Yes, employers must have time sheets or other means of recording the number of hours that are worked by each hourly employee. (By “hourly employee” we are referring to those who are paid by the hour and are entitled to overtime pay, but this requirement may apply to other employees as well.) A requirement to keep time records is part of the recordkeeping requirements under federal law, and is also required by many states’ laws. Federal law requires employers to keep accurate records for each hourly employee that include the number of hours worked per day, the day and time of day when the employee’s workweek begins, the number of hours worked per workweek, the employee’s regular hourly pay rate, the employee’s regular earnings, and any overtime hours worked and the employee’s overtime earnings. Federal law also requires employers to retain for three years records showing the number of hours worked by employees.
Complete and accurate time sheets help protect the employer against overtime pay claims. Under federal law, most employees who are paid by the hour must receive overtime pay (calculated at one and a half times their regular hourly rate of pay) for hours they work beyond 40 hours per workweek. State laws may require a higher rate of overtime pay, or daily overtime beyond a certain number of hours worked in a day. Employers who do not properly pay overtime wages can be held liable for the overtime pay plus additional damages and penalties. When employees bring claims for overtime pay, employers can use their records both to show whether or not the employees worked overtime hours and whether they were paid any overtime compensation. When employers lack complete and accurate written records, employers cannot prove which employees did – or did not - work overtime hours, and what employees were or were not paid. In those cases, the courts are more likely to accept employee’s estimates of their unpaid overtime and find the employers liable for the corresponding amounts.
Employers should note that federal, state, and local laws impose additional recordkeeping requirements, and may choose to consult with an attorney about those requirements.