Thursday, April 25, 2013

Record Keeping Requirements under the FLSA - Even for Exempt Workers

I have a client that owns a Nebraska small business that is transitioning an employee from hourly pay to salary.  She asked me about what kind of documentation she needs to be keeping for her employee that is now moving to a salaried position.  I found the information below on the Department of Labor's website here.

Every covered employer must keep certain records for each non-exempt worker. The Fair Labor Standards Act (FLSA) requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned.  The law requires this information to be accurate. The following is a listing of the basic records that an employer must maintain:

1. Employee's full name and social security number.
2. Address, including zip code.
3. Birth date, if younger than 19.
4. Sex and occupation.
5. Time and day of week when employee's workweek begins.
6. Hours worked each day.
7. Total hours worked each workweek.
8. Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework")
9. Regular hourly pay rate.
10. Total daily or weekly straight-time earnings.
11. Total overtime earnings for the workweek.
12. All additions to or deductions from the employee's wages.
13. Total wages paid each pay period.
14. Date of payment and the pay period covered by the payment.


It is my understand that this information must be maintained even for employees that are exempt from FLSA overtime requirements.  It was surprising that even though workers are on salary, employers must keep accurate records regarding hours worked each day.  



Interestingly, the FLSA and its implementing regulations do not specifically prohibit employers from requiring exempt employees to work a particular schedule or to track the hours they work. In fact, the Department of Labor (DOL), in the preamble to revised exemption regulations, stated that employers may require exempt employees to work a specific schedule and to record and track hours without affecting their exempt status. 

However, you should be aware that if you require exempt employees to work a certain number of hours and account for their work time on an hourly basis, you may jeopardize the exempt status of these employees if the accounting has the effect of treating them like hourly workers. This practice could make the employer liable for past overtime. 

For example, if the exempt employee’s salary fluctuates based on the number of hours worked or the employee’s pay is docked for hours not worked in any day, the employee most likely will not be considered exempt. (However, interestingly, the FLSA exemption regulations allow you to pay an exempt employee additional compensation without jeopardizing the employee’s exempt status. This additional compensation can be paid on any basis, including a flat sum, bonus payment, straight-time hourly amount, time and one-half, or any other basis, including paid time off.) 

You generally may track hours worked for purposes unrelated to the employee’s pay (such as to account for work time billed to clients or performed under a federal contract) and may record daily attendance. And, you also must comply with applicable wage and hour record keeping requirements for exempt employees, such as recording the time and day of the week the exempt employee’s workweek begins and total pay for the week. 

Accordingly, if you require exempt employees to work a specific number of hours or arrive at a specific time (and have them clock in and out to show that they are complying with these requirements), you need to make sure that these policies do not appear to be treating them as nonexempt, and thus jeopardize their exempt status. You best practice, then, is to show that these requirements are directly related to the exempt employees’ job duties. So, you are wise to tie the exempt employees’ required schedule to their managerial job duties, instead of simply focusing on the number of hours the exempt employees work or their starting time. For example, if an employee manages nonexempt employees who must be at work between 9 a.m. and 5 p.m., you can require the exempt manager to be at work during the same hours to supervise properly.

If you own a Nebraska small business, and you need help determining if your Nebraska worker is exempt from FLSA overtime requirements, you may want to speak with an attorney.  Madathil Law Office is happy to offer free initial consultations. 

Angela Y. Madathil
Madathil Law Office, LLC
Employment and Business Law

Serving clients in Omaha and Lincoln

In Omaha                                         In Lincoln
1625 Farnam Street #830                  285 South 68th Street Place, Suite 322
Omaha, NE 68102                            Lincoln, NE 68510

T: 402.577.0686
F: 402.415.0635

Image from here.

No comments:

Post a Comment