Record Retention: What to Keep and Where to Put It

September 15, 2014

Consider these steps to address your record retention concerns.

By Rebecca Morris

Employers are required to maintain numerous employee records to comply with federal, state, and local laws. Proper recordkeeping practices can also help to administer human resources policies and practices with greater efficiency. Many employers have questions about what records must be retained, how to properly maintain them and for how long. The following frequently asked questions address some of these concerns. Many employers have questions about what records must be retained, how to properly maintain them and for how long. The following frequently asked questions address some of these concerns. Employers are required to maintain numerous employee records to comply with federal, state, and local laws. Proper recordkeeping practices can also help to administer human resources policies and practices with greater efficiency.

Q: Which federal laws govern recordkeeping requirements?

A: Several federal laws require employers to maintain certain records for a specified duration. These laws include, but are not limited to:

Equal Employment Opportunity laws, including Title VII of the Civil Rights Act and the Americans with Disabilities Act require employers to retain resumes and job applications, requests for reasonable accommodations and records related to promotions, demotions and performance reviews for at least one year.
The Fair Labor Standards Act requires employers to keep pay-related records, including time cards, work schedules, total daily or weekly earnings, overtime payments, and deductions and additions to wages, for at least three years.

Note: Payroll records required for tax purposes should be retained for at least four years.

The Immigration Reform and Control Act requires employers to complete and retain Form I-9 for all new hires. Retention period: three years from the date of hire or one year following separation, whichever is later.
The Occupational Safety and Health Act requires certain employers to record work-related injuries and illnesses using OSHA Forms 301, 300 and 300-A. Retention period: five years.

Note: Record retention requirements vary by jurisdiction. Many states have laws requiring employers to retain, among other things, records pertaining to compensation, state mandated leave of absences, non-discrimination, workers’ compensation and unemployment. Check your state and local laws to help ensure compliance.

Q: Can all information pertaining to one employee be kept in the same file or do I need to keep certain information in separate files?

A: It is a best practice to maintain several separate files for each employee. For example, many employers maintain a personnel file for each employee, a confidential medical or health information file for each employee and an I-9 file. It is also a best practice for employers to maintain a separate investigation file should the employee initiate or be the subject of any complaint requiring investigation.

Q: What information should be included in an employee’s personnel file?

A: An employee’s personnel file generally contains records related to:

Hiring (e.g. application and resume), promotion, demotion, transfer, lay off or termination;
Rates of pay or other terms of compensation;
Training records;
Job descriptions;
Employee handbook acknowledgment; and,
Performance reviews and any disciplinary actions taken against the employee.

Q: What should not be included in an employee’s personnel file?

A: The following information should not be kept in personnel files:

Any information reflecting an employee’s membership in a protected group, such as their voluntary self-identification of gender, ethnicity, or race, veteran’s status or as an individual with a disability. These types of records should be kept in a separate file.
Any document relating to an employee’s health or medical condition, including any leave of absence requests based on an employee’s injury or disability. These records should also be maintained in a separate file.
I-9 forms and other immigration-related documents. It is a best practice to store all I-9 forms together in one file, since they must be produced promptly following an official request.

Q: Are employers permitted to retain employee records electronically?

A: In general, employers are permitted to store employee records electronically, and should ensure that their electronic storage system includes controls to protect the integrity, accuracy and security of the records retained.

Depending on the type of record, electronic storage may be subject to specific federal and state rules. For example, the Employee Retirement Income Security Act of 1974, as amended, requires that systems storing benefit plan records in electronic form meet specific security requirements. Additionally, employers that maintain I-9 forms electronically must meet certain system requirements. Employers should consult with legal counsel if they have questions about complying with these specific security requirements.

Note: Employee records should never be transmitted electronically unless it is done over a secure network and the records are encrypted. Additionally, if employee records are stored electronically, you should be able to control and log when the records are accessed and by whom.

Q: If an employer stores documents electronically, can it destroy paper copies of those same documents?

A: Generally, an employer that stores documents electronically can destroy the paper copies of the documents that it has scanned and stored in that system, if:

It is the business practice to do so (which should be articulated in a policy);
The electronic copy accurately reproduces the original record; and,
The employer can recreate a paper copy from the electronic form of the document.

However, an employer who chooses to destroy its original paper documents and rely solely on an electronic system of record should consider the impact of not having a paper back-up. For this reason, employers who have embraced the electronic system of recordkeeping often consider retaining a small paper file of critical documents containing original signatures. Often original signatures play an important role in authenticating a document, and can assist an employer who is faced with a claim of.

Note: Employers should always consult with legal counsel to discuss the risks involved in document destruction, and what, if any, documents that employer should consider retaining in hard copy.

Q: What is done with records once the retention period ends?

A: When the time comes to dispose of employment records, employers must be sure to do so in a manner that ensures the records cannot be read or reconstructed. Reasonable measures for disposing of employee records may include, but are not limited to, the following:

Burning, pulverizing or shredding papers containing employee information;
Destroying or erasing electronic files or media containing employee information; or,
Hiring a reputable document destruction contractor to properly dispose of employee records.

Rebecca Morris is the content development manager for ADP HR411. Whether it’s human resources, payroll or benefits, ADP provides the services and insights that let you focus on what matters: growing your franchise. For more information, contact ADP Vice President, Strategic Alliances Joe Francis. Find him at fransocial.franchise.org. Disclaimer: This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice or other professional services. ADP does not give legal advice as part of its services. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. This material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable law in your jurisdiction and consult experienced counsel for legal advice.