How Long Should You Keep Employment Records?

Are you compliant in your retention of employment records?  There are a number of government agencies that provide guidance and oversight. Watch the video to find out!

Transcript:

We got a question just the other day, from one of our members that asked, How long do we need to keep employment records? Now, we’ve had a lot of discussion on how long to keep medical records. But this is a good question. How long do you need to keep employment records for your employees? Well, there’s a variety of different statutes from the state as well as from the federal government, most of the state provisions really point to the federal government outside of some access to your employees, if you will, and set those aside. Really, we’re talking about retention here. So who are the entities that really are going to govern this? Well, there’s three primary entities that are going to that are going to lay down some specifics. It’s the IRS, of course, it’s EEOC, Equal Employment Opportunity Commission, and then also the Department of Labor.

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So IRS, EEOC, and DOL are all three actively involved in this whole process of how long we keep employment records, well, they all have different standards, the IRS wants you to keep the employment tax-related records. Well, here’s the issue is some of the tax-related records could stem and help support an independent contractor versus an employee or vice versa. And so a lot of the employment records are going to be important. And of course, a lot of employment record really leads to actions taken in regard to payroll. And so that’s important to keep. And so what they say is four years past the due date, or the pay date of the tax, whichever is later. So four years past, the due or the pay date of the tax. Now, EEOC says you need to keep those between one and four years. It depends on all of the different circumstances Department of Labor, however, they say that your employment records shouldn’t be kept between two and three years. And so there’s again, a lot of different information from those three different entities in regards to how long to keep your records.

So let’s just sum it all down and dump it all down to what makes the most sense when you look at everything. So you don’t have to break down everybody’s employment file and try to determine what you need to keep, what you need to discard, what needs to be available, and what doesn’t. The simple rule of thumb is this you want to keep the records for four years past the due or the pay date of your tax that’s associated with that particular employee for those particular records, or six months following termination, whichever is longer. So four years past that due or that pay date, or six months following termination. Now the termination rule that actually comes from EEOC, and if you remember from them is one to four years, so this gives the cushion. So the appropriate timeframe to keep your employment records is four years past the due, or the pay date of the tax, whichever is later or six months after termination, whichever is greater. Hopefully this helps you out. We’ll catch you next week.