How Long to Keep Employee Files: 5 Best Practices for Compliance
The duration for which companies retain employee records can vary depending on the type of record and the legislations relevant to the jurisdiction in which the business operates. Typically, businesses should aim to retain employee files for at least seve years after an employee’s termination date. However, some documents may have different retention periods due to specific regulatory requirements.
Understanding Different Retention Periods
Different types of employee records might require different retention periods. Familiarizing yourself with these requirements ensures compliance with legal standards and helps in managing workplace information responsibly.
Personnel Files
General personnel files, including resumes, job applications, and employee contracts, should generally be kept for at least one year after the employee leaves the company. For documentation related to promotions, demotions, or transfers, it’s advisable to keep these records for at least one year following the action.
Payroll Records
Payroll records are important not only for internal auditing but also for compliance with employment laws. The Fair Labor Standards Act (FLSA) recommends keeping payroll records for a minimum of three years. This would include data on wages, hours worked, and other payment-related details.
Employment Taxes
For anything related to tax withholdings and filings, the Internal Revenue Service (IRS) requires records to be preserved for at least four years after the date that the tax becomes due or is paid, whichever is later.
Benefit Plans
Documents related to employee benefit plans, such as pension and insurance documents, should be retained for at least six years after the plan year ends. Compliance with the Employee Retirement Income Security Act (ERISA) is essential in these cases.
I-9 Forms
Employers must retain an employee’s completed I-9 form either for three years after the date of hire or for one year after employment is terminated, whichever is later. This form verifies an employee’s legal right to work in the United States and is critical for compliance with immigration laws.
Best Practices for Document Retention
To manage employee records effectively and remain compliant with applicable laws, consider implementing the following best practices in your document retention policy.
Regularly Update Retention Policies
Regulations can change, and it is vital to keep your document retention policies up to date. Regular reviews help ensure compliance and efficiency in handling employee files.
Secure Storage and Confidentiality
Employee records often contain sensitive information. Secure both digital and physical storage areas and restrict access to authorized personnel only to protect employee privacy and data security.
Implement a Document Management System
Using a digital document management system can simplify the process of storing, accessing, and deleting files in accordance with retention schedules. These systems often come with features that automate many aspects of document handling, reducing the risk of errors.
Periodic Training for Relevant Staff
Ensure that Human Resources staff and anyone else who handles employee records understand your company’s policies and legal obligations regarding document retention. Regular training sessions can be very beneficial in achieving this.
Proper Disposal Methods
When the retention period expires, disposing of employee records appropriately is just as important as storing them. Implement secure disposal practices, such as shredding physical documents and using professional services for wiping electronic files, to prevent unauthorized access to sensitive information.
Conclusion
Maintaining compliance with document retention policies not only helps protect the company from legal penalties but also protects employee’s personal information. By understanding the required retention periods and implementing a structured policy, companies can efficiently manage employee files while ensuring they meet all legal obligations.
