum summarizing its terms if the agreement is oral.
Tipped Employees
- Some notation on the records showing the employee’s wages are determined partly by tips
- The amount reported by the employee to the employer as tips (weekly or monthly), which may be taken from IRS Form4070, Employee’s Report of Tips to Employer
- The amount of the tip credit taken by the employer
- Hours worked and straight- time earnings for time worked other than as a tipped employee
- Hours worked and straight- time earnings for time worked as a tipped employee
Industrial homeworkers
- For each batch of work, the date the work was given out or started, the amount of work given out, the date the work was turned in, the amount of work turned in, the articles worked on and the work done, piece rates paid, hours worked, and wages paid
- The name and address of any agent, distributor, or contractor of the employer that gives work to homeworkers
- The name and address of each homeworker
Employees receiving remedial education
Where employees are exempt from overtime pay requirements for
time spent receiving remedial education, the employer must keep, in addition to other required records, records of the hours spent by each employee receiving such remedial education and the wages paid for those hours
Formof records and availability for inspection
No requirements or regulations that ER’s keep records in a particular form. They can be store on microfilm or microfiche but they must have a viewing equipment available and provide transcriptions when asked to do so. Records must be kept safe and accessible at the worksite or at a central location and available within 72 hours of notice.
Penalties for recordkeeping violations
Willful violations of the recordkeeping requirements can bring a
criminal penalty of up to $10,000 and/or imprisonment for up to six months, although a jail sentence can be imposed only for second and subsequent convictions
Government Contractors (Walsh Healey)
Recordkeeping requirements similar to those in the FLSA exist under laws regulating federal government contractors. Separate logs of occupational injuries and illnesses must be kept and preserved for 5 years under the Walsh- Healey Public Contracts Act.
Internal Revenue Code
The Internal Revenue Code requires all employers that must withhold and pay over federal income, social security, and Medicare taxes to maintain the following records for each employee (see page 10-5)
Retention Period
These records must be kept by the employer for at least 4 years after the due date of the tax (or the date the tax is actually paid, if later) for the return period to which the records relate. Information related to taxes paid by employees (e.g., FormW- 4) must be retained by the employer for at least four years after the due
date of the employee’s personal tax return (generally the following April 15).
Records of Allocated Tips
regarding tip allocations for at least 3 years after the due date of the return or statement to which they relate.
Benefit Plans
need to keep records of what plans are excluded
What is the goal of the IRS in establishing procedures for ER records processed by computers?
The procedures are generally aimed at achieving one goal—making it easy for the IRS to determine the employer’s correct tax liability.
Penalty for faulty record keeping
A misdemeanor punishable to up to $25k ($100k for corporations) and/or imprisonment for up to one year plus costs of prosecution.
Under the Immigration Reform and Control Act (IRCA) the I-9 needs to be retained how long?
For at least three years after the date of hire or one year after the date of termination, whichever is later.
Civil Rights Act of 1964 (Title VII)
Prohibits employers from discriminating against employees on the basis of race, color, religion, sex, or national origin. The term “sex” includes homosexual and transgender employees. No recordkeeping req however they must keep recording for training for one year. Rules apply to Americans with Disabilities Act of 1990
Age Discrimination in Employment Act of 1967 (ADEA)
The Age Discrimination in Employment Act of 1967 prohibits employers from making hiring, termination, or other personnel decisions based on the age of individuals who are at least 40 years of age. Records need to be contained for 3 years - Name, address, DOB, occupation, pay rate, comp each week
EEO-1 report collects employer workforce data
Employers with 100 or more employees and federal contractors
with 50 or more employees are required to file an Employer Information Report (EEO- 1) with the EEOC. Oct 1 - Dec 31
Family and Medical Leave Act (FMLA)
requires employers with 50 or more employees to grant
employees up to 12 weeks of unpaid leave to care for a newborn or newly adopted child or for themselves or a parent, child, or spouse who has a serious medical condition. Retain under FLSA 3 years
ACA
1094-C and 1095-C’s fora at least 3 years from the due date of the returns
Unclaimed Wages
turned over to state treasuries under each state’s abandoned property (escheat) laws
Health Insurance Portability and Accountability Act (HIPAA)
The Department of Heathe and Human Service enforces. The Privacy Rule implemented the requirements of HIPAA
What procedure should be followed for the retrieval and destruction of records?
Whatever method an employer uses to create and preserve its employment and payroll records, it should have a policy governing record retention, retrieval, and destruction. The written policy should clearly state how long records are to be retained (and how the containers should be labeled), how they can be retrieved
(especially important if records are stored off site), and when and how they should be disposed of.
What are the advantages of storing payroll and employment records on microfilm or microfiche?
- Less space needed for storage
- Reduced storage costs
- Less chance of losing individual documents
- Increased durability
