Recordkeeping Record Retention Chapter 10 Review Questions/Exercises

General Rule  IRS (Internal Revenue Service) – 3 letters = 4 year minimum retention  FLSA (Fair Labor Standards Act)/FMLA (Family and Medical Leave Act) – 4 letters = 3 year minimum retention with some exceptions  IRCA (Immigration Reform and Control Act – I9 Form) – 4 letters = 3 years after hire date or 1 year after termination, whichever is later

Review Questions and Exercises  What records must an employer keep under the FLSA for an employee who is receiving remedial education?  Where employees are exempt from overtime pay requirements for time spent receiving remedial education, the employer must keep, in addition to other required records, records of the hours spent by each employee receiving such remedial education and the wages paid for those hours.

Review Questions and Exercises  What are the criminal penalties for FLSA recordkeeping violations ?  Willful violations of the recordkeeping requirements can bring a criminal penalty of up to $10,000 and/or imprisonment for up to 6 months, although a jail sentence can be imposed only for second and subsequent convictions.

Review Questions and Exercises  What is the general retention period under the Internal Revenue Code for copies of employer tax returns and information returns?  These records must be kept for at least four years after the due date of the tax (or the date the tax is paid, if later) for the return period to which the records relate.

Review Questions and Exercises  If the Department of Labor requests a Form I-9 for inspection, how long does the employer have to produce it?  3 Days (72 hours)

Review Questions and Exercise Under the FLSA, name four types of employment data records that must be kept for each covered employee for at least three years after the last date of entry.  Name as it appears on the employee’s social security card  Home address, including apt # and Zip code  Date of birth, if under age 19  Sex and occupation (for use in determining Equal Pay Act compliance)  The beginning of the employee’s workweek (time and day)  Regular rate of pay for OT weeks, (basis for determining rate, and any pay excluded from reg rate)  Hours worked each workday and workweek  Straight–time earnings (including straight-time portion of overtime earnings)  Overtime premium earnings  Additions to and deductions from wages for each period  Total wages paid for each pay period  Date of payment and the pay period covered

Review Questions and Exercises  What records must be kept under the FLSA for at least two years from their last date of entry?  A. Basic employment and earning records that support the data for each nonexempt employee’s hours of work, basis for determining wages, and wages paid (e.g., time or production cards);  B. Order, shipping, and billing records showing customer orders, shipping and delivery records, and customer billings: and  C. Records substantiating additions to or deductions from employees’ wages, including purchase orders, operating cost records, wage assignments, and garnishments.

Review Questions and Exercises  What additional records must be kept under the FLSA by employers of hospital employees?  In addition to other required records, hospitals and residential care facilities whose employees have a work period of 14 consecutive days (rather than 7 for other employees) must keep records of the time and day on which the 14-day period begins, hours worked each day and each 14-day period, and straight time and overtime premium earnings paid in each 14-day period. They also must keep a copy of the written agreement between the hospital and the employee allowing use of the 14-day work period or a memo summarizing its terms if the agreement is oral.

Review Questions and Exercises  What additional records must be kept under the FLSA by employers of tipped employees?  Employers that use the tip credit to pay part of a tipped employee’s minimum wage must keep, in addition to other required records, the following:  Some notation of the records showing that the employee’s wages are determined partly by tips;  The amount reported by the employee to the employer as tips (weekly or monthly), which may be taken from IRS Form 4070;  The amount of the tip credit taken by the employer; and  Hours worked and straight-time earnings for time worked other than as a tipped employee.

Review Questions and Exercises  What is the goal of the IRS in establishing procedures for employer records processed by computers?  The procedures are generally aimed at achieving one goal – making it easy for the IRS to determine the employer’s correct tax liability.

Review Questions and Exercises  What are the retention requirements for Form I-9?  Employers must retain the completed Form I-9, Employment Eligibility Verification, for at least three years after the date of hire or one year after the date of termination, whichever is later.

Review Questions and Exercises  What are the advantages of storing payroll and employment records on microfilm or microfiche?  The advantages of micro-media storage over paper storage include:  A. Less space needed for storage  B. Reduced storage costs  C. Less chance of losing individual documents  D. Increased durability

Review Questions and Exercises  What is the main disadvantage of storing payroll and employment records on micro-media?  The main problem is one of quality control – the camera may not photograph 100% of every document, the image may be partially unreadable, and verification of the image after it develops can be a time-consuming process.

Review Questions and Exercises  What procedure should be followed for the retrieval and destruction of records?  Whatever method an employer uses to create and preserve its employment and payroll records, it should have a policy governing record retention, retrieval, and destruction. The written policy should clearly state how long records are to be retained (and how the containers should be labeled), how they can be retrieved (especially important if records are stored off site), and when and how they should be disposed of.

