Recordkeeping Is Wage Compliance: The $613K NY Gyro Lesson

Employers sometimes think of wage-and-hour compliance as a math problem: pay the correct hourly rate, calculate overtime, issue the check, done.

The Department of Labor keeps reminding employers that there is another part of the equation: Can you prove the hours and wages were calculated correctly?

On July 28, 2026, the DOL announced the recovery of approximately $613,000 for 46 workers after an investigation of Minnesota restaurant NY Gyro found minimum wage and overtime violations. The agency also reported that the employer failed to maintain required records of employees’ hours worked.

That recordkeeping issue deserves attention because poor records can turn a manageable payroll error into a much larger compliance problem.

Under the FLSA, covered employers must maintain specified payroll information for nonexempt employees, including hours worked each day and total hours worked each workweek. The DOL also requires employers to preserve certain payroll records for specified periods.

Best Practices for Employers

First, distinguish between a schedule and a time record. A schedule tells you what the employee was expected to work. A time record should tell you what actually happened.

If someone was scheduled until 5:00 p.m. but stayed until 5:45 handling customers, completing paperwork, or closing the facility, payroll cannot simply default to the schedule.

Employers should also make it easy for employees to correct mistakes. If a missed punch requires three signatures, a printed form, a trip to HR, and the blessing of the payroll gods, employees and managers will eventually start taking shortcuts.

Automatic deductions deserve special attention. Automatic meal deductions can create exposure when employees frequently work through lunch but there is no practical way to cancel the deduction.

Multi-location organizations should make sure hours follow the employee. When the same employer has an employee working at multiple locations or in multiple roles, separate schedules or cost centers should not prevent payroll from identifying total compensable hours that must be considered.

What Employers Should Do Next

Conduct a focused payroll audit using a sample of nonexempt employees from different departments, shifts, managers, and locations.

Compare scheduled hours to punches and payroll. Look for missed punches, recurring manual edits, automatic deductions, unexplained reductions, employees consistently recording exactly 40 hours, and workers with multiple job codes or locations.

Then test the overtime calculation itself. Confirm the system is using the correct workweek—not simply the pay period—and verify that all compensation that must be included in the regular rate is being captured.

Employers should also review state and local requirements, particularly where minimum wage, record-retention, meal-period, or timekeeping requirements exceed federal standards.

The takeaway is straightforward: Accurate payroll depends on accurate records.

You do not want to discover during a DOL investigation that the company’s answer to “How many hours did this employee work?” is essentially, “We’re pretty sure.”

Lisa Smith, SPHR, SCP