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Careful recordkeeping can protect a business against wage claims

On Behalf of | Oct 5, 2021 | Employment Law

As an employer, you have numerous legal obligations to the people that work for your business. One of the most basic is that you pay them for their efforts. Federal employment laws create specific obligations for your business regarding the retention of certain records. 

Although retaining long-term records about business operations may involve planning and expense in the form of file storage or specialized computer software, it can actually protect your business against potentially devastating wage claims brought by your workers in the future.

How long should you retain your employment records? 

Federal law has different requirements for each type of record. When it comes to basic payroll records, such as clock in and out ones, your responsibility as an employer is to maintain that documentation for at least 3 years

Your records should include the identifying information for the worker, their role at your company and the specific terms for their compensation. You also need to maintain all of their daily time clock records and information about all deductions made from their wages and records about each individual paycheck. That may require substantial investment in digital storage or even physical storage facilities. 

However, those time clock and payroll records could be very important for your business if a worker brings a wage claim against the company. Your internal records can help you quickly and effectively show exactly how long someone worked at the company and how much you paid them. You may be able to resolve disputes about overtime by showing that they were counting their hours from the wrong day in the week, for example. 

Learning more about your financial and recordkeeping obligations as an employer can help protect you against oversights and future wage claims.