As per the various regulations enacted by federal authorities, employers are required to retain the various records pertaining to the employees even when the employment relationship has ended. The duration for which these employee records need to be retained varies as per the nature of the records retained. These records need to be stored in a secure location and for some of the records, there are various state laws also applicable and these have to be kept in mind before the destruction of employee records. Employers need to be careful regarding the compliance of such laws and those employers who are not able to produce certain type of employee records after termination may have to face strict penalties and fines as per the concerned laws.
The following are the different type of employee records that need to be retained in order to stay compliant with the various type of federal and state laws.
Each and every record pertaining to your hiring process in the form of resumes, applications, interview notes, and job postings need to be retained until that particular job position has been filled. Even the kind of searches you make in the application tracking system regarding that particular job position need to be retained. The time for which hiring records need to be preserved is one year. Hiring records are required to be produced if any government agency raises a question regarding your hiring process and such records will help you to prove that you are not practicing any kind of discrimination in any form. The laws that are related to the hiring process are Americans with Disabilities Act, Title VII, and various other laws that require you to demonstrate that you are hiring as per the spirit of equal opportunity.
Drug Test Records
If you as an employer are conducting a drug test for pre-employment, such tests are a part of the hiring record and such records have to be maintained for one year. In addition, if you conduct additional drug testing due to circumstances arising at work or even as a random check, you need to keep such records for one year. You need to note that if you are subject to Department of Transportation regulations, you need to maintain the drug testing records for five years.
The minimum requirement as per the applicable laws regarding maintaining the payroll records is for three years. However, keeping in mind the recent lawsuits, it is advisable if you maintain payroll records for more than three years. Payroll records include how much each employee was paid and the number of hours each employee of yours worked during their tenure in your organization. Such kind of records should be maintained for at least five years after the employee leaves.
You don’t need to maintain time records for exempt employees, as their pay is the same regardless of the number of hours worked. But if you made a mistake in classifying a non-exempt employee as exempt, then time records can help you for paying the overtime amount you owe that particular employee. You also need to preserve all the calculations regarding how you arrived at the payment amount. The breakup of the entire salary in the form of commissions, overtime, or hourly pay also needs to be maintained.
The payroll and time records are not only required for questions related to tax and pay, but also for instances like determining the eligibility for FMLA as it is dependent on the number of hours worked in a year. Also, if you have a part-time exempt employee, you will need such time records for determining their eligibility for FMLA.
Form I-9 and Health/Pension Benefits Records
Form I-9 of an employee should be maintained for three years after you hire the employee and at least for one year after the employee has ceased to work in your organization, whichever is later. In addition, you need to store all the records related to the employee benefits for a minimum of six years. As per the court ruling, if an employee sues you for giving them a pension lower than what they deserve, it is your responsibility as an employer to prove that your assessment regarding the pension amount is correct.
In addition, if your former employees are eligible for COBRA, extending their health benefits, you should maintain such records for six years to remain on the safer side. You may need to produce such records as per the provisions under the Employee Retirement Income Security Act (ERISA).
FMLA records have to be maintained for at least three years. If an employee of yours requests FMLA, you need to maintain all the records pertaining to that request, even if you didn’t grant the leave. You should keep the records regarding employee leave and record all the details such as when the leave began and how much time is used. Intermittent FMLA records also need to be kept for a minimum of three years.
You should note that this list is not all-inclusive and there are various other requirements as per the applicable federal and state laws and you need to make sure that you are in compliance with such laws and are able to produce the relevant information as and when required.