Question:

I’m a new business owner and am not sure what types of records I’m supposed to keep with regard to the hours my employees work. Can you give me a summary of what I’m supposed to do as far as timekeeping?

Answer:

I’m a new business owner and am not sure what types of records I’m supposed to keep with regard to the hours my employees work. Can you give me a summary of what I’m supposed to do as far as timekeeping?
Answer: Accurate timekeeping is a critical component of running a business that is in compliance with California’s wage and hour laws. Timekeeping errors can result in serious liability for a business, which can translate into significant financial costs and penalties if a Labor Code violation is discovered.

The California Wage Orders require each employer to keep accurate records, in ink or in some other indelible form, of the actual hours worked by their nonexempt employees. If the employer does not maintain accurate time records, it can be difficult to disprove claims an employee may bring for unpaid wages or missed meal or break periods. For example, should an employee file a claim for unpaid overtime, an employer needs to be able to produce accurate and reliable timekeeping records in order to refute that claim. This is especially important because in the absence of such evidence, courts and administrative agencies like the Division of Labor Standards Enforcement (DLSE) may give more weight to the employee’s testimony about their hours worked.

In light of the foregoing, it is advisable for employers to have a written timekeeping policy in place stating that all nonexempt employees are required to record the time that they actually work, which will then form a permanent record of their hours worked. Employees should be required to report any time sheet errors immediately, and any such errors should be corrected in the same pay period in which they occurred. The timekeeping policy should inform employees that they are not permitted to alter time sheets or to record time for another employee, and that falsification of time sheets is grounds for disciplinary action (and possibly termination).

In addition to the requirements discussed above, nonexempt employees should be required to record on their time sheets when they begin and end their legally required meal periods, and confirm in writing that they were provided a rest period for every four hours worked. That way, should a question ever arise with regard to the employer’s compliance with meal and rest period requirements, the employer will be able to provide evidence of compliance. The timekeeping policy should also provide that, when an employee signs off on his or her time sheet, by that signature the employee is deemed to be acknowledging in writing that he/she took all required meal and rest periods during that pay period.

Employers are also required to provide a written itemized statement to employees either semimonthly or at the time of payment of wages. The statement can be a detachable part of the employee’s paycheck, or it can be a separate written itemized statement, and must include the following information:

  • Gross wages earned;
  • Total hours worked for nonexempt employees;
  • The number of piece-rate units earned and any applicable piece rate;
  • All deductions;
  • Net wages earned;
  • The inclusive dates of the pay period for which the payment is being made;
  • The name and Social Security number (last 4 digits only) or other identification number of the employee;
  • The name and address of the employer; and
  • All applicable hourly rates in effect and the number of hours worked at each rate.

In addition to the foregoing, there are other important documents that you need to keep on hand. For instance, if you have a make-up time policy that allows employees who miss work during a workweek due to personal reasons to make that time up later in the same workweek, you must have a written agreement in place setting forth the terms of the make-up time policy. The same is true for on-duty meal period agreements where the nature of the employee’s duties precludes him/her from being relieved of all duty during a meal period. In such an instance, the employer must have in place an agreement signed by the eligible employee, and stating that the on-duty meal period arrangement is revocable at any time. Lastly, if your business has an employee handbook, you should also have each employee sign a document acknowledging that they have received, read, understand, and agree to comply with the provisions of the handbook. That signed acknowledgement should be kept with each employee’s personnel records as documentation that they are familiar with your policies.

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