Personnel recordkeeping is the first line of defense against employee lawsuits. Employers who fail to keep proper personnel records could be subject to legal action since they don’t have any documentation to disprove any allegations. Also, particular state and federal laws and regulations require specific records to be kept in employee files. Such requirements would apply to all employers covered by federal anti-discrimination laws, regardless of if charges were filed against the employer. For example:
- Equal Employment Opportunity Commission (EEOC) regulations require that employers keep all personnel or employment records for one year. If an employee is involuntarily terminated, the employer must retain the former worker’s personnel records for one year from the termination date.
- Under the Age Discrimination in Employment Act (ADEA) recordkeeping requirements, employers must keep all payroll records for three years. Additionally, employers must keep on file any employee benefit plans (such as pension and insurance plans). Employers must keep any written seniority or merit system for the whole period the plan or system is in effect. Additionally, the written documentation must be kept for at least one year after its termination.
- Under the Fair Labor Standards Act (FLSA) recordkeeping requirements applicable to the Equal Pay Act (EPA), employers must keep payroll records for at least three years. In addition, employers must keep all records that explain the basis for paying different wages to employees of opposite sexes in the same establishment for at least two years. These records can consist of:
- wage rates,
- job evaluations,
- seniority and merit systems, and
- collective bargaining agreements.
The following five kinds of employee records are critical information that all employers need to keep on hand for the appropriate period:
- Attendance Records – Employee time off, such as vacation time and sick time, must be carefully tracked. Since some states require unused accrued vacation time to be paid out upon termination, accurate and complete documentation helps to disprove any compensation claims from former employees. Employers should keep leave records and workers’ compensation records related to the Family and Medical Leave Act (FMLA) indefinitely to protect against future litigation.
- Benefit Records – Two provisions of the Employee Retirement Income Security Act of 1974 (ERISA) explain employee benefit plan record retention. ERISA states that all records of agency filings, participation, and beneficiary disclosures must be retained and kept available for examination for at least six years after the filing date. The records would generally include worksheets and other supporting data or documentation, committee minutes, board resolutions, and other information to prepare the filings or disclosures. ERISA also states that an employer must “maintain benefit records with respect to each of [its] employees sufficient to determine the benefits due or which may become due to such employees.”
- Training Records – Training records are vital to businesses for several reasons. On a more personal level, training records can show that employees were trained on new topics of importance to the organization. The information gained at the training may allow employees to be considered for a raise or promotion down the road. On a more significant level, training records document whom the staff trained, when they were trained, and the training subject matter. Many federal entities can access training records to verify that organizations are meeting regulatory requirements for specific industries. A lack of proof involving employee training could end up in fines and penalties against the company.
- Payroll Withholding Records – The Internal Revenue Service (IRS) requires that all businesses utilize a recordkeeping system. That system must keep payroll withholding records safe and orderly for at least three years after the due date of the return OR the date it was filed, whichever is later.
- Unemployment Records – After an employee has been laid-off or terminated, they may successfully file for and start receiving unemployment benefits. Each step of the unemployment process should be documented and kept safe. These include the employee’s information (name, address, social security number), hire/separation/re-hire (if applicable), payment dates for cash and non-wages, and dates and hours of work. Any correspondences with the employee and the unemployment agency should also be kept in case of a future audit or investigation.
To assist employers and Human Resources professionals in proper recordkeeping techniques, Personnel Concepts has created the HR Record Retention Guide. This comprehensive guide is designed to help small business employers assess their level of compliance with current federal record ret