USMCA Recordkeeping Requirements
Section 810.600 Recordkeeping Requirements
Article 5.8 of the USMCA requires USMCA Countries to require importers, exporters, and producers to maintain records necessary to demonstrate the validity of certifications of origin. These records include those relating to the production of goods, including covered vehicles. Article 5.9 of the USMCA authorizes USMCA Countries to request such documentation during the verification process. The Act requires importers who claim preferential tariff treatment under the USMCA for goods imported into the United States from a USMCA Country, and vehicle producers whose goods are the subject of a claim for preferential tariff treatment under the USMCA, to make, keep, and, pursuant to rules and regulations promulgated by the Secretary, render for examination and inspection records and supporting documents related to the labor value content requirements. See 19 U.S.C. 1508(b)(4). The Act further grants the Secretary authority during the course of a verification to request any records relating to wages, hours, job responsibilities, or any other information in any plant or facility relied on by a producer of covered vehicles to demonstrate that the production of those vehicles meets the high-wage components of the LVC requirements. See 19 U.S.C. 4532(e)(4)(B). Pursuant to these authorities, this section of the rule details the recordkeeping obligations of importers, exporters, and producers of covered vehicles necessary to demonstrate compliance with the high-wage components of the LVC requirements.
Subsection 810.600(b) provides that although electronic records are generally preferred, as such records are easily generated, maintained, and made available for inspection, the records described in this section may be made and maintained in any form or format. However, pursuant to Article 5.8, paragraph 3 of the USMCA, the records must be in a form or format that allows the records to be promptly retrieved and printed or copied.
Consistent with the verification procedures set forth in Article 5.9 of the USMCA and 19 U.S.C. 4532(e), § 810.600(c) provides that the records described in this section must be made available to an authorized representative of the Department for inspection, copying, and transcription upon written request to the producer. The request will describe the records that are being sought, and the party receiving the request will have 30 days from the date of the written request to provide the requested records to the Department in an accessible format, unless the party has requested and obtained an extension of that time.
Consistent with Article 5.8 of the USMCA, § 810.600(d) provides that importers must ensure that the records described in § 810.600 are maintained for 5 years from the date of importation of any vehicle for which preferential tariff treatment was claimed, and exporters and producers must ensure that the records described in § 810.600 are maintained for 5 years from the date on which the certification of origin was completed. To the extent the producer relies in its certification on plants or facilities it does not operate, the plant or facility may maintain its records relevant to the producer’s certification, provided the producer can ensure such records to support its certification are properly maintained and provided to the Department upon request within the 30-day timeframe provided for in § 810.600(c). The same obligation applies where a plant or facility, whether operated by the producer or another entity, uses contract workers, such as workers employed through a staffing agency, or where the producer counts high-wage transportation or related costs for shipping toward its LVC obligations. Thus, in such instances, the producer must either have or be able to produce (or have the contractor produce) upon request within the 30-day timeframe provided for in § 810.600(c) the records described in this section for such workers, if such records are relevant to the producer’s certification. The Department will accept records directly from a supplier or contractor where, for example, the producer and supplier or contractor have contracted for such an approach.
Subsection 810.600(e) details the specific records that must be preserved and maintained to demonstrate compliance with the high-wage material and manufacturing expenditures component and eligibility for the high-wage assembly expenditures credit. These records are necessary for the Department to verify that wages for all hours worked in direct production have been appropriately included in the computation of the average hourly base wage rate, and to ensure that benefits, bonuses, premium payments, incentive pay, overtime premiums, or other similar payments have been properly excluded from that calculation. Moreover, to enable the Department to verify that a producer’s average hourly base wage rate calculation is correct, the records described in this section must cover the entirety of the time period used by the producer to calculate the average hourly base wage rate for each plant or facility relied upon to meet the LVC requirements.
