Federal time-sheet laws require covered employers to keep minimum records of the hours their employees work. Businesses may have to keep daily records if they pay their workers hourly. This is to ensure compliance with federal minimum-wage and overtime laws. Many states have additional time-sheet requirements for employers and may require companies to keep records of employees' break times.
The U.S. Department of Labor administers the Fair Labor Standards Act, which establishes the minimum wage and hour guidelines for covered employers. The act applies to state, local and federal government employers; public agency employers; union halls; health care employers; and schools. It also applies to private employers who conduct interstate business or produce gross sales of at least $500,000 a year.
Covered businesses must comply with the act's time-sheet requirements and record-keeping rules. States may have additional wage and hour laws for employers. Several states, including Texas and California, have specific time-sheet regulations that apply to all business owners, regardless of their size.
According to federal law, businesses can keep time sheets or time cards recording the actual number of hours their employees work. As a practical issue, they can round their employees' time worked to the nearest 15 minutes. However, the Wage and Hour Division of the U.S. Department of Labor states that employers who round down must also round up to benefit their employees from time to time. This ensures employers compensate their employees properly over time.
It's illegal for covered businesses to encourage their employees to engage in "off the clock" work. Although federal law doesn't require companies to pay their employees for time not worked or provide breaks, they must pay them for rest breaks that are less than 20 minutes or meal breaks of less than 30 minutes. Hourly employees and non-managerial or non-administrative employees must receive overtime compensation of 1.5 times their hourly wage for any time they work beyond a 40-hour week.
In addition to complying with federal timekeeping requirements, employers must keep adequate records of their employees, including names, Social Security numbers, gender and addresses. Employers are also required to keep records of their employees' salaries.
Some states such as California and Texas require employers to maintain these records for a minimum number of years. California also requires employers to disclose an employee's time records upon request by an employee or the state labor commissioner. Some states have additional time-sheet requirements for minors, which include tracking the specific number of hours they work.