Employee Recordkeeping Requirements
With so many disparate regulations governing employee recordkeeping requirements, it’s hard 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 some local municipalities, also have unique recordkeeping requirements that go beyond the federal mandates.
The Short Answer for Time & Attendance Record Retention
If you’re 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. The only federal provisions that extend beyond a 5 year retention requirement are:
- Records for pension and welfare benefit plans: 6 years retention following employment
- Records for safety and toxic chemical exposure: 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.
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 2 Years Plus
- During Employment: Retain All Employee Records
- Post-employment: Retain Records for 4 Years Plus
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.
As stated above, 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
Fair Labor Standards Act (FLSA)
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
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
Employees who receive tips as part of required wages
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
Learn more about time and attendance-related concerns for tipped employees by reading this supplemental article.
Family & Medical Leave Act (FMLA)
Applies to employers with 50+ employees as defined by the FMLA.
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
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.
Note: Retention can be extended by the IRS as long as records are pertinent to a tax filing in question. For this reason, many experts recommend keeping IRS-related records indefinitely.
Additional Regulations & Recordkeeping Requirements
Additional regulations and recordkeeping requirements may apply to your business and employees. For a more in-depth look into these more obscure recordkeeping requirements, Acumen recommends reading this third-party whitepaper.
Please contact us to learn more about our employee time and attendance systems or request a quote today.
This article is not to be taken as legal advice.