Clever RX
6 min read

Rules of Record Retention

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Record retention policies and regulations exist across multiple industries. Keeping up with the required documentation for your business is important. Record retention for the company and its employees is a legal responsibility for all employers. 

What is record retention?

Record retention is the process of storing and managing records and data for a certain amount of time. This requires you or your HR department to generate and maintain information to demonstrate compliance with federal, state, and Local regulations. All documents must be kept in a safe and accessible location. Businesses can easily find themselves in big trouble if they are not retaining the proper documentation for the appropriate amount of time.

The various federal agencies have their own record-keeping requirements, which vary in the amount of time the records should be stored. Some regulations apply to most employers, whereas others apply primarily to government contractors and subcontractors.

Some agencies that require you to keep records:

  • Internal Revenue Service (IRS)
  • U.S. Department of Labor (DOL)
  • Equal Employment Opportunity Commission (EEOC)
  • Occupational Safety and Health Administration (OSHA)

Federal record retention requirements:

4 YEARS

  • Employee’s name, address, occupation, social security number
  • Dates of employment
  • Pay rates and total wages 
  • Copies of tax returns/tax deposits
  • Amount of wages subject to withholding
  • Agreement to withhold additional amounts
  • Returned copies of Form W-2
  • Cancel/voided checks
  • Annuity and pension payments
  • Fair market value of wages-in-kind
  • Record of allocated tips
  • Taxes withheld
  • Quarterly tax returns
  • Copy of all tax forms

3 YEARS

  • Employee’s birth date/ gender
  • Hours worked each day/ week
  • Amount and date of payment
  • Collective bargaining agreements
  • Sales and purchase records
  • Form I-9
  • Dates of FMLA Leave
  • Copies of written notices of intention to take FMLA leave (provided by employee)
  • Copies of general and specific notices (provided by employees)
  • Premium payments for employee benefits
  • Record of any disputes

2 YEARS

  • Timecards
  • Wage rate tables 
  • Work time schedules
  • Order/shipping/billing records

There may be additional payroll documents you are required to keep, such as enrollment documents, employee reimbursements, and termination records. Many companies keep records longer to protect the company against audits and lawsuits.

Apart from federal record retention requirements, there are also record retention requirements set by each state. Keep in mind, the different federal, state, and local laws may require you to keep information for different periods of time. It is important to ensure that you comply with the state regulation for each state where your company operates. 

Storing Records

Businesses can decide how documents are retained, whether it is paper documents or electronically stored. Space and/or security can become an issue when maintaining paper records. The easiest, fastest, and safest way to retain important documents is through an electronic format. With electronic record-keeping, there is no need to keep important documents locked away in a file cabinet. No more worrying about records getting lost or damaged like with paper documents. 

An intuitive software will allow you to keep important business and employee-related records in the same place you track time, approve payroll, and access reports. Using a human capital management software will generate reports and store important employee information automatically. With a cloud-based software, documents are easy to keep and always accessible. Worry less about what records to keep and how long to keep them by using an all-in-one HCM software where you can store everything from employee personal files to important tax forms. 

If you are interested in learning more about the rules of record retention contact AAP.

(This is not intended for legal advice)

Below we have compiled record retention policies by state. 

Alabama

Alaska

Arizona 

Arkansas 

California

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana 

Maine 

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania 

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming