One of the most important duties of any HR department is managing and retaining a wide array of personnel and payroll records. There are many governmental regulations, such as FLSA, ERISA, and FMLA, as well as government agencies, such as the IRS and OSHA that have strict guidelines. Here are some HR record retention guidelines for businesses to help you determine which records must be kept and which can be destroyed.
Most businesses maintain a separate file for every employee they hire. These files typically contain a wide range of records, such as:
- Pre-Hire Documents (resume and interview evaluations)
- Benefit Applications
- Background Checks
- Drug Test Results
- Pay Rate Agreements and Pay Rate Change Notifications
- Position Change Records
- Promotion Records
- Performance Evaluations
- Safety Reports
- Disciplinary Records
In accordance with HR record retention guidelines for businesses, you must maintain these file types for at least four years after termination, but most experts recommend storing these records for at least seven years for liability and other legal reasons. Certain forms have different laws governing how long they can be stored and who can have access to them so, for example, make sure you are familiar with the Colorado background check laws or your state’s equivalent. Some companies file I-9 forms with their personnel files, but it is strongly recommended that businesses file all I-9 forms separately and keep them for at least three years after termination. You should also regularly purge these files once their retention term has expired to avoid the risk of fines for errors in outdated files. It is also highly recommended that medical records are kept in separate from the remainder of the personnel file to ensure compliance with HIPPA and related regulations.
Payroll and Payroll Tax Record
Payroll records also must be stored for at least seven to ten years to maintain compliance with IRS regulations. These records include payroll records, payroll tax records, employee garnishment documentation, payroll registry, W-2 forms, and insurance payments. In addition, you should retain attendance records for at least seven years. These vital records will help you prove the accuracy of your payroll reports should the need arise. You must keep these records for every employee, even if they are no longer working for you. It is important to note that multiple dates can impact document retention periods. Hire date, termination date and incident date are among the most common for HR records.
You should also maintain records for alternative pay data, such as sick pay, vacation pay, FMLA, and worker’s compensation. Most experts recommend storing sick/vacation pay records for four years, FMLA documentation for three years, and worker’s compensation records for at least 30 years; this can provide ways to explain any discrepancies between your payroll and attendance records.
Finally, you want to maintain all records associated with employee pay levels, including base pay rates, bonuses, commission, pay raises, and pay decreases for at least five years.
How to Store these Records
One of the biggest problems organizations face when it comes to meeting record retention guidelines is finding the space to store it all. While this is considered to be quite a problem, today’s technology has helped to provide a simple solution. Document and information management systems can provide efficient and effective ways to store all of the necessary documents without taking up a lot of valuable in-house space. Security settings can protect this data and ensure that only authorized users gain access only to those documents that they need to perform their jobs. These products and their providers enable you to store all files in digital format versus maintaining paper copies, and can even help you convert all your current paper files into digital format for easy storage. Contact CASNET today to learn more.