Owning your own business and being your own boss can be very rewarding, regardless of the field of work. In the United States, there are certain rules and regulations that control how a company should operate, and these guidelines may be different depending on the industry. All companies that operate under the Fair Labor Standards Act are required to keep specific records for a designated period of time for covered, non-exempt employees. Essential documentation may include an employee’s contact information, salary, work hours, and job duties. Record keeping might seem like a basic task, but if it is not done properly, this can lead to significant consequences. An experienced employment law attorney can help a business owner avoid any civil or criminal actions that they could face.
Important Employee Information
For the majority of business owners, their companies are their livelihood. In many cases, the foundation of their success lies in their employees. Therefore, they must make sure to take care of their workers by following standards and procedures that govern their industry. According to the United States Department of Labor, employee payroll information that contains important documents about each employee in your company should be kept for at least three years. Good record keeping practices can help a company maintain a strong reputation, allowing for future growth. Some of the main aspects of employment records should include:
- The employee’s name, address, and Social Security number
- The employee’s dates of employment
- The employee’s regular pay rate (salary or hourly)
- The amount of wages paid
- The amount of taxes taken out of an employee’s paycheck
- The amount of overtime paid
- The employee’s job duties
Penalties for Negligent Records Management
A comprehensive records management process can help a company operate in an efficient and effective manner. Improper records management can lead to unorganized documentation, the loss of vital information, and stressed employees and employers. If company owners fail to maintain their employment records, they may face criminal charges or civil lawsuits, depending on the circumstances. Poor record keeping can also result in the following consequences:
- Imprisonment due to tax evasion
- Misuse of funds leading to bankruptcy
- Financial penalties for non-compliance
The Internal Revenue Service (IRS) recommends that companies and individuals save financial records for up to seven years. However, certain documents might need to be saved for a longer period of time, as they may be necessary for filing taxes or if an audit is needed.
Contact a Schaumburg, IL Employment Defense Lawyer
Owning and running a company involves many responsibilities, including maintaining detailed information and reports on employees, as well as daily transactions and activities. Accurate record keeping can be the difference between a business failing or succeeding. That is why you should consult with the attorneys at Miller Law Firm P.C. Our dedicated Illinois employment law attorneys understand the intricacies of business law for both small, family-owned companies and large corporations. Attorney Richard J. Miller is a former finance executive with valuable insight on business operations and the criminal charges that can result from poor record keeping. Call us today at 847-995-1205 to schedule a complimentary consultation.