How Long Must Employee Records Be Kept?

Maintaining employee records is essential for legal compliance, protecting employer and employee rights, and ensuring smooth business operations. Employers must follow federal and state regulations to determine how long they should retain various types of employee records. Proper record retention helps in audits, resolving disputes, and meeting tax obligations.

2. General Guidelines for Retaining Employee Records

The duration for keeping employee records varies depending on the type of record and applicable laws. Employers should consider both federal and state regulations when determining retention periods. Generally, it is advisable to keep employee records for a minimum of three to seven years after termination, but certain records require longer retention periods.

3. Types of Employee Records and Retention Periods

Hiring Records

• Retention Period: 1 year (EEOC requirement)

• Includes: Job applications, resumes, interview notes, background checks, and offer letters

Payroll and Tax Records

• Retention Period: 3-7 years (IRS and FLSA requirements)

• Includes: W-2 forms, timesheets, pay stubs, tax documents, and wage calculations

Performance Records

• Retention Period: 3-5 years after termination

• Includes: Performance reviews, disciplinary actions, and attendance records

Medical and Benefits Records

• Retention Period: 3-6 years (ADA, FMLA, and OSHA requirements)

• Includes: Health insurance enrollment, workers' compensation claims, and medical leave documentation

Termination Records

• Retention Period: 3-5 years after termination

• Includes: Exit interviews, resignation letters, and final pay records

4. Legal Requirements for Record Retention

Several federal agencies establish retention requirements for employee records:

Fair Labor Standards Act (FLSA)

• Requires payroll records to be kept for at least 3 years.

Equal Employment Opportunity Commission (EEOC)

• Hiring records must be retained for 1 year after creation or decision-making.

Occupational Safety and Health Administration (OSHA)

• Records related to workplace injuries must be kept for 5 years.

• Exposure and medical records must be kept for 30 years.

Americans with Disabilities Act (ADA)

• Medical records must be retained for 1 year after termination.

Family and Medical Leave Act (FMLA)

• Requires records to be kept for 3 years.

Internal Revenue Service (IRS) Requirements

• Tax-related documents must be retained for at least 4 years.

5. Best Practices for Record Storage and Disposal

Storage Options

• Digital Storage: Cloud-based HR software ensures easy access and security.

• Physical Storage: Secure filing cabinets with restricted access.

Disposal Methods

• Shredding: Confidential physical records should be shredded before disposal.

• Secure Digital Deletion: Electronic records should be permanently deleted using secure software.

6. State-Specific Record Retention Laws

Many states have additional record retention requirements. Employers should:

• Review their state’s Department of Labor guidelines.

• Retain records for a longer period if state law requires it.

• Ensure compliance with both federal and state laws.

7. Consequences of Improper Record Retention

Failing to retain employee records properly can lead to:

• Legal Penalties: Non-compliance can result in fines or lawsuits.

• Employee Disputes: Incomplete records may affect wrongful termination claims.

• Audit Issues: Inadequate records can trigger IRS and labor department audits.

8. Conclusion

Maintaining employee records for the appropriate length of time ensures compliance, protects businesses, and supports legal obligations. Employers should establish a clear record retention policy and regularly update it to align with current laws. Implementing best practices for storage and disposal will further enhance data security and compliance.

For expert HR solutions and compliance guidance, visit Hr First Solutions to streamline your employee record management.