I’ll be the first to admit – this is not an interesting topic. But, if you have even one employee or plan on hiring anyone, it’s important to pay attention to how long you must keep employment records. Federal, state, and local governments all have different requirements for how long you have to keep records for your employees. We’ll cover some of the basics here. But, make sure to check with your state and local governments to make sure you’ve covered all your bases.
Why is it important to keep records for your employees? You’ll be able to defend yourself if a former employee sues you for something like wrongful termination.
Keep all hiring records for at least one year after you’ve filled the position. Hiring records include applications, resumes, etc.
According to the Americans with Disabilities Act and Title VII, it’s illegal for you to discriminate during the hiring process, so saving hiring records will protect you if someone who did not get the job decides to sue you for discrimination.
Keep all payroll records for at least three years after termination. Keeping payroll records will show that you paid your employees fairly for the work they performed and that you complied with minimum wage and overtime laws.
Keep all I-9 forms for at least three years after hiring an employee or at least one year after the employee has left your company, whichever date is later. You must keep these forms separate from other employee records.
I-9 forms show that your employees are eligible to work in the U.S.
Keeping this information will help you prepare your defense if a former employee wants to sue you for wrongful termination.
If an employee requests time off under the Family & Medical Leave Act (FMLA), then keep that paperwork (even if you didn’t grant the request) for at least three years.
Drug Test Information
If you require drug testing during the hiring process, there’s a good chance you’ll only have to keep drug test results for a year (because it falls under hiring records), but if your business is related to the transportation industry, you’ll have to keep drug test information longer.
Due to Department of Transportation (DOT) safety regulations, any business involved in transportation must keep drug test records for at least five years.
Employment Tax Records
Keep all employment tax records, including all wages, tip information, W-2 forms, and W-4s, for at least four years, just in case you get audited. For the full list of what these records include, check out the IRS website.
Health & Safety Records
The Occupational Safety & Health Administration (OSHA) requires you to keep all health and safety records for at least five years. These records include reports of employee injuries or illnesses caused by work. The reports should include a brief description and any pertinent details.
It’s important to keep these records to show that your employees have a safe working environment and that any injuries are handled correctly.
Unemployment Insurance Records
Each state has its own rules about how long to keep unemployment insurance information, but it could be anywhere from four to seven years.
Retirement Benefit Information
Per the Employee Retirement Income Security Act (ERISA), you must keep retirement benefit information for at least six years after an employee leaves or is terminated.
If a former employee sues you because they said they deserve more retirement money, you have to prove that you don’t owe more. It is not up to the former employee to prove they are owed more.
Health Benefits Information
It’s a good idea to also keep health benefits information for at least six years. This is especially true if a former employee is eligible for continued health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).