Subsection 810.600(e) provides that producers must maintain certain records for all workers who worked at any plant or facility relied upon by the producer to meet the high-wage material and manufacturing expenditures component or to qualify for the high-wage assembly expenditures credit and who are subject to the FLSA recordkeeping requirements under 29 CFR 516.2. If such workers are employed outside the United States, but if employed in the United States would be subject to the recordkeeping requirements under 29 CFR 516.2, the producer must also maintain the records detailed in this subsection for such workers. Since, due to recordkeeping obligations under the FLSA, plants and facilities in the United States generally already maintain records for most workers who work in direct production, the requirements in § 810.600(e) should impose little to no additional recordkeeping burden for those plants and facilities.
Producers must also maintain the records required under subsection 810.600(e) for workers in any USMCA Country who have performed direct production work during the relevant time period but who are exempt from the recordkeeping requirements of 29 CFR 516.2, if the producer relied on those workers in its computation of the average hourly base wage rate. Such workers include, for example, workers who are exempt from the FLSA’s minimum wage and overtime requirements under 29 CFR part 541 Start Printed Page 39796and those workers who would be exempt if employed in the United States (i.e., where the FLSA applies).
The specific records producers are required to maintain for the workers discussed above are outlined in §§ 810.600(e)(1)-(6). Subsection 810.600(e)(1) explains that these records must contain, for each worker, the full name (or identifying symbol or number if one is used in place of the worker’s name on any time, work, or payroll records), job title, home address, and other available contact information. These records are needed for the Department to determine which workers should be interviewed during a verification to obtain information about hours worked in direct production, job duties, and pay. This information also enables the Department to locate for interviews workers who are no longer working at the plant or facility in question.
Subsection 810.600(e)(2) provides that producers must keep records of the total number of daily and weekly hours worked by each worker. Such records are necessary to help the Department determine whether all hours worked in direct production were correctly included in the computation of the hourly base wage rate by, for example, comparing workers’ hours worked in direct production with their total hours worked in the same time period. This subsection also explains that if a worker has a fixed schedule, working the same shifts and the same number of hours each week, the producer may instead maintain a record of the worker’s scheduled hours. However, if this recordkeeping method is used, there must be verification by some method each week that the worker did in fact work the scheduled hours, and, in the occasional workweeks when the worker does not work the scheduled hours, a record of the actual hours worked each day and in total for those workweeks.
Subsection 810.600(e)(3) requires producers to keep certain earnings records. These earnings records include payroll records showing the date wages were paid and the time period covered by such wage payments, each worker’s hourly rate of pay and basis of pay (e.g., hourly, salary, piece rate, day rate, etc.), total daily or weekly straight-time earnings, total premium pay for any overtime hours worked, total pay for the pay period, and any deductions taken from each worker’s pay. To the extent that a worker’s rate of pay or straight-time earnings include benefits, bonuses, premium payments, incentive pay, or other similar payments excluded from the hourly base wage rate, as defined in § 810.105(b)(1), the producer must keep records that clearly identify those payments and state the amount of such payments. This information is necessary for the Department to verify that each worker’s hourly base wage rate was correctly calculated when computing the average hourly base wage rate for the relevant time period. For example, identifying the hourly rate and the basis of pay allows the Department to confirm that the hourly base wage rate has been correctly computed for workers who are paid on a salary, piece-rate, day-rate, or other basis. Identification of premiums, benefit payments, and other similar payments, such as incentive pay or bonuses, is necessary to ensure that such payments were not incorrectly included in the hourly base wage rate, while deductions must also be examined to ensure that the deductions were properly factored into the hourly base wage rate. WHD will apply the principles outlined in 29 CFR part 531 to determine whether a deduction may be included in the hourly base wage rate. For example, amounts deducted for board and lodging generally will be included in a worker’s hourly base wage rate, while amounts deducted for tools and equipment will not.
