California Labor Code 1174: Employer Timekeeping and Recordkeeping Requirements

California Labor Code 1174 outlines employer timekeeping and recordkeeping duties, allowing electronic or paper systems when records are indelible. Keep records in California, preserve them at least three years, and provide accessible copies to workers and authorities.

By Douglas Wade, Attorney

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Table of Contents

Introduction

1. Is there a specific kind of timekeeping system that companies must use?

2. Is it possible to maintain time logs electronically?

3. How long should electronic records be maintained?

4. Labor Code 1174: Time records for certain items must be reported (be careful, it’s not only starting and stopping times).

5. Documents must be kept within California (mandated by Labor Code 1174)

Introduction

Does law in California require employers to have an electronic timekeeping system to meet its requirements? Nowadays, it is commonly thought that keeping these records online must be lawful, but it is difficult to recall that ten years ago, these questions were at the forefront of everyone’s minds. These issues, however, bring up valid points regarding the Labor Code’s requirements for employers to keep and maintain time records.

The Labor Code fails to directly tackle this issue, which may or may not surprise you, contingent upon how slowly you think the law is adjusting to new technology. Employers can, however, consider a few guiding principles when deciding which practices are ideal for their company. In this article, we will discuss five important responsibilities that businesses should take into account while establishing timekeeping systems.

1. Is there a specific kind of timekeeping system that companies must use?

The use of any kind of electronic timekeeping clock or system is not mandated under California law. Employers have the option to record an employee’s time using paper & pen. The records ought to be “indelible,” which means that the time records cannot be withdrawn, altered, or erased, as will be discussed later. Nonetheless, many companies find that using a computerized timekeeping system is more efficient, even when they just have a small number of employees.

Making the switch to a computerized timekeeping system can help to minimize errors in storing and computing time spent, facilitate tracking of modifications, and facilitate an evaluation of the time records if an employee challenges their pay. Nowadays, the majority of timekeeping software will immediately highlight any infractions for a manager’s evaluation and assist in monitoring compliance with meal breaks.

2. Is it possible to maintain time logs electronically?

Employers are required under California Wage Orders to keep their employees’ time logs “in English as a first language and in writing or other permanent form.”

In a Letter (dated 20^th July 1995), the Division of Labor Standards Enforcement declared that “electronic document storage satisfies California law requirements if the documents are (1) accessible in the State of California, as well as (2) can be printed in an irreversible format upon demand of either the worker or the Division.”

On 10^th November 1998, the DLSE released a second Opinion Letter informing employers that they could keep the electronic time recording information outside of California “so long as a printed version of the information was kept at a central place within California.” The DLSE’s opinion letters have widespread legal authority even though they do not set legally binding precedent. Employers must therefore exercise caution when depending too much on these viewpoints.

Furthermore, both of these Opinion Letters are in conflict with one another. The Wage Orders stipulate that time records “must be maintained on file by the company for a minimum of three years at the premises where employment occurs or at a central point inside the State of California,” as explained below. Employers should thus think about keeping a copy of their employees’ time logs in the State of California, either on paper or in an electronic format.

Similar wording can also be observed in Labor Code section 226 about the data that employees must get on their pay stubs:

Employers are required to keep a copy of the report or documentation of the deductions on file for a minimum of three years at the place where the employee works or at an administrative office in the State of California. The deductions taken from wage payments must be documented in ink or another indelible form, appropriately dated, and displaying the day, month, and year.

The DLSE published an Opinion Letter on 6^th July 2006, allowing firms to provide employees with digital pay stubs, provided specific conditions were fulfilled. According to the DLSE:

To reconcile the “detachable component of the check” and “accurate comprehensive information in writing” provisions of Labor Code section 226(a), the Division has recently moved to permit digital wage statements, ensuring that every worker is still able to opt for a paper paycheck stub or document and that those who get electronic wage statements are able to readily access the data and transform the electronic reports into physical copies at no cost to them.

The qualities that follow must be included by the employer for the DLSE to authorize digital wage statements:

At any moment, an employee has the option to get their wage statements on paper.
No later than payment day, the wage statements will be accessible on an encrypted website and will include all the information mandated by Labor Code section 226(a).
Private personal identification numbers and individual employee identification numbers will govern internet access. The website will have firewall protection and should always be accessible, barring outages brought on by maintenance needs or system malfunctions.
Workers will have the option to use company-provided devices or their own personal devices for accessing their records. Every worker will have access to the computers at work so they can view these records.
Copies of the digital wage statements are going to be available for workers to print on nearby printers from their laptop or computer terminal while they are at work. The employee will not be charged for viewing or printing their files. Workers can also save their files electronically, print them on their personal printer, and access them online.
Wage statements shall be kept in an electronic format for a minimum of three years, during which time they will remain accessible to current employees. Upon requesting it, former employees will receive free printed copies.

The time records that employers must keep in accordance with California law would probably be subject to the same review. However, since there are no definite court rulings that support the DLSE’s viewpoint, employers must handle this matter with legal counsel.

3. How long should electronic records be maintained?

Businesses should also be aware that, according to Business & Professions Code section 17200, the statute of limitations for numerous wage and hour collective actions in California can go back up to four years. As a result, they should think about preserving wage statements and any other records that are necessary for safeguarding against claims that date back more than four years.

4. Labor Code 1174: Time records for certain items must be reported (be careful, it’s not only starting and stopping times).

California companies must maintain “time records detailing when a worker begins and terminates each work period,” according to the Wage Orders. Additionally, the total number of hours worked each day, meal times, and split shift periods must be documented. Mealtimes when operations stop and permitted relaxation times don’t have to be documented.

Employers are also required by Labor Code 1174 to maintain time records that detail the quantity of piece-rate units acquired, the relevant piece rate given, the number of hours worked each day, and the amount of compensation paid.

5. Documents must be kept within California (mandated by Labor Code 1174)

The “plants or facilities at which people are working” or the state must keep these records. A minimum of three years must pass before the recordings are destroyed (according to Labor Code 1174).

Additionally, the Wage Orders mandate that they maintain records “at the place where they work or at an administrative center inside the State of California.” As instructed by Labor Code 1174, a copy of the digital information should be kept with the state as a safeguard, as was previously noted, if businesses have electronic files.

Employers typically retain the information for four years because, as was previously indicated, the period of limitations for compensation claims might go back up to four years. In the event that the records are ever sought or required for defense against legal action, employers must make sure that the information they are storing is accurate and readable and that it represents the workers’ actual time logs.

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California Labor Code 1174: Employer Timekeeping and Recordkeeping Requirements

Introduction

1. Is there a specific kind of timekeeping system that companies must use?

2. Is it possible to maintain time logs electronically?

3. How long should electronic records be maintained?

4. Labor Code 1174: Time records for certain items must be reported (be careful, it’s not only starting and stopping times).

5. Documents must be kept within California (mandated by Labor Code 1174)

California Labor Code 5814: Penalties for Delayed or Unreasonable Workers’ Compensation Payments

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