Review Questions and Exercises  What is the common name of the regulations issued by the Department of Health and Human Services to implement the privacy requirements of the Health Insurance Portability and Accountability Act?  The Privacy Rule

Review Questions and Exercises What Federal agency enforces the HIPPA restrictions on the release of personal health information?  The Department of Health and Human Services.

True/False Questions  Payroll records retained in compliance with IRS recordkeeping requirements must be kept in paper form.  False  Payroll records may be retained in any form, including microfilm, microfiche, paper, or computerized.

True/False Questions  After an employer forwards abandoned (un-cashed paychecks) to the appropriate state agency, state law may require that the employer keep a record of the employee’s name and last known address for a specified period of time.  True

True/False Questions  Records required by the FLSA must be made available for inspection by the Wage and Hour Division within 48 hours of a notice of inspection.  False  72 hours

True/False Questions  Employers that withhold and pay federal income, social security, and Medicare taxes must maintain records according to the Internal Revenue Code.  True

True/False Questions  Employers that use a payroll service provider are relieved of their recordkeeping responsibilities.  False  The employer remains ultimately responsible for the recordkeeping requirements.

True/False Questions  The trend today is for a company to maintain one employee master file that includes payroll, human resources, and benefits information.  True

True/False Questions  Even though “white collar” workers may be exempt from the FLSA’s overtime pay requirements, records of their hours worked must still be kept by the employer.  False  Certain records relating to overtime pay requirements need not be kept for exempt “white collar” employees. However, employers must include in their records the basis on which wages are paid so that each employee’s total earnings for each pay period can be calculated.

True/False Questions  The FLSA does not require employers to keep records in any particular form.  True

True/False Questions  Employers that store payroll records on microfilm or microfiche must have viewing equipment available when an inspection is requested.  True

True/False Questions  Records required to be kept under the FLSA must be stored at the employer’s worksite for inspection.  False  The records required by the FLSA may be stored by the employer either at the work site or at a central location where its records are customarily maintained.

True/False Questions  If an employer has incomplete records and an employee files a lawsuit for unpaid overtime, the court will most likely accept the employee’s evidence of hours worked and wages received.  True

True/False Questions  Form W-4 must be retained by the employer for three years.  False  Form W-4 must be retained by the employer for four years.

True/False Questions  The IRS requires that machine-readable records be kept at least until the expiration of the statute of limitations for the tax year to which they relate.  True

True/False Questions  The minimum retention period for state unemployment insurance records differs from state to state.  True

True/False Questions  Federal and state laws generally require that a copy of records be retained in paper form for audit purposes.  False  The various federal and state laws generally do not require that records be kept in any particular form and often specifically allow record retention on microfilm or microfiche.

Multiple Choice Questions  Under the FLSA, all of the following records are required to be kept for at least three years from the last date they were in effect except for?  A. Records showing additions to or deductions from employee’s wages  B. Collective bargaining agreements  C. Certificates authorizing the employment of minors  D. Records showing total sales volume and goods purchased.

Multiple Choice Questions UUnder the FLSA, which of the following records must be kept for more than two years from the last date they were in effect? AA. Wage rate tables BB. Piece rate tables CC. Work time schedules establishing the hours and days of employment DD. Collective bargaining agreements

WWhich of the following forms is used by the employee to report tips to the employer? AA. Form 8019 BB. Form 4070 CC. Form 8027 DD. Form 1099-MISC

IIf the records required by the FLSA are maintained at a central location, how soon after a Department of Labor request must the employer make them available AA. 24 hours BB. 48 hours CC. 72 hours DD. 10 days

UUnder the Walsh-Healey Public Contracts Act, how long must a separate log of occupational injuries and illnesses be kept? AA. 2 years BB. 3 years CC. 4 years DD. 5 years

 How long are FUTA tax records normally required to be retained?  A. 3 years  B. 4 years  C. 5 years  D. Indefinitely

Multiple Choice Questions HHow long does the ADEA require that records of an employee’s name, address, date of birth, occupation, pay rate, and compensation earned be kept? AA. 2 years BB. 3 years CC. 4 years DD. 5 years

WWhat law requires Form I-9 to be retained? AA. Immigration Reform and Control Act of 1986 BB. Civil Rights Act of 1964 CC. Age Discrimination in Employment Act 1967 DD. Americans With Disabilities Act of 1990

 Which of the following laws governs unclaimed wages?  A. Federal wage-hour laws  B. State escheat laws  C. Equal employment opportunity laws  D. Labor relations laws

Multiple Choice Questions HHow long must an employer maintain records it is required to keep under the Family and Medical Leave Act? AA. 4 years BB. 6 years CC. 3 years DD. 1 year

QUESTIONS?