Employee files are a comprehensive collection of documents tracking an individual’s journey from applicant to former employee. Managing and retaining these records is a fundamental responsibility for any organization, serving as the official history of the employment relationship. Proper recordkeeping ensures compliance with federal and state regulations, provides necessary documentation for government audits, and helps defend against potential employee lawsuits or discrimination claims. Since there is no single, universal retention period, understanding the varying timelines for different record types is crucial.
Core Federal Retention Requirements for Payroll and Tax
Retention periods for documentation related to wages, hours worked, and tax withholding are governed primarily by the Fair Labor Standards Act (FLSA) and the Internal Revenue Service (IRS). These requirements establish minimum timeframes employers must keep records to ensure fair wage practices and accurate tax reporting.
Under the FLSA, which governs minimum wage and overtime, employers must preserve basic payroll records for a minimum of three years. This includes employee name, address, social security number, rate of pay, and total wages paid each pay period.
Records used to calculate wage payments, such as time cards, work schedules, and records of additions or deductions, must be retained for two years. These detailed records are the basis for the three-year summary payroll documents and must be easily accessible for inspection by the Department of Labor.
The IRS mandates that employment tax records must be retained for at least four years. This period begins after the date the tax becomes due or is paid, whichever is later. Documents include filed tax returns (e.g., Forms 941) and employee withholding certificates (e.g., Forms W-2 and W-4). This retention period ensures the necessary paperwork is available in the event of a federal tax audit.
Specific Retention Requirements for Hiring and EEO Records
Records related to hiring and general employment actions are governed by statutes enforced by the Equal Employment Opportunity Commission (EEOC). These laws, including Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Age Discrimination in Employment Act (ADEA), are designed to ensure fair employment practices and prohibit discrimination.
The general federal rule requires retaining all personnel or employment records for one year from the date the record was made or the personnel action occurred, whichever is later. This applies to job applications, résumés, interview notes, screening tools, promotions, transfers, and training records.
If an employee is involuntarily terminated, the employer must retain their personnel records for one year from the date of termination. If a charge of discrimination is filed against the organization, the retention timeline is extended indefinitely. All records relevant to the charge or resulting lawsuit must be retained until the final disposition of the legal action.
Immigration Compliance Records (Form I-9)
The Employment Eligibility Verification Form I-9 verifies the identity and employment authorization of individuals hired in the United States. Compliance with this requirement is overseen by the Department of Homeland Security.
A completed Form I-9 must be retained while the individual is actively employed. Once employment is terminated, a specific calculation determines the final disposal date. The employer must retain the Form I-9 for three years after the date of hire OR one year after the date employment is terminated, choosing whichever date is later. This formula ensures the document is kept for a sufficient period for government inspection, regardless of the employee’s tenure.
Medical and Safety Records
Records concerning employee health, workplace injuries, and exposure to hazardous conditions often carry the longest retention periods due to the potential for latent illness and long-term legal liability. These records must be diligently maintained and kept strictly separate from general personnel files to protect employee confidentiality.
The Occupational Safety and Health Administration (OSHA) mandates that records related to an employee’s exposure to toxic substances or harmful physical agents must be preserved for the duration of employment plus an additional 30 years. This lengthy timeframe accounts for occupational diseases that may take decades to manifest.
Records documenting workplace injuries and illnesses, including the OSHA 300 Log, the annual summary (Form 300A), and the incident report (Form 301), must be retained for a minimum of five years following the end of the calendar year to which they relate. Documents generated under the Family and Medical Leave Act (FMLA), such as leave requests and medical certifications, must be kept for at least three years. All medical documentation must be stored in a file separate and distinct from the employee’s regular personnel file.
General Personnel Files and Recommended Best Practices
The general personnel file holds documents not covered by specific regulations (IRS, FLSA, EEOC, or OSHA). This includes employment agreements, performance reviews, disciplinary actions, training certificates, and benefit enrollment forms.
Since federal law does not prescribe a specific retention period for this category, employers rely on recommended best practices to mitigate risk. A common professional recommendation is to retain these files for six or seven years after an employee’s termination. This timeframe aligns with the longest statute of limitations for contract disputes or general litigation in many states.
The structure of the filing system is as important as the retention timeline, requiring the separation of documents into distinct, secure files. Organizing records in this manner streamlines the process of responding to audits, as only the specific, legally permissible documents are presented to the requesting authority.
Secure Storage and Disposal Methods
Employee records contain sensitive data, such as social security numbers, medical information, and financial data, necessitating stringent security measures throughout the retention lifecycle. The primary goal is to prevent unauthorized access and protect confidentiality, whether records are stored physically or digitally.
Physical records must be stored securely, typically in locked file cabinets or access-controlled storage rooms. Access should be limited exclusively to authorized Human Resources personnel or management with a legitimate need to view the documentation.
Digital storage requires encrypted systems, password protection, and role-based access controls to limit who can view or modify files. Using a secure, backed-up system, often a dedicated Human Resources Information System (HRIS), helps maintain accessibility while protecting against data loss or security breaches.
Once the legally required retention period has passed, proper disposal is necessary to prevent identity theft and maintain confidentiality. Paper records must be destroyed using cross-shredding or an industrial shredder. Digital files must be securely deleted or erased using specialized procedures that ensure the data cannot be recovered.
The Critical Role of State and Local Laws
Federal retention periods, as outlined by agencies like the IRS, FLSA, and EEOC, represent the absolute minimum time an organization must keep a record. Federal law does not preempt state or local requirements that mandate longer retention periods for the same documents.
State laws often impose longer retention requirements, particularly for wage and hour records or workers’ compensation documents. For example, a state statute of limitations for a wage claim might be five years, overriding the federal three-year minimum.
Employers must always comply with the longer retention period when federal, state, or local requirements conflict. This necessitates consulting the specific labor department guidelines for every state and municipality where the business operates. Relying solely on federal minimums exposes the organization to unnecessary risk and potential fines under state law.