Employers must keep records of the hours worked by their employees, including overtime hours, and of the wages the employees are paid. Federal law says that employers must “make, keep and preserve” records on non-exempt employees.1 Those records include, among others, the total hours worked each workday, and the total hours worked each workweek for non-exempt employees.2
Similarly, under state law, employers must make and keep at least three (3) years of payroll or other records for each of their employees that contain:
• the employee’s name and address,
• date of birth,
• when the employment started and ended,
• time of the beginning and ending of work each day,
• time of beginning and ending any meal periods,
• total number of hours worked per day and per week,
• rate of pay and wages paid each payroll period,
• the amount of and reason for each deduction from the wages earned,
• output of the employee, if paid on other than time basis, for example, if paid by piecework.3
These records must be kept accessible and available for inspection by a representative of the Wisconsin Department of Workforce Development.
Employer of workers who customarily and regularly get tips, like wait staff, may use a tip credit, which allows the employer to pay a minimum cash wage of $2.33/hour as long as tips bring the employee’s hourly wage to $7.25. Employers who use the tip credit must be able to establish by payroll records for each week in which the credit was taken that, when adding the tips received to the wages paid, no less than the minimum wage of $7.25 was paid to the employee.
In addition to maintaining payroll records to show what tipped staff actually received in wages, the employer must have a “tip declaration” signed by the tipped employee for each pay period. The employer’s payroll records must show that any required social security and tax withholdings have been withheld for each pay period, and show that when adding the tips received to the wages paid by the employer, no less than the minimum rate was received by the employee. When the employer’s time and payroll records do not contain these requirements, no tip credit is allowed to the employer.
Where an employer keeps the time records required by law, it is the employee’s burden to prove that she performed work for which she was not compensated in violation of the Fair Labor Standards Act.4 However, when an employer fails to keep adequate records, then the employee only needs to produce sufficient evidence to show, by a reasonable inference, that she performed uncompensated or inadequately compensated work. A “reasonable inference” is a conclusion that could logically be drawn by a reasonable person in light of his or her life experience. When the employee presents such evidence, the burden shifts to the employer to produce contrary evidence of the precise amount of work performed, or evidence to contradict or negate the reasonableness of the inference to be drawn from the employee’s evidence that she actually worked the hours she claims. Where an employer directs a non-exempt employee not to keep accurate time records, the employer, not the employee, must suffer the consequences and the employee’s evidence of the hours she actually worked should be the measure of her lost wages.5
It is important for employees to know that if they have not been paid what they should have been paid, the burden is on the employer to show accurate time and wage records. If the employer does not have those records, it is in violation of federal and state law, and whatever evidence the employee has of time worked should be sufficient to make a successful claim under the Fair Labor Standards Act and the Wisconsin wage claims law.
1 29 U.S.C. § 211(c), 29 C.F.R. § 516.1.
2 29 C.F.R. § 516.2.
3 Wis. Admin. Code DWD 272.11.
4 Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946).
5 Walton v. United Consumers Club, Inc., 786 F.2d 303, 315 (7th Cir. 1986).
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