You Can Thank Us Later – 11 Employee Record Retention Requirements you MUST Follow

What are Your Employee Record Retention Requirements?

There’s a responsibility most small businesses owners would probably like to forget. But it’s imperative for anyone running anything larger than a sole proprietorship. This is your responsibility to keep records on your employees. While this might not be the most exciting part of running a business, it is important.

Employee Record Retention Requirements

Federal, state and local governments all have various requirements when it comes to keeping accurate documentation about hiring and other HR functions to protect both employees and businesses. As a business, failing to keep these records on hand could leave you open to wrongful termination suits or similar repercussions without any paperwork to defend yourself. Here are some of the requirements your business might have to satisfy when it comes to keeping employee records.

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Keep Hiring Records for a Year

When you’re hiring for a new position, federal statutes like the Americans With Disabilities Act and Title VII require you to be non-discriminatory in your hiring process. So you should keep all applications, resumes and other documentation from the hiring process for at least a year after the job was filled in case any of the parties who did not receive the job decide to file a lawsuit.

Keep Payroll Records for Three Years

Payroll records are essential for making sure employees are fairly compensated for the hours they’ve worked and for making sure your business complies with any overtime and minimum wage requirements. The law requires you to keep these records on hand for non-exempt employees for three years. However, employees can also choose to file lawsuits if they feel they’re owed back pay for any overtime worked. So it can be beneficial for you to keep them on hand for up to five years after termination.

Keep I-9 Forms for a Year After Termination

I-9 forms are required for businesses to show that they verified an employee is eligible for work in the United States. By law, you’re required to keep these forms for three years after hiring an employee or one year after an employee is terminated, whichever date comes later. You’re also required to store these forms separately from other personnel records.

Keep Separation Paperwork for Five Years After Termination

Keeping paperwork related to termination or separation is also essential in case you’re faced with any wrongful termination issues. Keep resignation letters and exit interview paperwork on hand for three years after the employee leaves and separation paperwork for five years.

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Keep FMLA Leave Reports for Three Years After Termination

The Family Medical Leave Act is there to ensure eligible employees receive unpaid leave where their job is protected in the event of a medical or family issue. If an employee submits a request for FMLA leave, you should keep that information in your records for at least three years after that employee parts ways with your business, regardless of whether the leave was granted or not.

Keep Retirement Benefits Forms for Six Years

If you provide retirement benefits to employees, you should keep that information on hand for at least six years after the employee leaves or is terminated, per the Employee Retirement Income Security Act. In addition, courts have determined that it’s the company’s responsibility to prove they provided sufficient coverage and benefits in the event an employee sues, rather than the employee’s responsibility to prove the coverage was insufficient.

Keep Drug Test Records for Five Years

In some cases, background check and drug testing information can fall under the standard of other hiring information. However, if the job is related to transportation, then you are required to keep records of any drug tests performed for five years as part of the Department of Transportation’s safety regulations.

Keep Employee Tax Records for Four Years

When it comes to taxes related to employees, the IRS recommends keeping records on hand for four years in the case of an audit. This should include all wages, pension payments, tip information, W-2 and W-4 forms, and any other related information.

Keep Employee Health and Safety Records for Five Years

The Occupational Safety and Health Act requires you to take and keep records of any employee injuries and illnesses obtained in the workplace, with a brief description and any other pertinent information. This is to ensure that employees are provided with a safe working environment and that any issues are handled accordingly.

Keep Unemployment Insurance Information for Up to Seven Years

Unemployment insurance records requirements vary by state. However, in some cases, you may be required to keep those records for between four and seven years. Specifically, Washington D.C. requires businesses to keep those records for seven years.

Keep Contracts for Up to Five Years

If you work with independent contractors or third parties, you may also need to meet some state record keeping requirements. In Virginia, businesses are required to keep contracts on hand for five years after an agreement is made. And some other states also have similar requirements of between three and four years.

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

2 Reactions
  1. It can get confusing. While you can hire HR staff, you still need a system in organizing these records for your own benefit.

  2. Can you keep these records digitally?