Time Card Recordkeeping Requirements
Time Card Recordkeeping Requirements
Learn how to apply rules in the California Workers’ Compensation Uniform Statistical Reporting Plan—1995 (USRP) for recordkeeping, division of payroll and dual wage classifications.
Recordkeeping
Scenario
Marcus owns two businesses that are assignable to Classification 0042, Landscape Gardening, and Classification 0106, Tree Pruning, Repairing or Trimming. Marcus keeps manual records of time cards and time summaries. He does not maintain electronic records.
The auditor does not want to review the records that Marcus provided and advises that it’s in Marcus’ financial interest to submit a spreadsheet with the requested information; otherwise, all the wages will be assigned to Classification 0106, the higher-rated classification.
Marcus contacts the WCIRB Policyholder Ombudsman for clarification on the rule and how it applies.
Explanation
Marcus’ records contain the information required for the division of payroll. Part 3, Standard Classification System, Section V, Payroll – Remuneration, Rule 3, Division of Single Employee’s Payroll does not require any standard format for the records but requires that they be contemporaneous records and that they be summarized, meaning totaled, by operation. The accuracy of the summaries must be verifiable by reviewing the original individual employee records.
Resolution
The Ombudsman speaks with the auditor and the broker to clarify their understanding of the regulations. Both understand that Marcus is not required to provide records to the auditor in a spreadsheet or any other prescribed format.
The auditor completes a review of Marcus’ records and sends preliminary reconciled payroll figures to him for review. There are no significant payroll differences from the payroll amounts contained in Marcus’ records. Marcus is very satisfied with the outcome.
How USRP Rules Are Applied
If an employee’s payroll is to be divided between two or more classifications, the applicable time card recordkeeping requirements for most industries are listed in Part 3, Standard Classification System, Section V, Payroll – Remuneration, Rule 3, Division of Single Employee’s Payroll. This rule states, in part:
... the remuneration of any one employee may be divided between two or more classifications, provided the employer has maintained complete and accurate records supported by original time cards or time book entries which show separately, both by individual employee and in summary by operations performed, the remuneration earned by such employee ...
The rule does not require any standard format for the records, but requires that they be original, i.e., contemporaneous records, and that they be summarized, meaning totaled by operation. The accuracy of the summaries must be verifiable by reviewing the original, individual employee records.
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Dual Wage Classifications
Scenario
Max operates Maximum Construction, Inc. He wants to know why the auditor reassigned his employees from the lower-rated, high-wage Classification 5140, Electrical Wiring, to the higher-rated, low-wage companion Classification 5190.
Although Max provided the auditor with the time records that he maintained during the policy term, he did not provide time cards that showed the times the employees started and ended each work period throughout the workday as required by the regulations.
Since the requisite time records were not available at the time of the audit, Max’s employees were assigned to the higher-rated Classification 5190.
Explanation
Although Max provided the auditor with the time records that he maintained during the policy term, he did not provide time cards that showed the times the employee started and ended each work period throughout the workday as required by the regulations.
This "start and stop time requirement" only pertains to the assignment of his employees’ payroll to the lower-rated dual wage electrical wiring Classification 5140; it is not applicable to the division of payroll with other construction activities.
Resolution
Since the requisite time records were not available at the time of the audit, Max’s employees were assigned to the higher-rated Classification 5190.
How USRP Rules Are Applied
Dual wage classifications are Construction or Erection classifications requiring verification that the employee’s regular hourly wage equals or exceeds a specified amount and are subject to additional recordkeeping requirements set forth in Part 3, Standard Classification System, Section IV, Special Industry Classification Procedures, Rule 2a(1), Records of Payroll. This rule states, in part:
For all employees, other than salaried employees, determination of the regular hourly wage must be supported by one of the following sources:
- Original time cards or time book entries for each employee. Original records must include the operations performed, the total hours worked each day and the times the employee started and ended each work period throughout the workday. At job locations where all of the employer’s operations cease for a uniform unpaid meal period, recording the start and stop times of the uniform break period is not required.
- A valid collective bargaining agreement that shows the regular hourly wage rate by job classification of worker. If using a collective bargaining agreement, the records must include an employee roster by job classification that permits the reconciliation of individual employees to the job classifications set forth in the collective bargaining agreement.
For all employees, other than salaried employees, the payroll for which an hourly wage determination cannot be reconciled to time cards or time book entries or collective bargaining agreements as specified above shall not be assigned to a classification that requires the regular hourly wage to equal or exceed a specified amount.
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Division of Payroll
Scenario
Michelle owns a bakery and a restaurant next door. The bakery is assigned to Classification 2003, Bakeries or Cracker Mfg., and the restaurant is assigned to Classification 9079, Restaurants or Taverns. The two businesses are physically separated; however, they share employees who work in both the restaurant and the bakery. Michelle wants to know why the employees are assigned to the higher-rated Classification 2003.
To accurately allocate each employee's payroll between the time spent performing bakery and restaurant activities, Michelle must provide the auditor with complete and accurate payroll records with supporting documents, which show separately, both by individual employee and in summary by operations performed, the remuneration earned by the employee.
Explanation
Even though the businesses maintained the required physical separation, Michelle’s employees performed activities that were integral to both the restaurant and bakery operations. Integral means the activities are direct or necessary to the operation as a whole and typically include "hands-on" activities.
To accurately allocate each employee's payroll between the time spent performing bakery and restaurant activities, Michelle must provide the auditor with complete and accurate payroll records with supporting documents, which show separately, both by individual employee and in summary by operations performed, the remuneration earned by the employee.
Resolution
Michelle did not keep complete and accurate records as provided in this rule, so the payroll for her employees was assigned to Classification 2003, the highest-rated classification applicable to any part of the work performed by her employees.
How USRP Rules Are Applied
Part 3, Standard Classification System, Section V, Payroll – Remuneration, Rule 3, Division of Single Employee’s Payroll addresses instances in which complete and accurate records are not maintained:
If the employer fails to keep complete and accurate records as provided in this rule, the entire remuneration of the employee shall be assigned to the highest rated classification applicable to any part of the work performed by the employee. Payroll may not be divided by means of percentages, averages, estimates, or any basis other than specific time records.
Similar requirements for dividing payroll between Construction or Erection classifications are in Part 3, Standard Classification System, Section IV, Special Industry Classification Procedures, Rule 2, Construction or Erection Work.
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