How long should I keep employee records?
How long do you keep records when an employee leaves? Your first instinct may be to clean out the old records and only keep the new records handy. Employers may be unaware that there are strict regulations, and if they are unable to come up with certain documentation after one’s termination, they may be subject to penalties or fines from the government. Hiring records, I-9’s, payroll, tax records, and benefit information are the most commonly questioned components.
To maintain federal guidelines, employers are required to keep hiring records for one year from the date the applications were received. These hiring records include, but are not limited to:
- Applicant resumes
- Employment applications
- Interview notes
- Letters of reference
- Offer letters
- Performance reviews
- Termination records
Employers must have a completed I-9 and copies of supporting documents on file for each individual on the company’s payroll. Employers are also required to keep each completed document for a certain amount of time after an employment relationship is terminated. To calculate how long you should keep the documents, follow the below guideline:
|1. The date the employee began work for pay:||__________________|
|2. Add 3 years to the date:||__________________|
|3. The date the employee was terminated:||__________________|
|4. Add 1 year to the date on line 3:||__________________|
|5. Which date is later: line 2 or 4?||__________________|
The answer placed on line 5 will help you understand how long you need to keep these documents on file.
Payroll and tax records
Employee payroll and tax records need to remain on file for four years following separation, according to the IRS. These documents would include, but are not limited to:
- W-4 and/or W-9
- OT earnings
- Pay rate + total wages paid
- Hours worked
Employers are required to keep benefit information on record for six years following termination. This includes:
- Plan documents
- Election forms
- Beneficiary information
- Eligibility determination records
- Plan termination
The importance of storing accurate employee records stretches beyond the legal ramifications. It can help with recruitment and identifying gaps in skills. Analyzing stored records, specifically the components of your hire documentation for current employees, can help you assess gaps and determine additional training and development approaches you should provide. Making these assessments can also help you modify your hiring process by screening for specific skills your company needs, for example: add a skills assessment test as part of your application process.
Keeping up with so many employment records can be a daunting task, especially when your focus is on keeping the pertinent ones handy. Use BerniePortal to store these documents electronically.
Small business owners are continually faced with the question regarding how to stay...