Employee Records – How Long Should You Keep Them For?

Years of employee records take up significant amounts of space–either as physical documents or when stored electronically. Periodically purging old documents helps keep your records at manageable levels, but doing so raises an important question: How long to keep employee files? The answer depends on the nature of the employee files and federal or state laws.

SEE ALSO: Managing a Multigenerational Workforce in the Age of The Millennial

Federal and state laws determining how long to keep employee files come with significant fines for noncompliance. Failure to provide employee documents in the event of legal action can result in the loss of court cases regarding discriminatory hiring practices, disputes over health and pension benefits, and charges of wrongful dismissal.

Hiring Documentation

The Americans with Disabilities Act, Title VII of the Civil Rights Act, and other federal laws require all hiring records be stored for a year after a job offer is made in order to prove the employer did not discriminate in the hiring process. Such documents include:

● Applicant resumes,
● Interview notes,
● Job applications,
● Drug test results,
● Job postings,
● Any searches made through applicant tracking systems.

Employee Termination Documentation

While the general public associate employee termination with firings and layoffs, human resources defines termination at the ending of an employment relationship. In addition to involuntary termination and layoffs, termination may include retirement, voluntary resignation, and job elimination.

After termination, the following employee records must be stored for a minimum of three years:
● Personnel files,
● Payroll records,
● Benefits enrollment forms.

The US Equal Employment Opportunity Commission requires employers keep all emplouyment records for a minimum of one year after termination. However, should an employee file a dispute under federal civil rights laws, all documentation must be kept until either the employer and relevant federal agency come to an agreement or until the EEOC makes a ruling.

In addition to the above, the Age Discrimination in Employment Act requires payroll records be stored for three year, and benefit information for a year.

Nonexempt Employee Recordkeeping

The Fair Labor Standards Act (FLSA) also requires documents be kept for at least three years. For nonexempt employees, this time limit covers:

● Employer copies of pay stubs,
● Proof of wage payments,
● Proof of paid overtime,
● Straight-time and overtime hours worked,
● Payroll deductions,
● Other wage-related information.

For exempt employees, all of the above apply except for overtime documents, as salaried employees do not qualify for overtime.

Medical and Pension Records

Medical and pension records must be stored for a minimum of six years to be in accordance with the federal Health Insurance Portability and Accountability Act. should an ex-employee claim he or she deserves greater benefits, it is the responsibility of the employer to produce documents proving otherwise.

The Family and Medical Leave Act requires all documents related to family or medical leave be kept for three years, including when leave began and the dates and hours of all time taken.

Drug Test Documentation

Drug test documentation, either due to random checks or an incident at work, must be maintained for a year. An exception is any occupation or business subject to Department of Transportation regulations, where documents are kept for five years.

Other Employee Information

Copies of wage rates, salary levels, documentation used to justify pay scales, performance appraisals, and collective bargaining agreements must be kept for a minimum of two years.

The information above only applies to federal laws and regulations. State law may require employers to maintain records for longer periods of time. When state and federal time limits for employee data storage differ, go with the longer time period.