What records do I have to keep for payroll purposes?

Whether you have few or many employees, maintaining payroll records will be vital to your operation.

But with all the paperwork, documents and behind-the-scenes requirements from regulators, it can quickly become overwhelming for most employers. Even if only to stave off regulatory and legal pressure, it needs to become a priority.

Federal Payroll Record Keeping Requirements

For starters, you need to ensure an employer is at least following the federal Fair Labor Standards Act (FLSA) to show that the company respects laws about minimum wage, overtime, equal pay and child labor.

Staying in compliance with FLSA record-keeping rules is really simple, once you understand what information you need and how long you need to keep it. The following are some of the fundamental records every employer must keep:

• Full name and Social Security number of the worker.
• Details of the employee’s address, sex and occupation.
• Employee’s date of birth if under 19.
• The actual number of hours worked each day and week.
• The form in which an employee’s wages are paid and (e.g., hourly, weekly, etc.
• The normal hourly rate should be paid to the employee.
• Full straight-time earnings for the day or week.
• Total overtime pay for the work week.
• Increments or decrements from the employee’s salary.
• Sum of all wages paid per pay period.
• Date of payment and period for which the payment is made.

These records must be retained in a safe and accessible place by employers. But, for how long?

Payroll records and collective bargaining agreements, sales and purchase records, must be kept for three years, while wage computation information such as timecards must only be kept for two years. And please note, employers must also keep records for staff that have been terminated.

In case of an audit or controversy, all such records shall be produced within 72 hours upon the request of representatives of the U.S. Department of Labor. It’s much easier to deal with them the next time they come knocking at your door if you can keep these in one place all ready for you.

And remember to keep employment tax records too. Employers must retain records associated with payroll and withholding for at least four years after the tax return is due or when you pay taxes, if that’s later.

State Payroll Record Keeping Requirements

State regulations may also vary from national record-keeping rules. Michigan, for example, requires the same type of information established by FLSA; however, they also require a detailed accounting of fringe benefits and that all records be kept on file for three years.

Employers who operate in multiple states or at the national level should confirm with state, and even local agencies on what they may need.

Keeping Records Organized

Managing these records can be cumbersome. But most of them can easily be accessed online with a few clicks of a mouse, using the right payroll software. Rely on our pros for assistance in staying compliant with your payroll record-keeping responsibilities through our online portal.