PAYROLL RECORD-KEEPING 101

Employers should take proper steps to generate and protect complete and accurate payroll records. In addition to being legally obligated to compile such records, employers can also use these documents to refute a worker’s claim for unpaid overtime, off-the-clock hours worked, and/or missed meal breaks. Under federal and California law, employers must maintain and preserve payroll records that include hours worked, wages paid, pay dates, and gross and net pay.

As more specifically described in the California wage orders record-keeping requirements and other state regulations, each employer must keep accurate employee information including:

• Full name, home address, occupation and social security number.
• Ages of all minors.
• Time records showing when the employee begins and ends each work period.
• Meal periods, split shift intervals and total daily hours worked except for (i) any meal periods during which all operations cease and (ii) any authorized paid rest periods.
• Total wages paid each payroll period, including value of board, lodging, or other compensation actually furnished to the employee.
• Total hours worked in the payroll period and applicable pay rates. This information must be readily available to the employee upon reasonable request.
• Total balance of sick pay benefits.
• As covered in our blogs Piece Work Compensation Is a Wreck Waiting to Happen and California’s Itemized Pay Stub Requirements, Ignoring the Needed Details Poses Trap for Unwary Employers, other details regarding piece rate production and compensation for all applicable employees.

The above-listed records must be in English; written in ink or other indelible form; and properly dated, showing day, month, and year. Payroll records should be kept either at the employee’s place of employment or at a central location within California for at least four years to comply with employment-related records retention requirements. Employers should consult with their tax advisors for any additional IRS-mandated retention periods.

Employers should safeguard all such employee records from unauthorized use, disclosure, removal or destruction. Restrict access to such files to trusted human resources and/or accounting personnel only and always keep the records in a secure, locked location. After all, when it comes to wage and hour claims, the best defense is a good set of payroll records.

For more information, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.

Cindy Bamforth, May 11, 2016