Payroll Recordkeeping – More Than Just Getting Employees Paid On Time

There is more to payroll recordkeeping than just making sure that your employees are paid the right wage for the type of work they are performing and getting their paychecks out the door on time.

payroll audits result in the payment of back wagesAre your payroll records accurate and up-to-date?  They need to be – because inaccurate payroll records can cost employers BIG bucks!

Most employers and bookkeepers have a tendency to think that accurate payroll record keeping involves little more than being able to pull up a Payroll Summary for a prior period in QuickBooks, if the State or Federal Department of Labor asks for it.

Sure, a Payroll Summary in QuickBooks is a handy thing to be able to create with just a couple of mouse clicks – but there is so much more supporting documentation that you need to be able to also get your hands on.

I’ve written a previous article – Fair Labor Standards Act – Employee Record Keeping Requirements, which provides a list of the items that you are required to keep.  While that original article was very on target at the time (February 15, 2011), things have changed – A LOT!

In the past couple of years there has been an increase in the number of Federal and/or State payroll wage audits resulting in the repayment of back wages, in all industries – not just construction, plus fines and penalties.  In May and June of 2013 U. S. Department of Labor audits have resulted in the payment of $5,750,693.00 in back wages throughout the United States.

NortheastSoutheastMidwestSouthwestWesternTotal
June 2013$205,000.00$33,000.00$366,000.00$1,149,000.00$1,753,000.00
May 2013$577,143.00$1,075,000.00$10,700.00$2,291,850.00$43,000.00$3,997,693.00
Grand Total$782,143.00$1,108,000.00$376,700.00$3,440,850.00$43,000.00$5,750,693.00

Visit the U. S. Department of Labor, Wage and Hour Division, Press Releases website  – once there, click on your “region” to see more information.

Keep your payroll records for the duration of EACH worker’s employment with your company PLUS 5 to 10 years!  Most Human Resources and legal experts are suggesting this to ensure these records are available in the event a claim is filed, according to a recent article I read published by Personnel Policy Service, Inc. in their HR Matters E-Tips newsletter.

Look for an article on Thursday with more QuickBooks Payroll Record Keeping Tips.

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2 thoughts on “Payroll Recordkeeping – More Than Just Getting Employees Paid On Time

  • Great tip Keith, thanks for sharing it!
    Just a word of caution/advice for anyone wanting to implement this procedure though.
    When you attach documents, such as the signed timesheets, QuickBooks automatically creates a folder where ever your QuickBooks data file lives called Attach. When you perform a normal QuickBooks backup (File -> Backup Company) the folder containing your attachments is NOT included in that backup – at this time. Please make sure that you have a means in place to backup or keep a synchronized copy of that entire folder. If you move to a new computer you will manually need to copy the attachments folder and place it on the new computer.
    I use a program called GoodSync for tasks like this.

  • Keith Gormezano

    One thing I recommend to my Greater Seattle area clients is that they scan their employees (signed by both the employee and supervisor stating that the hours are correct) timesheets and attach a copy to the paycheck in QuickBooks 2012 or higher and for the employee to keep a copy for themselves.

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