Payroll Quiz: Stay on Top of FLSA Rules

Some payroll staffers may assume that complying with IRS regulations is enough to keep their companies out of trouble.

That’s not the case — there are a number of requirements under the Fair Labor Standards Act (FLSA) enforced by the Department of Labor (DOL) that companies need to stay on top of, too.

IRS guidelines overlap in many cases, but there are key differences — such as records retention — in what the two federal agencies require.

Keeping accurate records isn’t just a good idea – it’s the law. FLSA requires that your data be complete and accurate.

Check that Payroll Knows the Score on FLSA

Test your staffers’ knowledge of the FLSA’s recordkeeping provision by having them answer True or False to the following statements. Then scroll down for the answers:

1. You must keep records of hours worked by both exempt and nonexempt employees.

2. Although the IRS requires you to keep personal information about employees, such as their Social Security Numbers, the DOL doesn’t.

3. Your records don’t have to include an hourly rate of pay.

4. Payroll records, like hours worked and wages, must be kept for three years; supporting documents like time cards and wage rate tables must be kept for two years.

Answers to the Quiz

1. False. FLSA requires these records for nonexempt employees only. But if an employee is misclassified as exempt, you could be penalized (e.g., back wages) for lacking proper records.

2. False. DOL requires SSN, sex, occupation, date of birth if under age 19, and more (e.g., address, workweek start) alongside hours/wages data.

3. True. Include hourly rate for hourly-paid nonexempt; for salaried or piece-rate, document the applicable basis/earnings instead.

4. True. Payroll records (hours, rates, earnings): 3 years. Supporting docs (time cards, wage tables, schedules, wage add/deducts): 2 years. Collective bargaining agreements (CBAs): 3 years.