How long are employers required to keep employee records

When an employment relationship ends, employers have an obligation to store employee personnel files in a secure location. The length of time employee records must be kept varies, according to federal and some state laws concerning employer record keeping. These are strict regulations, and employers who are unable to produce certain employee files after termination may be subject to stiff penalties and fines imposed by government entities.

Employee Resignation Termination

The term "employee termination" covers a number of employment actions, not just involuntary termination or an employee discharge. Employers use the word "termination" to indicate all types of employment separations – voluntary resignation, layoff, retirement and job elimination. It sounds harsh to the lay person, but human resources departments speak of termination simply because it means that the employment relationship has ended, so it's always applicable regardless of the circumstances.

Components of Employment Records

Employment records consist of employee personnel files, payroll records, benefits enrollment forms and medical records. Job-related materials – everything except health and medical information – is generally stored within the human resources department and may be available to staff on a need-to-know basis. Payroll records are sometimes kept separately but are stored for easy accessibility by employee name or identification number, such as a Social Security number.

Information concerning employee health or medical benefits and related documents are available only to an HR staff member or manager-level employee designated as a privacy officer, as specified by Health Insurance Portability and Accountability Act (HIPAA) regulations that ensure confidentiality of certain records maintained by an employer.

FLSA Nonexempt Employee Recordkeeping

Under the Fair Labor Standards Act (FLSA), employers are required to keep payroll records for nonexempt employees for three years. Payroll records for nonexempt employees include employer copies of pay stubs or proof of wage payments, proof of overtime wages paid, straight-time and overtime hours worked, payroll deductions and other wage-related materials. The record keeping requirements for salaried, exempt employees differ slightly, only because exempt employees aren't entitled to overtime and therefore you wouldn't have proof of overtime paid. The FLSA requires that employers maintain nonexempt records for three years from the employment termination date.

The FLSA requirement is two years for records like collective bargaining agreements, performance appraisals and documents that may satisfy requirements to justify pay scales, wage rates and salary levels.

State record keeping laws may vary from the federal, and in some states, the requirements are longer than federal regulations mandate. The state of Texas, for example, requires that employers maintain certain wage and tax information for four years. Certain benefits-related materials should be maintained by Texas employers for six years.

EEOC Recordkeeping of All Employment Records

The U.S. Equal Employment Opportunity Commission (EEOC) requires you to maintain all employment records for one year from the employee's termination date. For purposes of the Age Discrimination in Employment Act (ADEA), you need to keep payroll records for the same length of time required under the FLSA – three years from the termination date. Other employee benefit information must be retained for only one year.

Special record keeping rules apply when an employee files a charge of discrimination under any of the anti-discrimination laws the EEOC enforces. In matters involving employee disputes under the federal civil rights laws, you must keep employee files until the employer and the federal agency reach a resolution, or until the EEOC issues its decision. Because files must be kept throughout the entire dispute resolution process, it could be years after the termination before an employer can safely discard the employee's files.

Better Safe than Sorry

Because record keeping rules vary according to federal and state government requirements, it's prudent to maintain employee records for the maximum length of time. It's perfectly fine to store those records electronically, so you don't have to allocate space and resources to paper records. You'd be wise to maintain all employee records for at least three years – to cover all the bases of the federal rules – and longer, if necessary, to comply with state rules.

Page Last Reviewed or Updated: 07-Jul-2022