Thursday, February 6, 2014

Jimmy Buffet and Employee Record Retention

Jimmy Buffet, the most popular song-writing pirate that ever lived, coined two phrases that can be applied to employee record retention requirements:
  • “What we keep is what we can’t let go” 
  • “Indecision may or may not be my problem” 
When it comes to employee files and other employment related documents, “what we keep is what we shouldn’t let go” until we don’t need it any more. Federal agencies have established requirements that say how long you need to keep certain documents and records to stay in compliance with employment laws, so “indecision doesn’t have to be a problem.”

Generally, you should establish the following retention periods for both electronic and paper-based records:

Employee Files
7 years after termination
6 years after plan year
I-9 Forms
Not more than 3 years after termination
Hiring Records
1 year after the hiring decision (unless you are a federal contractor – then you need to retain for 2 years)
Payroll Records/Time Sheets, etc.
3 years
Withholding Tax Records
4 years from date tax is due or paid
Family Medical Leave Records (for those employers over 50 employees)
3 years
Healthcare Continuation
There are no recordkeeping requirements under COBRA, however experts agree that records should be retained for 6 years to stay consistent with ERISA requirements
Drug Test Records
1 year from date of test (up to 5 years for records pertaining to DOT drug testing requirements)

If you have an ongoing dispute or claim with an employee, it is a good idea to retain ALL documents relating to the employee until the dispute or claim is completely resolved. I advise erring on the safe side and hanging on to it for another year just in case.

The important thing is to keep these documents in a safe and secure location during the retention period. If at all possible, I recommend keeping old records off site. It is somewhat inconvenient but affords the best security and protection. Knowing what you have and what you don’t have is also important. A simple Excel spread sheet can tell you what you have and when it is time to let it go. Destroy records by shredding them to ensure that no confidential information gets in the hands of anyone who shouldn’t have it.

Being decisive about keeping (then letting go of) old employee files can be easy if you remember the words of wisdom from a singing pirate. Happy Shredding!



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