Record retention is an important part of the payroll function. How long does an employer need to maintain Employee records?
As long as an employee remains employed, all records relating to the employment of that individual must be maintained and up to date. Once an employee is terminated from employment, however, how long is the employer required to hold on to that employee’s personnel records? According to the latest HR resources:
- Payroll Journals – 3 years
- Time Cards – 3 years
- Federal and State payroll reports / W-2’s – 4 years
- Garnishments and other assignments – 3 years
- W-4’s – 4 years
- Employee Personnel Records (includes employment applications) – 3 years
- I-9 – 1 year or 3 years, whichever comes first. In other words if an employee who has worked for you for 3 years or more is terminated, you must maintain that I-9 for 1 year. If an employee who has worked for you for 6 months is terminated, you must maintain that I-9 for a total of 3 years.
Under the Fair Labor Standards Act (FLSA), employers are required to keep payroll records for nonexempt employees for three years. Payroll records for nonexempt employees include employer copies of pay stubs or proof of wage payments, proof of overtime wages paid, straight-time and overtime hours worked, payroll deductions and other wage-related materials. The record keeping requirements for salaried, exempt employees differ slightly, only because exempt employees aren’t entitled to overtime and, therefore, the employer wouldn’t have proof of overtime paid. The FLSA requires that employers maintain nonexempt records for three years from the employment termination date.
When an employee is in your employment, there is a tendency to place in their file all general information and occurrences that may pertain to that employee. When that employee’s employment ceases, it is recommended that all that general information that does not include or pertain to the above-mentioned items be cleaned out of the employee’s file. This should include any superfluous information that could be used in a negative manner in future proceedings.
Important Note: The above information provides general guidelines. Requirements can vary from state to state. If you have a specific situation regarding a terminated employee and their personnel records, you should seek legal counsel from a qualified individual regarding your specific situation.
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