Employers are generally required to maintain various employee records to comply with legal regulations and ensure proper management. The specific data and retention periods can vary based on federal, state, and local laws, as well as industry-specific requirements.
We get it—another hefty responsibility for the small business owner to manage! What records do you need to retain? And for how long?
Federal laws and agencies like the Federal Labor Standards Act (FLSA), Equal Employment Opportunity Commission (EEOC), and Department of Labor (DOL) have established employee recordkeeping requirements. Plus, you might have state and local laws to adhere to.
Keep reading for a checklist of employment records you’ll need to keep, along with guidelines for how and when.
How long do employers have to keep employee records?
This depends on the type of records and any applicable federal, state, and local laws that apply. The Society of Human Resource Management (SHRM) notes that many employers keep it safe and straightforward by retaining employee records for seven years, which meets most regulations.
Employee Personnel Files
Most personnel files should be retained for at least one year after employment ends. This includes everything from personal details to hiring documentation. Under the FLSA, employers should keep personal and hiring records, such as:
- Full name and Social Security number
- Complete address
- Birth date (if under age 19)
- Demographic information
- Job description
- Job application and cover letter
- Pre-employment evaluations
- References
- Background checks and drug test results
- Offer letter
- Employment, noncompete, nonsolicitation, and any other contracts
- Start and end dates
When it comes to performance and disciplinary records, keep the following for at least two years after the employee leaves:
- Performance reviews
- Wages and changes
- Trainings, classes, and certifications completed
- Job titles, promotions, or transitions
- Leaves of absence
- Corrective actions or complaints
- Exit interviews, layoff, or termination information
Form I-9, Employment Eligibility Verification
Form I-9 is one of the most important documents for every employee you hire in the United States, including citizens and noncitizens. You and the employee must complete your respective portions of the form by their first day of work.
You must retain all I-9s for three years after the employee’s hire date or one year after their termination, whichever is later. Be sure to file them securely and separately from other employee records. The new I-9 alternative procedure offers a remote method, making completing and retaining each form much more efficient.
Payroll Records
This is another crucial area of employee records, which can become overwhelming and confusing due to the numerous documents and regulations around payroll. Many requirements range from three to seven years—and employers often err on the side of caution by sticking to the higher end. If you’re not sure if you should keep certain documents, hold onto them and consult with an HR professional. Below are some guidelines.
First, the Department of Labor (DOL) requires businesses to retain any wage-related records for at least two years, including:
- Employee schedules, whether fluctuating or fixed
- Regular pay rate
- Wage tables
- Time cards and piecework tickets
- Total daily or weekly straight-time earnings
- Total wages paid each pay period
- Overtime earnings
- Additions to or deductions from wages
If you’re ever selected for a DOL audit, you’ll need to provide these employee records, which should be stored at the workplace or in a central records office.
Regarding the method and format you use for timekeeping, you may use a time clock, have a designated timekeeper track employees’ work hours, or have workers write their own times. The DOL allows any of these as long as the records are complete and accurate.
For workers on fixed schedules, you can simply document their daily and weekly hours, indicating that they followed the assigned schedule. If an employee works more or fewer hours than their set schedule, record those hours on an exception basis.
Tax Records
The IRS also requires employers to keep employee records related to federal and state taxes for at least four years, including:
- Your EIN
- Amounts and dates of all wages, annuities, pension payments, and tips
- The fair market value of in-kind wages paid
- Employee names, addresses, SSNs, and occupations
- Dates of employment
- Payment details for employees who were absent due to sickness or injury
- Copies of employees’ income tax withholding certificates (Forms W-4, W-4P, W-4R, W-4S, and W-4V)
- Dates and amounts of tax deposits you made
- Copies of returns filed and confirmation numbers
- Dates and amounts of fringe benefits and expense reimbursements
- Documentation to substantiate any credits claimed
Employee Benefits
According to the Employee Retirement Income Security Act of 1974 (ERISA), employers must retain employee records of 401(k) plans for at least six years after filing Form 5500. These include but are not limited to fiduciary plan documents, participant disclosures, payroll records, selections, and beneficiary designation forms.
The EEOC also mandates that employers keep documentation of all employee benefits (e.g., pension and insurance plans) “and any written seniority or merit system for the full period the plan or system is in effect and for at least one year after its termination.” Records of benefit plans, enrollment forms, and plan descriptions should all be kept.
These requirements are part of anti-discrimination laws. If an EEOC charge is filed against your business, you must show these records and hold onto them until the charge or a related lawsuit is resolved. Retaining accurate, clear paperwork can protect your company in these situations.
Health & Safety Records
The Occupational Safety and Health Administration (OSHA) mandates retaining records of workplace injuries, illnesses, and exposure to hazardous substances for five years after termination. Additionally, HIPAA regulations require storing medical files separately from personnel files for confidentiality, while EEO laws protect sensitive personal information.
To be safe, keep documentation of:
- Employee medical records related to their ability to perform their jobs safely (e.g., fitness-for-duty exams, medical evaluations for specific tasks, and records of workplace accommodations)
- Leaves of absence and details
- FMLA leave documentation (see next section)
If an employee is exposed to a toxic substance, employers must keep documents related to all medical exams and safety data for 30 years after the worker’s termination.
Family and Medical Leave Act Documentation
The FMLA also has employer recordkeeping requirements, stating that businesses must maintain specific documentation related to employees’ leave for family or medical leave for at least three years. These include:
- Notices given to employees regarding their FMLA rights (e.g., general notice postings, individual eligibility notices, and rights and responsibilities notices)
- Records of the designation of FMLA leave, including any forms or communications specifying the leave as FMLA
- Medical certifications provided by employees to support their need for FMLA (which should detail the serious health condition of the employee or family member and the leave duration)
- Records of any paid and unpaid leave taken under FMLA, how it was designated (i.e., FMLA or otherwise), and benefits maintained during leave
- Employer policies and practices on benefits and compensation during paid and unpaid leave
Maintain the confidentiality of FMLA-related records by storing them separately and ensuring only authorized personnel can access this sensitive information.
Conclusion
Investing the time and energy into proper employee recordkeeping is worth it to protect your company and employees and mitigate risk! This is a major area that will help you remain compliant and streamline HR processes. Inaccurate or missing paperwork can lead to one or a chain reaction of costly events, including:
- IRS or DOL audits
- Labor law noncompliance
- Disputes about compensation, hours worked, overtime, and more
- Discrimination and harassment allegations
- Privacy and data protection violations and breaches
And all of the above opens up your company to potentially significant penalties. For a small business, every dollar counts—and thousands of dollars in fines can take a severe hit on your bottom line!
Staying up on these many items and requirements takes time and effort. So, if you have questions about employee records and how long to keep them, contact BlueLion today for guidance at info@bluelionllc.com or 603-818-4131!
The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.
