How Long to Keep Payroll Records: A Guide for Businesses

Type of Records

Description of Records

Duration

Affirmative Action Records

These requirements only apply to federal supply and service
contractors and subcontractors that employ 50 or more persons and have a contract of $50,000 or more.

Federal contractors and subcontractors must maintain personnel records, including job ads, applications, hiring records, pay rates, training selection, accommodation requests, physical exam results, and affirmative action documentation. Contractors must identify the gender, race, and ethnicity of each employee and applicant where possible.

Two years from when the personnel record or personnel action occurred, whichever is later.
One year, if the contractor has fewer than
150 employees or does not have a government contract of at least $150,000.

Apprentice Programs

Apprenticeship committees that control apprenticeship programs must retain all apprenticeship records, including, but not limited to, a chronological list of names and addresses of all applicants, requests for reasonable accommodation, test papers completed by applicants, and records of interviews.

Two years from the date the record was made.

Benefits Records

Data: All data used to support summary plan descriptions and other records supporting plans or reports, including vouchers, worksheets, receipts, and applicable resolutions.
Employee/Beneficiary Records: Records concerning employee benefits that are sufficient to determine the benefits due or which may become due.

COBRA Records: Copies of Consolidated Omnibus Budget Reconciliation Act (COBRA) notices, acknowledgments that COBRA notices were received, documents relating to any instance in which COBRA is not offered due to gross misconduct, and COBRA-related correspondence.

Generally six years from filing (or date the record would have been filed but for exemption or simplified reporting requirement).

Specifically, retirement plan records (like 401(k)s) should be kept indefinitely, as long as they may be relevant to a determination of benefit entitlements.

COBRA records are critical for cases where a person has filed a claim that COBRA was not processed correctly. COBRA regulations are enforced by the IRS, the Department of Labor, and the Treasury Department.

Business Records

Records showing total dollar volume of sales
or business and total volume of goods purchased or received.

Three years.

Drug and Alcohol Testing Records

Employers covered under the Department of Transportation’s drug and alcohol testing regulations must maintain records pertaining to test results, testing process administration, return-to-duty process administration, employee training, and supervisor training.

Employers may need to retain records from one to five years depending on the industry and type of record. The Federal Motor Carrier Safety Administration requires education and training records be retained indefinitely and two years after ceasing to perform functions.

Emergency Paid Sick Leave Act (EPSLA) and Emergency Family and Medical Leave Expansion Act (EFMLEA) Under the FFCRA

Documentation required to take leave:
• Name.
• Leave dates.
• Qualifying reason for leave.
• Oral or written statement of inability to work based
on qualified reason.
• Name of the government entity or healthcare provider that issued the quarantine or isolation order.
• Name of child being cared for.
• Name of the school, place of care, or child care provider that has closed or become unavailable.
• Exemption from providing leave documentation by small employers (less than 50 employees) claiming exemption.

Four years regardless of whether leave was granted or denied. If employee provides oral statements to support the request for EPLSA or EFMLEA, the employer is required to document and maintain such information
in its records for four years.

EPSLA and EFMLEA Tax Credits

In order to qualify for tax credits, employers must furnish the following documentation:

• Comprehensive records demonstrating how the employer determined the amount of paid sick leave and expanded family and medical leave paid to eligible employees, including detailed records of their work, telework, and the benefits provided under EPSLA or EFMLEA.

• Documentation outlining how the employer determined the portion of qualified health plan expenses allocated to wages.

• Copies of all completed IRS Forms 7200 that have been submitted to the IRS.

• Copies of completed IRS Forms 941 that have been submitted to the IRS. Alternatively, for employers who use third-party payers to fulfill their employment tax obligations, records of the information provided to the third-party payer regarding the employer's entitlement to the claimed credit on IRS Form 941.

• Any other pertinent documents required to support the request for tax credits, as specified in the applicable IRS forms, instructions, and guidelines for claiming a tax credit.

Four years.

Family and Medical Leave Act (FMLA) Records

FMLA-covered employers are required to maintain records that align with the requirements of the FLSA. These records include basic payroll and employee data, as well as dates of FMLA leave taken by eligible employees, including the hours taken if leave is less than a full day. Employers must also keep copies of employee notices of leave and eligibility notices, which can be stored in employee personnel files. Additionally, documentation related to employee benefits and employer policies regarding paid and unpaid leave should be maintained.

Premium payments for employee benefits should also be recorded, along with any disputes between the employer and eligible employees regarding FMLA leave designation. Any records or documents relating to medical certifications, recertifications, or medical histories of employees and their family members should be kept confidential in separate files from regular personnel files. If applicable, records containing family medical history or genetic information should adhere to the confidentiality requirements of GINA. However, supervisors and managers may be informed about necessary work restrictions or accommodations, and first aid and safety personnel may be informed about employees' medical conditions if emergency treatment is necessary. Finally, relevant information should be provided to government officials investigating FMLA compliance or other relevant laws.

Three years.

Federal Contractors and Subcontractors, Federal Service Contracts

For each employee working on a service contract, records showing:
• Name, address, and Social Security number.
• Worker classification, wage rates, and fringe benefits provided (or cash equivalent payments in lieu of fringe benefits).
• Total daily and weekly compensation.
• Number of daily and weekly hours worked.
• Any deductions, rebates, or refunds from compensation.
• Any list of a predecessor contractor’s employees showing employee’s length of service information.
Employers must also:
• Keep separate records of time spent on SCA-covered and non-SCA-covered work each workweek.
• Track and keep proof of SCA-covered work performed by employees who perform work in different classifications.

