Under the Fair Labor Standards Act (FLSA), you must keep accurate records of hours worked each workday and each workweek for every nonexempt employee, along with the pay details that flow from those hours. Payroll records must be kept for 3 years and time cards and other supplementary records for 2 years. The law does not tell you which tool to use, only that the records are complete and accurate.

This guide explains exactly what the Department of Labor (DOL) expects under 29 CFR Part 516, how long each record must be kept, where state law asks for more, and what happens when the records are missing or unreliable. This is general information, not legal advice: when a rule depends on your state or your facts, confirm it with counsel or your state labor department.

The recordkeeping rules sit in 29 CFR Part 516. For each nonexempt employee, the DOL expects you to keep the following information:

- Identity details: full name, home address, occupation, and birth date if the employee is under 19.

Yes, for nonexempt employees the FLSA requires you to track hours worked every day and every week, and being salaried does not change that. You are generally not required to track hours for exempt employees, although you must be able to prove that the exemption applies. Whether someone is exempt depends on salary and duties, not on a job title or on whether they are paid by the hour.

This article walks through the three groups that cause the most confusion: hourly employees, salaried nonexempt employees and exempt employees. It also covers state rules, remote workers and what to do if you are unsure. This is general information, not legal advice, so check with counsel or your state labor department when the answer depends on your facts.

Almost every hourly employee is nonexempt, which means the FLSA applies in full: minimum wage of $7.25/hour (higher in many states and cities) and 1.5 times the regular rate for hours over 40 in a workweek. To prove you paid correctly, you must record the hours worked each workday and each workweek, as described in FLSA timekeeping requirements.

The law does not require a particular method, but it does require accuracy. Estimating hours from a posted schedule is not tracking, because breaks, late arrivals, early departures and extra work all change the real number.

An employee is exempt from overtime only if the person is paid on a salary basis at or above the required level and performs duties that fit a specific exemption. Everyone else is nonexempt and must be paid at least minimum wage and 1.5 times the regular rate for hours over 40 in a workweek. In 2026, the federal white-collar salary threshold is $684 per week ($35,568 per year).

Misclassification is one of the most common and costly wage and hour errors. This guide explains the current thresholds, the three parts of the test, the mistakes the DOL sees most often and what to track so your classification decisions hold up. This is general information, not legal advice: check with counsel or your state labor department for your situation.

For the executive, administrative and professional exemptions, the federal salary level is $684 per week, or $35,568 per year. For highly compensated employees the annual total compensation threshold is $107,432.

The DOL issued a 2024 rule that would have raised these figures, but a Texas federal court vacated it in November 2024, and the DOL removed it from the CFR effective May 15, 2026. The 2019 levels are in force again. If you updated pay for the 2024 numbers, you can keep those pay levels, but they are no longer the federal minimum.

A DOL wage and hour audit is an investigation by the Wage and Hour Division (WHD) into whether you pay minimum wage and overtime correctly and keep the required records. Investigators typically ask for payroll records, time records, pay rates, job descriptions and proof of exemptions for a defined period, usually the last 2 to 3 years. The best preparation is to have clean, accurate time and pay records before anyone asks.

This guide covers what triggers an audit, the documents investigators usually request, what happens during the process and how to prepare. This is general information, not legal advice: if you receive a notice, involve an employment attorney early.

The WHD opens investigations for several reasons. A complaint from a current or former employee is the most common trigger. Others include industry-wide enforcement efforts in sectors with frequent violations, referrals from other agencies and findings in a prior investigation.

You do not need to have done anything deliberately wrong to be investigated. Small errors in overtime calculations, misclassified employees or missing records can all lead to findings.

If you violate the FLSA, an employee can recover unpaid minimum wage and overtime (back pay), an equal amount as liquidated damages, and attorney fees. The claim can reach back 2 years, or 3 years if the violation was willful. Because the damages are doubled and the lookback is long, a small weekly error can become a large judgment.

This guide explains how back pay is calculated, what liquidated damages and willfulness mean, how collective actions work and what records protect you. This is general information, not legal advice. If you are facing a claim, speak with an employment attorney.

An employee who proves a violation can recover the unpaid wages, plus liquidated damages equal to the unpaid wages, plus reasonable attorney fees and costs. Liquidated damages are the default, though a court can reduce them if the employer shows it acted in good faith and had reasonable grounds to believe it was complying.

The DOL can also pursue back wages through its own investigation, as described in our guide to DOL audits. State laws may add their own penalties, interest or longer lookback periods.

The FLSA sets the federal floor, but states can and often do require more: higher minimum wages, daily overtime, meal and rest breaks, paid sick leave, higher exempt salary thresholds and longer record retention. When federal and state law differ, you must follow whichever gives the employee the greater protection. If you have employees in more than one state, you need to check each one.

