• Making sure that employees understand time-recording expectations can avert possible legal action.
• Federal law requires specific retention times for employment documents.

When the burden of keeping time records is placed on employees, the organization must communicate expectations and procedures for recording time. Creating written policies is also helpful, and employers should ensure that supervisors consistently enforce requirements and expectations.

As an example, state law might require a 30-minute meal period in the middle of a shift. If so, the employer needs to communicate that employees are expected to take meal breaks and record this break on the timecard. The organization must also ensure that employees actually have time to take the break. This does not mean employers must forcibly prevent employees from working during the designated mealtime. However, the employer should ensure, for example, that relief workers are available where needed so employees can take their mealtime.

Ensuring that employees understand expectations, and offering reminders about the policy or requirement, can help protect the company in case of future litigation. A common area for back pay lawsuits is unpaid mealtime, where employees claim the employer deducted 30 minutes from the daily hours worked, even if all employees did not actually take a break (or were not completely relieved from duty during breaks).

However, when employees have been informed of expectations, and the employer has not only provided reminders but also consistently enforced the expectation, potential litigation can sometimes be dismissed. If employees are aware of expectations for taking breaks and reporting time, but they voluntarily skip a break without telling the organization, those employees often have a much greater challenge in establishing a claim for back pay.

Essentially, the employer shows the employees were in knowing violation of company practices and communicated requirements, and failed to report the time worked, even to the point of certifying that the timecards were a true and accurate representation of time worked.

For these reasons, employers should have written policies on matters such as expected break or mealtimes, procedures for reporting time accurately, consequences for false reporting, and explanations of how to change a timecard if necessary.

When employees tend to work a fixed or regular number of hours that does not change from week to week, some employers have chosen to refrain from having daily or weekly timecards completed. The employer must still keep records of hours worked each week, but would simply record the same hours every week. While this practice can be acceptable, it does involve some potential risks.

First, in the event of an audit by the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) or an equivalent state agency, such a practice may cause the investigator to assume the employer is not capturing all hours that employees work. The investigator may have encountered other employers that recorded eight hours per day for each employee, regardless of whether some employees worked longer hours.

To overcome this assumption of inaccuracy, the employer should be able to show that employees have been informed of a procedure for reporting variances in hours worked. The employer may even have to show that employees used the procedure. For example, if an employee worked an extra 15 minutes during a particular week, the employee should have reported that extra time, and it should be included in the employer’s records.

Unless the company has strict controls for when employees start and stop working, it is almost inevitable that some employees will work slightly different hours during some weeks, such as staying late to finish a project or skipping an otherwise unpaid meal period.

Second, an employer that records the same hours every week may face a greater challenge in refuting employees’ claims that they worked extra hours without pay. Once again, a clear procedure for reporting exceptions may help overcome such a claim. An employer must pay for all hours it knows (or should have known) that an employee worked.

An employee’s refusal or failure to report additional hours may mean the back pay claim would be found to have no merit. However, such cases often hinge upon the employer’s diligence in communicating and enforcing the policy for reporting extra time.

Employers should have a stronger presumption that all time worked was properly captured when employees self-report hours worked by providing signed timesheets, by entering hours worked in an electronic timekeeping system, or by punching a time clock.

Records and retention

Employee files are a depository of many different documents, each with specific information required by certain laws and with different retention periods. The personnel file is where many records are customarily kept.

The following list is not all-inclusive, but represents some of the more common documents required by federal laws. The retention periods listed are the minimum. Many employers retain them for longer periods, and state laws may require longer retention.

• Time sheets: Keep for two years, potentially in the personnel file, but no specific location is required, as long as they are safe and accessible. 29 CFR 516.6
• Payroll records: Keep for three years, potentially in the personnel file, but no specific location is required, as long as they are safe and accessible. 516.5
• W-4s (copies) or other tax records: Keep for four years, potentially in the personnel file, but no specific location is required. However, if the Social Security number is included, records should be secure. FICA, FUTA 26 CFR Part 1
• Records of employment actions (hires, promotion, termination, etc.): Keep for one year from the date of the action or making of the record, whichever is later. Traditionally stored in the personnel file, but no specific location is required. If legal action occurs, keep these records for the duration of the action. Title VII, ADA, ADEA, 29 CFR 1602.14.

All employers should heed this decision and ensure that supervisors are verifying accurate reporting of all hours worked. A supervisor might have knowledge of unreported working time if an employee works late or takes work home with a supervisor’s knowledge but does not record the additional hours, or if an employee reaches a spending limit and asks to work “off budget” by not recording hours in order to finish the project within approved spending limits.

A supervisor who becomes aware of unreported or underreported working hours should address the situation immediately. The employee should be required to accurately report all working time in the future, and should be paid for all hours worked that can be reasonably ascertained.