Three years from completion of the work.

Immigration

Form I-9, Employment Eligibility Verification

For the duration of employment. Upon termination, the form must be retained either three years after the date of hire, or one year after the date employment is terminated, whichever is later.

Income Tax Withholding

Records relating to FICA and FUTA income tax withholdings.

Four years after the date the tax becomes due or is paid, whichever is later (see details in
IRS Publication 583).

Minor Employees

Certificates of age for all minors that include the
following information:
• Name and address.
• Place and date of birth.
• Sex.
• Signature.
• Name and address of minor’s parents.
• Name and address of employer.
• Industry of employer.
• Occupation of minor.
• Signature of issuing officer.
• Date and place of issuance.

Three years.

Miscellaneous Documents (Agreements, Contracts, Certificates, Benefits)

Written records relating to employee benefits plans, collective bargaining agreements, seniority and/or merit systems, plans, trusts, individual employment contracts, written FLSA agreements, and certificates authorizing payment at less than minimum wage.

At least three years; the IRS may require longer (up to seven years).

OSHA Records

The following OSHA records:
• OSHA Form 300, Log of Work-Related Injury and Illnesses
• OSHA Form 300A, Summary of Work-Related Injuries and Illnesses OSHA Form 301, Injury and Illness
• Incident report

Present year, plus five preceding calendar years.

Payroll Records

For each employee, records that contain the following:
• Employee’s full name and Social Security number.
• Address, including ZIP code.
• Birth date, if younger than 19.
• Sex and occupation.
• Time and day of week when employee’s workweek begins.
• Hours worked each day.
• Total hours worked each workweek.
• Basis on which employee’s wages are paid (hourly, weekly, or piecework).
• Regular hourly pay rate.
• Total daily or weekly straight-time earnings.
• Total overtime earnings for the workweek.
• All additions to or deductions from the employee’s wages.
• Total wages paid each pay period.
• Date of payment and the pay period covered by the payment.

Three years from termination of employment or completion of the contract.
Two years for records on which wage computations are based. For example, time cards and piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages.
For more information, see Recordkeeping  Requirements Under the FLSA.

Personnel Records

Records including:
• Job applications, resumes, and other forms of employment inquiries.
• Job advertisements, notices to the public or to employees regarding job openings, training programs, and written training agreements.
• Documents related to hiring, firing, transferring, assignment, demotions, promotions and layoffs, payroll records, rates of pay, or other terms of compensation.
• Job descriptions, employment handbooks, notice of and criteria for selection for training or apprenticeship programs.
• Employee evaluations, requests for reasonable accommodation, summaries of applicants’ qualifications, lists of job criteria, interview records, identification of minority and female applicants.
• Opportunities for overtime.

Statutory requirement is two years; however, four years is generally recommended.

Polygraph Tests

Employers investigating an economic loss or injury must maintain a copy of the statement about the specific incident or activity under investigation, the basis for testing that particular employee, and proof of service of the statement to the examinee.
Employers who manufacture, distribute, or dispense controlled substances must maintain records specifically identifying the loss or injury in question and the nature of the employee’s access to the person or property that is the subject of the investigation.
Every employer who requests an employee or applicant to submit to a polygraph examination for an ongoing investigation, drug manufacturer, or security services EPPA exemptions must maintain the following:
• A copy of the written statement with the time and place of the examination and the examinee’s right to counsel;
• A copy of the written notice provided by the employer to the examiner identifying the person to be examined; and
• Copies of all opinions, reports, or other records furnished to the employer by the examiner relating to such examinations.

Three years from the date of exam (or from date the exam is requested if no exam is conducted).

Records of Self-Identifying Veterans and Individuals with Disabilities

Government contractors must keep a separate file
on applicants and employees that self-identify as disabled veterans or Vietnam-era veterans, or individuals with disabilities.

Three years.

Records Relating to Charge, Complaint, Enforcement Action, or Compliance Review

Personnel or employment records relating to aggrieved person and to all other employees holding positions similar to that held by aggrieved person, including application forms and test papers completed by aggrieved person and all other persons applying for same position as aggrieved person.

Until final disposition of the charge, complaint,
review, or action.

Records Relating
to Employment Tests, Employment Opportunities

Records relating to:
• Job orders submitted by the employer to an employment agency or labor organization for recruitment of personnel for job openings.
• Test papers completed by applicants or candidates for any position that discloses the results of any employer-administered aptitude or other employment test considered by the employer in connection with any personnel action.
• The results of any physical examination where such examination is considered by the employer in connection with any personnel action.
• Any advertisements or notices to the public or to employees relating to job openings,
promotions, training programs, or opportunities for overtime work.

One year after the record is created or the personnel action described is taken, whichever is later.
Two years for:
• Government contractors or subcontractors with 150 or more employees; or
• A government contract of $150,000 or more.

Time Cards and Schedules

Records on which wage computations are based (time cards and piece work tickets, wage rate tables, work and time schedules).

No less than three years.

Wage Differentials

Records explaining/supporting any wage differentials (including job descriptions, job evaluations, merit, incentive, and seniority systems, etc.).

Two years.