This guide compares the federal baseline with the most important state differences, using California, New York and Washington as examples, and shows how to keep multi-state timekeeping organized. This is general information, not legal advice. Many of these rules change every year, so confirm current figures with the state labor department or counsel.

The FLSA requires a minimum wage of $7.25/hour, overtime at 1.5 times the regular rate for hours over 40 in a workweek, and recordkeeping under 29 CFR Part 516. It has no federal daily overtime, no federal meal or rest break requirement and no federal paid sick leave or vacation requirement for most private employers.

That baseline is what many employers assume applies everywhere. In practice, a large share of the US workforce lives in a state or city with a higher minimum wage and extra rules. Our guide to FLSA timekeeping requirements covers the federal records.

Whether a worker is an employee or an independent contractor decides whether you owe minimum wage, overtime, payroll taxes and timekeeping records. The DOL uses an economic reality test that asks whether the worker is in business for themselves or economically dependent on you. In 2026, the DOL is enforcing the economic reality approach under Field Assistance Bulletin 2025-1 and has proposed a rule to formalize it, but state tests can be stricter.

This guide explains the test, what the DOL is doing in 2026, how classification changes your timekeeping duties and what to do if you are unsure. This is general information, not legal advice. The federal rule was still a proposal when this was written, so check the current status and your state law with counsel.

The FLSA protects employees, not independent contractors. If a worker is an employee and nonexempt, you must record hours worked each workday and workweek, pay at least minimum wage and pay 1.5 times the regular rate for hours over 40. If the worker is truly an independent contractor, those duties do not apply.

Calling someone a contractor does not make it so. A signed agreement, a 1099 form or the worker's own preference does not control. What matters is the reality of the working relationship.

Under the One Big Beautiful Bill Act, employees can deduct up to $12,500 ($25,000 if filing jointly) of qualified overtime compensation for tax years 2025 through 2028, and employers must report it on Form W-2, Box 12, with code TT starting with tax year 2026. Only the FLSA-required premium, the "half" in time-and-a-half, qualifies. Accurate time records that separate FLSA overtime from other pay are now a tax-reporting need as well as a wage compliance need.

This guide explains what counts, what does not, how to calculate the qualifying amount with a worked example and what your time system needs to capture. The IRS has issued guidance, including FAQ update FS-2026-13 in August 2026, so confirm the latest instructions with the IRS or a tax professional. This is general information, not legal or tax advice.

The deduction is for "qualified overtime compensation," and it applies to overtime that the FLSA requires. For a given hour of overtime, the qualifying portion is the premium, meaning the extra half of the 1.5 rate, and not the straight-time portion already included in regular pay.

The deduction is taken by the employee on the tax return, up to $12,500 ($25,000 for joint filers), and it phases out for modified adjusted gross income above $150,000 ($300,000 joint). It applies for tax years 2025 to 2028. Employees may take it whether or not they itemize.

Predictive scheduling, also called fair workweek, laws require covered employers to give workers advance notice of their schedules, often 14 days, and to pay predictability pay when they change shifts after the notice period. They apply mostly to retail, food service and hospitality employers, and they exist in Oregon (statewide) and in a growing list of cities. There is no federal predictive scheduling law.

This guide explains who is covered, what the laws usually require, how predictability pay works with a worked example and what records you need. The details vary a lot by jurisdiction and change often, so verify the specifics before you rely on any number. This is general information, not legal advice.

The federal FLSA says nothing about advance notice of schedules. The rules come from state and local law. Jurisdictions with predictive scheduling or fair workweek laws include Oregon (statewide), New York City, Chicago, Seattle, San Francisco, Los Angeles (retail), Philadelphia, Evanston, Berkeley and Emeryville.

The list changes, and each law has its own definitions and thresholds. Employers with locations in several places often face a different rulebook for each. Before you open or staff a new location, confirm whether a local ordinance applies.

Under the FLSA, hours worked include all time an employee is required to work or is "suffered or permitted" to work, even if you did not ask for it. Pre-shift tasks, required training, waiting that is controlled by the employer and short rest breaks of 5 to 20 minutes are all paid time. Bona fide meal periods, an ordinary commute and most off-duty time generally are not.

This guide walks through the most common situations under 29 CFR Part 785, with step-by-step dollar examples, and shows how to record time so these questions do not turn into claims. State law can be broader than the FLSA, so check your state. This is general information, not legal advice.

Work counts when the employer knows or has reason to believe it is being performed. An employee who answers customer emails at night, finishes a task after clocking out or starts setup before the shift is working. If the manager knows and allows it, the time is payable, even if company policy says not to do it.

The remedy is not to ignore the work but to stop it or pay it. A policy that prohibits unauthorized work must be enforced, and any unauthorized time that occurs still has to be paid.