Subsection 810.600(e)(4) provides that producers must keep records of any collective bargaining agreements, written agreements or memoranda, individual contracts, plans, trusts, employment contracts, or written memorandum summarizing oral agreements or understandings applicable to any workers who work in direct production. Such agreements help verify the average hourly base rate by showing the pay rates that have been agreed upon for such workers, as well as disclosing additional agreed-upon payments or benefits, so that the Department can confirm that such payments or benefits were not included in the computation of the average hourly base wage rate.
To ensure that the average hourly base wage rate has been calculated correctly for the high-wage material and manufacturing expenditures and the high-wage assembly expenditures components, § 810.600(e)(5) requires a record to be maintained of all hours worked in direct production, as defined at § 810.105(b)(2), by workers at any plant or facility used to meet the high-wage component of the LVC requirements during the relevant time period. This record must include each worker’s name, type of direct production work performed, hours worked by each worker that constitute direct production work, the hourly base wage rate paid to each worker for the direct production hours worked, and the total wages paid to workers for those direct production hours worked. These records must distinguish hours worked in direct production from other hours worked, to the extent that workers perform both direct production work and work not in direct production during the relevant time period. However, if at least 85 percent of a worker’s total work hours are hours worked in direct production, a record may be kept of total work hours during the time period used for certification purposes. In that case, the recordkeeping system must also record hours worked in direct production and hours spent not performing direct production work in weeks when both types of work are performed, must record the hours at the time the work is performed, and must ensure the hours worked in direct production are clearly ascertainable so that WHD can verify, if necessary, that the 85 percent threshold was in fact reached for such workers.
If a producer uses high-wage transportation or related costs for shipping a high-wage part or component in calculating the high-wage material and manufacturing costs, § 810.600(e)(6) requires maintenance of records demonstrating that the transportation, logistics, or material handling provider paid production workers performing the transportation of the part or component, such as drivers and loaders, an average hourly base wage rate of at least US$16. Such records might include, for example, the contracts with the transportation or shipping provider, collective bargaining agreements entered into by the transportation or shipping company, and other indications of the wages paid to these workers. This information is necessary to enable the Department to verify the accuracy of the producer’s LVC calculations in those instances where transportation or related costs have been used to calculate the high-wage material and manufacturing expenditures.
Subsection 810.600(f) requires any producer claiming a credit for high-wage technology expenditures to maintain records demonstrating the wages paid by the producer for research and development or information technology work in North America, as well as the wages paid by the producer for production work in North America. The credit for high-wage technology expenditures is obtained through a comparison of expenditures on wages for research and development and information technology work in North America to expenditures on wages for production work in North America. Producers claiming this credit must therefore maintain a record of all wages Start Printed Page 39797paid to workers who perform research and development and information technology work in North America, including the workers’ names and the type of research and development or information technology work performed by each worker. Producers also must maintain a record of the total wages paid to workers who perform direct production work in North America, including the workers’ names and the type of production work performed by each worker. Maintenance of records demonstrating this information is necessary for the Department to verify that the credit was calculated correctly.
The records listed in § 810.600(e) are not necessarily an exhaustive list of the records producers must keep. As explained in § 810.600(g), if a producer relied on any additional records not listed in §§ 810.600(e) or (f) to support its calculations demonstrating that it meets the high-wage components of the LVC requirements, then the producer must also maintain those additional records. This requirement is consistent with 19 U.S.C. 4532(c)(1)(a)(ii), which requires producers to have information on record to support the LVC calculations submitted in its certification.
Subsection 810.600(h) provides that nothing in § 810.600 shall excuse any producer with facilities in the United States from complying with any recordkeeping or reporting requirement imposed by any other federal, state, or local law, ordinance, regulation, or rule. This includes, but is not limited to, recordkeeping requirements under the FLSA, the Family and Medical Leave Act, and state wage and hour laws, as well as any recordkeeping requirements concerning other components of the LVC requirements as set forth in regulations issued by CBP or any other federal agency.
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