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Run the Payroll Fee Auditor →Blog · Payroll Management · Retail
Retail Businesses: Payroll Recordkeeping Requirements (2026)
Payroll recordkeeping for retail businesses starts at the federal baseline, three years for payroll records and two for the time records behind them, then adds what reaches this industry: DOL Fact Sheet #20 and DOL Fact Sheet #15. BEG runs retail business payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Records specific to retail businesses
An employer relying on the section 7(i) exemption must keep accurate records of hours worked each workday and workweek and of earnings and wages paid, and must select a representative period of at least one month but not more than one year to test whether commissions exceed half of the employee's earnings. Without hours and earnings records the employer cannot substantiate the exemption.
Before taking a tip credit, an employer must inform tipped employees of the direct cash wage being paid (at least $2.13 per hour), the amount claimed as a tip credit (not more than $5.12), that the credit cannot exceed tips actually received, and that tips are retained by the employee except under a valid tip pool.
The federal baseline every employer keeps
29 CFR 516 requires payroll records for three years and the records they were computed from, time cards, schedules and piece or commission records, for two years. Employment tax records stay four years after the return they support. Forms I-9 stay three years from hire or one year from separation, whichever is later. For retail businesses the practical rule is that the pay codes for high turnover and new-hire volume and multi-location payroll produce records of their own, and an audit reads those, not the summary.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- An employer relying on the section 7(i) exemption must keep accurate records of hours worked each workday and workweek and of earnings and wages paid, and must select a representative period of at least one month but not more than one year to test whether commissions exceed half of the employee's earnings. Without hours and earnings records the employer cannot substantiate the exemption. [DOL Fact Sheet #20]
- Before taking a tip credit, an employer must inform tipped employees of the direct cash wage being paid (at least $2.13 per hour), the amount claimed as a tip credit (not more than $5.12), that the credit cannot exceed tips actually received, and that tips are retained by the employee except under a valid tip pool. [DOL Fact Sheet #15]
Read the full guide to how to prepare for a payroll audit, and the rest of the retail business payroll library.
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Frequently Asked Questions
Retail business records: DOL Fact Sheet #20
An employer relying on the section 7(i) exemption must keep accurate records of hours worked each workday and workweek and of earnings and wages paid, and must select a representative period of at least one month but not more than one year to test whether commissions exceed half of the employee's earnings. Without hours and earnings records the employer cannot substantiate the exemption.
Retail business records: DOL Fact Sheet #15
Before taking a tip credit, an employer must inform tipped employees of the direct cash wage being paid (at least $2.13 per hour), the amount claimed as a tip credit (not more than $5.12), that the credit cannot exceed tips actually received, and that tips are retained by the employee except under a valid tip pool.
How long does a retail business keep payroll records?
Three years for payroll records and two for supporting time records under the FLSA, four years for employment tax records under the IRS rule, and longer where an industry rule cited above says so.
What does managed payroll cost for a retail business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. High turnover and new-hire volume, multi-location payroll and seasonal overtime spikes are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Retail Businesses. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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