Employee Recordkeeping Requirements

Today, with so many disparate regulations governing employee recordkeeping requirements, it is becoming increasingly difficult to keep track of exactly what you need to keep and how long you need to keep it.

Nearly every federal employment law sets specific recordkeeping rules for employee data, depending on the data in question. In addition, most states and many local municipalities, have unique recordkeeping requirements that go beyond the federal mandates.

The Short Answer for Time & Attendance Record Retention

If you are looking for the most straightforward solution for record retention and are not concerned about data storage and archiving costs, many experts will recommend keeping all employment data for the entire amount of time a person remains an active employee, plus 5 years.

There are notable exceptions, however. The only federal provisions that extend beyond a 5 year retention requirement are:

  • Records for pension and welfare benefit plans: which require 6 years retention following employment
  • Records for safety and toxic chemical exposure: which require 30 years retention following employment

The Long Answer for Time & Attendance Record Retention

The best record retention policies are probably the most inclusive policies. Keeping as much information for as long as possible is a best practice for protection against labor-related litigation. This minimizes the risk of your business being liable for mishandled recordkeeping.

But in addition to ensuring compliance and protecting against litigation, a good record retention policy helps apply time and attendance rules evenly across all employees. This can be especially helpful to dismiss claims of different treatment based on discrimination.

When creating your record retention policy, it is useful to categorize documentation and data retention requirements by employee status:

  • Pre-employment: Retain records for non-hires for a minimum of 2 years
  • During Employment: Retain all current employee records
  • Post-employment: Retain previous employee records for a minimum of 4 years

Employee Benefit Record Retention

Employee time off, such as vacation time and sick time, must be carefully tracked – ideally with automated time and attendance systems to protect against claims of discrimination. Since some states require unused accrued vacation time to be paid-out upon termination, accurate and complete documentation helps dispel any compensation claims from former employees.

Additionally, pension and retirement-related records must be retained for 6 years following employee separation according to the Employee Retirement Income Security Act (ERISA).

Family and Medical Leave Act-related leave records and workers’ compensation-related records are recommended to be kept indefinitely to protect against future litigation.

The Most Common Retention Requirements

There are several common employee record retention requirements that all businesses must comply with. These common requirements, along with often specific and intricate state and local mandates, can create a complicated network of employee recordkeeping that must be meticulously and accurately tracked and maintained.

Here are some of the most widely applicable record retention requirements:

Fair Labor Standard Act (FLSA)

  • Application
    • All employees
  • Retention Requirements
    • Retain for 3 Years: Employee information (name, address, occupation, birth date if under 19, and gender), complete payroll records (hours worked, overtime, and wage deductions), certificates, union agreements, written training agreements, sales and purchase records, and certificates of age for employees under 18.
  • Additional Retention Requirements
    • Retain for 2 Years: Basic employment and earnings records, wage rate tables, job descriptions, actual work completed, wage additions and deductions, evaluations, merit or seniority systems, and wage differential payments to employees of the opposite sex and same position.

FLSA / Equal Pay Act

  • Retention Requirements
    • Retain for 3 Years: Collective bargaining agreements; employee and payroll information.
  • Additional Retention Requirements
    • Retain for 2 Years: Explanation of merit or seniority systems; employee time sheets or cards.

FLSA / Tipped Employees

  • Application
    • Employees who receive tips as part of required wages
  • Retention Requirements
    • Retain for 3 Years from the Date the Record is Created:
    • Time paid for hours worked each day in a tipped position
    • Time paid for hours worked each day in a non-tipped position
    • Tips received and accounted for or turned over to the employer in a weekly or monthly amount

You can learn more about time and attendance-related concerns for tipped employees by reading this supplemental article.

Family & Medical Leave Act (FMLA)

  • Application
    • Applies to employers with 50+ employees as defined by the FMLA.
  • Retention Requirements
    • Retain for 3 Years: Detailed payroll and employee data, records of FLMA leave, copies of all employee notices and documents describing FMLA policies, records of premium payments made by employees on FMLA leave, copies of requests for leave and notices to employees responding to requests for leaves and designating leaves as FMLA leaves, records of any dispute regarding the designation of a leave as FMLA-related. Any medical records must be kept in a separate, secure location.

Internal Revenue Service (IRS) Regulations

  • Application
    • All employees
  • Retention Requirements
    • Retain for 4 years after payment, deduction of taxes, or due dates of returns: Basic employee data (name, address, Social Security number, and birth date), pay records (daily and weekly hours, overtime, tips, deductions from pay, taxes withheld, fringe benefit payments, and the amounts and dates of wage payments), copies of employee withholding forms (W-4 or W4-E), annual records of total wages and taxable pay, documentation describing why any taxable pay did not equal the total pay for an employee, the amount paid into the state unemployment fund (including employee pay deductions), and experience rating data.

In addition, retention requirements can be extended by the IRS for as long as records are pertinent to a tax filing in question. For this reason, many experts recommend keeping IRS-related records indefinitely.

The Acumen Answer for Time and Attendance Record Retention

While there is no shortage of solutions for automating employee record retention, Acumen prides itself on providing a comprehensive solution that is fully customizable. Acumen’s solutions offer a fully automated way to effortlessly track and maintain employee records in accordance with federal, state, and even local mandates.

Utilizing software that not only follows the law, but employs best practices, is one of the most certain ways to ensure that your business records are fully compliant with all relevant federal, state, and local standards.

If you would like to learn more about Acumen’s employee time and attendance systems and recordkeeping, contact Acumen today.