Recordkeeping Tips for Contractors
The Fair Labor Standards Act (FLSA) requires all employers to maintain accurate records of their employee’s wages, hours worked, and more. As the United States Department of Labor (DOL) ramps up its efforts to pursue contractors in violation of the FLSA, it’s becoming clear that contractors must be proactive in their efforts to maintain compliance.
In this editorial, a Chattanooga construction lawyer from Cotney Construction Law will detail some important recordkeeping tips for contractors. As a bonus, we’ll also discuss some tips pertaining to OSHA’s regulation 29 CFR 1904, which involves recordkeeping for employee injuries.
Tip #1: Understand the FLSA Recordkeeping Requirements
As a contractor, your workload doesn’t always give you the time you need to deftly handle your own recordkeeping, but you can’t afford to be caught in possession of incomplete financial records. Our Chattanooga construction lawyers can review your books and help you avoid a violation of the FLSA. We can ensure that your records include all the employee information required by the FLSA including:
- Time tracking (hours per week)
- Daily and weekly earnings
- Hourly rate (including overtime)
- Total overtime pay
- Total wage deductions
- Total wages paid every pay period
Tip #2: Develop a Comprehensive Document Retention System
Regardless of the size of your firm, developing a comprehensive system for document retention is the most effective way to maintain compliance with FLSA recordkeeping requirements. As you take on multiple projects, the size of your workforce will fluctuate and change, so you need to work closely with employees in managerial roles to ensure that you are receiving accurate employment records.
Document retention involves the preservation of employee records, including time cards and work time schedules. If a government inspector requests these documents and you fail to produce them or provide access to them, you could be issued additional penalties for wage violations. You should never, under any circumstances, destroy employee records without first speaking to a Memphis contractor lawyer. Willful destruction of recordkeeping data can result in a fine of up to $10,000.
When it comes to document retention, your safest bet is to, as long as space permits, keep records indefinitely to protect yourself from any potential issues with the FLSA down the road. In fact, your recordkeeping efforts should go above and beyond what FLSA requires. Contractors should maintain records in accordance with the following guidelines:
Retain for a minimum of two years:
- Daily Sales Summary
- Accounts and Notes Receivable Trial Balance
- Prepaid and Accrued Expense Journal
- All Other Trial Balances
Retain for a minimum of four years:
- Employment Applications
- Petty Cash Vouchers and Summary
- W-4 Forms
Retain for a minimum of seven years:
- Vendor Invoices
- Purchase Orders
- Customer Invoices
- Credit Memos
- Office Receipts
- Register Sales Slips
- Receiving Reports
- State and Local Sales and Gross Receipts Tax
- Income Tax Returns
- Safety Records
- Inventory Records
- Employee Personal Records (after termination)
Retain for a minimum of ten years:
- Insurance Records and Policies
- Vendor Invoices
- Bank Drafts and Paid Notices
- Bills of Lading
- Bank Statements and Reconciliations
- All Correspondence and Customer Files
- U.S. and State Unemployment Tax Returns
- Social Security and Withholding Tax Returns
- Duplicate Deposit Tickets
- Employee Earning and History Records
- Subsidiary Ledger
- Journal Vouchers
- Notes Receivable Ledger
- Accounts Receivable or Payable Ledger
- Financial Statements
- Property Records
- Capital Stock Books
- Cash Received Journal
- Audit Reports
- Cash Disbursement Journal
- Canceled Checks
- Depreciation Schedules
- U.S. Revenue Agents Reports & Related Papers
- Purchase Journal
- State Franchise Tax Returns
- Interdepartmental Sales Journal
- State Annual Reports
- Payroll Journal
- Corporate Minutes Book
- General Journal
- Government Contracts and Supporting Records
- General Ledger
- Construction Contracts and Supporting Records
- Expense Ledger
- Employment Contracts
- Sales and Cost of Sales Ledger
- Papers Pertaining to Litigation
- Deeds, Mortgages and Bills of Sale
Tip #3: Don’t Mix Business and Personal Finances
Clearly, the recordkeeping needs of a contractor require an exhaustive effort from more than one person, especially in medium- to large-sized firms. With multiple revenue streams, a revolving door of workers, and numerous clients, the cash flow of a contracting business is fluid and continuous. You don’t want to further confuse matters, so never mix your business and personal finances. This is one of the most effective ways to avoid a compliance issue, and by keeping these finances separate, you actually help simplify your books.
Tip #4: Embrace New Recordkeeping Practices
Let’s face it, as your company grows, you will need to adopt new procedures for keeping your business running smoothly. This could mean a number of things for your business. It could mean hiring an accountant or dedicated bookkeeper to maintain your records, or it could mean partnering with a Memphis construction attorney to review your records and represent you in cases pertaining to FLSA violations. What matters most is that you are proactive in safeguarding your business against avoidable disputes and litigation. This may require an investment of time and money, but it will only help elevate your bottom line as time goes by.
Tip #5: Don’t Forget About OSHA
In addition to the recordkeeping requirements outlined in the FLSA, contractors must also be cognizant of the Occupational Safety and Health Administration (OSHA) recordkeeping requirements outlined in 29 CFR 1904. As previously discussed in our article Record Keeping Mistakes, this regulation “requires employers with more than 10 employees, unless exempt, to record, report, and post illnesses and injuries that occur on job sites.”
While the documentation pertaining to illness and injury records is markedly different than the documents related to your company’s finances, the same level of diligence is required to prevent a violation.
It’s imperative that contractors know which forms are utilized for reporting and recording workplace injuries and illnesses. You should be familiar with Forms 300, 300A, and 301. Form 300 is a “Log of Work-Related Injuries and Illnesses.” Form 300A is a “Summary of Work-Related Injuries and Illnesses” that must be posted in the workplace between February 1st and April 30th. Contractors should keep these two forms for a minimum of five years. Form 301 is an “Injury and Illness Incident Report” that is also the first form you should fill out in the incident of a work-related injury or illness.
Another important distinction that contractors must consider is the difference between injuries and illnesses that are reportable and recordable. Only report and record work-related incidents that result in death, loss of consciousness, days off, limited work activity, change of position, and medical treatment (excluding first aid).
You may also have to record certain conditions that can only be diagnosed by a medical professional. This includes cancer and irreversible diseases, bone injuries, hearing tests and eardrum punctures, contaminated needlestick injuries or cuts, and tuberculosis infections. If you need legal advice about what recordkeeping practices are best suited for your company, consult one of our Memphis contractor lawyers.
If you would like to speak with one of our Memphis construction attorneys, please contact us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.