Federal Law Breakdown by 1+, 15+, 20+ Employee Threshold (and more)
Overwhelmed with trying to know which federal law applies to your company? Here's a quick summary of each law, broken down by company size.
With so many different employee records and retention timeframes, how do you know when it's safe to purge employee payroll and personal data?
Employment records are the backbone of an employee’s relationship with a company. These records encompass a wide range of documents that contain personally identifiable information, from the initial hiring process to ongoing employment details.
If you have been tasked to create and retain employee records, you know there are varying retention timeframes for each record. Maintaining accurate records is crucial to ensure compliance and protect confidential data.
Several state and federal employment laws, including the Fair Labor Standards Act (FLSA) and the Equal Employment Opportunity Commission (EEOC), mandate that employers verify and retain certain records for employees. From payroll records and job descriptions to training records and employment actions, essential employee information such as social security numbers, citizenship status, birth dates, and full legal names are collected and stored. Some employers may also have health insurance enrollment forms, medical records, and credit reports, all of which require special handling per the Health Insurance Portability and Accountability Act (HIPAA) and the Fair Credit Reporting Act (FCRA).
Maintaining accurate and up-to-date employment records is not just a legal requirement but also a critical aspect of good business practice, ensuring that companies can respond effectively to any compliance checks or legal inquiries.
Here is a quick chart of employee records that must be retained, along with federal retention periods and applicable laws.
(Please note: federal contractors may be required to retain records for longer periods than those posted below.)
Selection and Hiring Records |
Federal Retention Period |
Applicable Law(s) |
Notes |
Job applications, resumes, advertisements about job openings, job description, assessment results, screening tools, interview notes, references/verifications, offer letter, and records relating to hiring decisions |
1 year after termination; 2 years if applicant is 40+ years old |
EEOC, ADEA, ADA, TITLE VII |
Many states require employers to retain these records for 3 years, although the federal standard is 1 year |
Pre-Employment Records | Federal Retention Period | Applicable Law(s) | Notes |
---|---|---|---|
Credit checks, criminal history, driving records, consent forms, references/verifications, and any other forms of background checks | 1 year after termination | EEOC, FCRA, TITLE VII | Some experts advise 5 years for consumer related credit information reports, per FCRA statute of limitations |
Employee Form I-9 | Federal Retention Period | Applicable Law(s) |
---|---|---|
Form I-9 and any accompanying documents used for identification | 3 years after date of hire or 1 year after termination, whichever is later |
IRCA, INA |
Employment Actions |
Federal Retention Period | Applicable Law(s) | Notes |
---|---|---|---|
Promotions, demotions, transfers, training opportunities, performance appraisals, accommodations, incentives, merit system, seniority system, terminations, etc. | 1 year after employee is terminated; however, you may want to maintain employment action records longer to contest unemployment claims | EEOC, ADEA, ADA, TITLE VII | Per the Equal Pay Act, an explanation for paying different wages to employees of the opposite sex should be retained for 2 years |
Reasonable Accommodations |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Information that includes the date an accommodation was requested, response, date fulfilled, and accommodations made | 1 year from when the record or personnel action is made or employee is terminated, whichever is later | ADA |
Family and Medical Leave Records |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Payroll and identifying employee data, occupation, rate of pay, dates taken, hours of the leave, copies of notices provided to employer, documents describing benefits or policies, premium payments, and any disputes | 3 years after termination | FMLA |
Job-Related Injuries |
Federal Retention Period | Applicable Law(s) | Notes |
---|---|---|---|
Logs, records, and summaries of work-related injuries and illnesses, as well as records of exposure to toxic substances for each employee | 5 years after termination | OSHA | If employees are exposed to toxic substances, maintain related medical exams and material safety data sheets for 30 years after termination |
Retirement Benefits |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Summary plan descriptions, annual reports, disclosures, and plan terminations | 6 years after the plan date or employee termination, whichever is later | ERISA |
Personnel Files |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Employee's full name, address, social security number, gender, date of birth, occupation, job classification, compensation records | 3 years after termination | FLSA, ADEA, Davis-Bacon Act, FMLA, EPA, Lilly Ledbetter |
Employee Health & Benefits Records |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Health and benefits beneficiary forms, medical and dental/vision plan elections, and drug test results | 3 years after termination | ADEA |
Employee Payroll Records |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Compensation records (time sheets, payments, tips, in-kind wages), dates of payment, paid time off (PTO), annuity and pension payments, benefits, deductions and additions, fringe benefits, daily schedules, pay rate, and payroll data |
3 years from when the record is created | ADEA, FLSA |
Employee Tax Records |
Federal Retention Period | Applicable Law(s) |
---|---|---|
Undeliverable W-2s, W-4s, 1099s, employee withholdings, dates of employment, paid time off (PTO), federal and state payroll tax forms, returns filed, and fringe benefits | 4 years from date tax is due or paid | Internal Revenue Code |
Employee personnel files should be kept confidential, securely maintained, and only be accessible to authorized personnel.
When it comes time to destroy these records, employers must ensure the process is secure, whether through shredding physical documents or using secure electronic destruction methods. This careful approach helps protect sensitive information and ensures compliance with legal requirements.
In today's digital world, electronic record-keeping is the preferred method for managing employment records. Utilizing HR software, employers can efficiently store and access employee information, including hiring documents, performance evaluations, termination letters, and more. This method not only streamlines the record-keeping process but also aids in compliance with federal and state laws.
Employers must ensure that electronic records are accurate, complete, and secure, with access restricted to authorized personnel. Regular backups and disaster recovery plans are essential to prevent data loss and ensure business continuity, making electronic record-keeping a robust solution for modern records management.
Effective employee records management hinges on a few key best practices:
It is crucial to retain records for the legally required period and to destroy them securely when no longer needed. Implementing a standardized record-keeping system ensures consistency and efficiency, while regular reviews and updates help maintain compliance with evolving employment laws and regulations.
Employment records are a vital component of any business, making their accurate, complete, and secure management essential. Employers must comply with federal and state laws to maintain and retain certain employee records.
Electronic record-keeping offers a modern solution for managing employment records, but it requires diligence to ensure accuracy and security. By adhering to best practices in records management, employers can ensure compliance with applicable laws, protect themselves from potential legal issues, and support the overall success and growth of their business.
As part of our services, Stratus HR provides digital filing of client employee records to satisfy all federal, state, and local record retention requirements. For more information or help with your employee records retention process, please contact your certified HR expert.
Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.
Overwhelmed with trying to know which federal law applies to your company? Here's a quick summary of each law, broken down by company size.
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