- As an employer, you are required to retain numerous records on your employees, but the length of time you are required to keep them varies.
- Retaining the appropriate records is important, not just for compliance with governmental requirements, but also to protect you and your employees from future legal issues.
- Records must be retained from one to seven years depending on record type and the law.
Government regulations and documentation go together like peanut butter and jelly. It can be a slippery, sticky business, keeping files according to a host of laws and requirements from every level of bureaucracy our dear country contains.
Hopefully, you understand that you must keep certain records, right? If not, that’s another post. Let’s assume you know you need to keep files on everyone and everything. But how long must you keep them?
That’s where it gets interesting (if by interesting, we mean confusing). There are at least a dozen types of records you need to keep, and not all need to be held for the same length of time. Unless you want to find yourself surrounded by file cabinets or blanch at the cost of your data storage, you need to put together a strategy to help you pitch the right records at the right time.
Why do you retain employee records?
Aside from the fact that federal, state, and local laws require it, retaining certain records protects both you and your employees. Without the proper documents, you could open yourself to a wrongful termination lawsuit or another legal headache.
Aside from the fact that federal, state, and local laws require it, retaining certain records protects both you and your employees.
For example, if you terminated an employee for excessive tardiness, you would need to prove that:
- You had a policy about tardiness that stated how many was too many.
- The employee had acknowledged reading or receiving the policy and agreed to abide by it.
- You kept accurate records of the dates the employee was tardy.
- The employee was warned of the outcome of excessive tardiness.
You would need to be able to show that your policy was utterly transparent and that the employee had sufficient warning of the rule so that breaking it would be seen as willful. Without the records, you wouldn’t have a case.
Records to keep and how long to keep them
Most legal records are kept from one to seven years, and the count typically begins from a particular point in time.
Keep for One (1) Year
Hiring records and I-9 forms must be retained for one year, at a minimum. You start to count the year for I-9s from the time of contract termination.
Keep for Three (3) Years
Payroll records (i.e. paper or digital time cards) and Family and Medical Leave (FMLA) records must be retained for three years. The FMLA record retention clock begins at the employee’s termination.
Payroll records (i.e. paper or digital time cards) and Family and Medical Leave (FMLA) records must be retained for three years.
Keep for Four (4) Years
Employee tax records must be retained for four years before destroying them.
Keep for Five (5) Years
Employee health and safety records, contracts, and separation paperwork must be retained for at least five years. Separation paperwork retention is counted from the date of termination.
Keep for Six (6) Years
Retirement benefit forms must be retained for at least six years.
Keep Seven (7) Years
Unemployment insurance information must be retained for seven years. Seven years is a favorite term for the government, but it isn’t the longest. Luckily, nothing on this list needs to be retained forever.
Technology alleviates record retention headaches
There are scores of human resource and record retention solutions available for any size business. Electronic record retention follows the same rules as physical records, but the files take up much less space.
Here are more benefits to electronic record retention:
- You can manage large numbers of documents efficiently.
- You can search and gather documents, such as for an audit, quickly.
- You eliminate the risk of discarding files prematurely.
- The software can ensure the files are complete and notify you of anything that’s missing.
- The software keeps information secure, especially with cloud-based solutions.
- Technology automates your record retention tasks.
We may not have paperless offices yet, but electronic record retention will have you in the business of saving trees (and de-cluttering desktops).
If your business is bigger than a sole proprietorship, you need to know the legal requirements for employee record retention in the state where you are based. You can ease the administrative burden by using a software solution or by outsourcing your human resources tasks to a third party.