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  • Stubbuilder
  • Nov 12, 2021

Federal Payroll Law

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a federal payroll law that governs wage levels, extra pay qualification, recordkeeping, and child labor standards for full-time and part-time employees in the private sector as well as federal, state, and municipal.

We’re concerned about the record-keeping element of such a Federal payroll Law whenever it comes time to pay stubs.

Thus, whereas the FLSA convinces companies to retain detailed records of hourly wages and salary paid, this will not prevent employees or individuals from seeing their pay records.

Companies must maintain employee data for a certain amount of time

Employers must maintain data for at least 3 years under the FLSA. Federal Payroll data, union contracts, and revenue and buying data are all included.

The data might be retained on-site at the workplace or at a central records department.

Details used to calculate wages (hour cards, plans, & records of wage modifications) should indeed be kept for at least two years.

Officials from the Department of Labor should be able to view such documents and may require the employer to make additions, calculations, or transcriptions.

Who does the Fair Labor Standards Act affect?

Employers having yearly sales of $500,000 or more, & who participate in interstate or foreign commerce, are bound to the FLSA.

Although it may look to just be restricted, the FLSA includes over 90% of US industries.

Every FLSA-covered company is required to retain particular information with each non-exempt employee.

The Act does not define a specific format for the documents, but it does mandate must they contain basic identifiable details on each employee, as well as details concerning the hourly pay and amounts received.

All data must be correct according to the FLSA. The following are fundamental records that an employer must keep:

  1. The complete name and social security number of the individual
  2. The zip code is included in the address
  3. If you’re under the age of 19, your date of birth
  4. Sex and profession
  5. When does an employee’s workday start and on what day of the week?
  6. Each day’s working hours
  7. Every workweek’s total duration worked
  8. Wage structure
  9. Pay is based on the number of hours.
  10. Overall straight-time profits on a daily and weekly basis
  11. Extra earnings during the entire week
  12. Any increases or decreases in the gross salary
  13. Each payment period’s total earnings
  14. Date of payout, as well as the pay period for which the payment has been made

Benefits for Employees You Have a Legal Responsibility to Provide

1. Contributions to Medicare and Social Security

Social Security & Medicare are both legally required welfare systems that almost all U.S. employees pay into while working or get rewards from later in life.

Both employers and employees pay Medicare and Social Security taxes through payroll deductions.

2. Insurance for Employees’ Health

Workers’ health policy, including covering the costs of medical care, therapy, rehab, & paid holidays, or replacement income for employees who are injured or sick on the job, is also another advantage that you’re legally obligated to offer. 

3. Unemployment Benefits

Unemployment benefits replace a portion of an employee’s salary for a limited period of time if he or she leaves their job unexpectedly. Unemployment compensation insurance is funded by both workers & employers and is managed by the administration on either a state or federal level.

4. Medical and family leave

When your private sector company employs more than 50 people, the federal Family Medical Leave Act (FMLA) demands that you give up to 12 weeks of leave without pay to your staff even while ensuring employees’ job stability.

The federal government mandates corporations to bring benefits such as Medicare and Social Security, as well as unemployment insurance, employers’ insurance, healthcare insurance, plus family and medical leave.

Additional regulations may be imposed by state & local governments.

5. Health Care Coverage

The Affordable Care Act (ACA) now mandates that any company with 50 or even more full-time workers provide healthcare coverage.

Such businesses should also declare the importance of health insurance on employee W2-forms, as well as submit the relevant IRS documents with information on the price and types of healthcare plans they provide to their workers.

The federal government may charge you and issue penalties or fines if you don’t provide enough or reasonable healthcare coverage to full-time workers.

Related Article: 5 Simple Steps to Take After the Deadline for Taxes