Ever set out to organize and dispose of old employee files and paperwork in the office? the job is tougher than it seems.
Best practice – Develop a records retention policy as your first step. A host of federal and state laws specify how long you must retain pay- and benefits-related documents.
Compliance is essential when a current or former employee sues or the DOL, IRS or the state audits your records.
Here is a records-retention schedule recommended by employment lawyer Jacqueline McManus –
• Retain for two years employee personnel files, including performance reviews and training.
• Hold these for three years – wage records, including time cards, base pay and overtime wage-rate calculations and records explaining wage diferentials for workers performing the same job, and hold I-9 forms for three years from hire date or one year after termination, whichever is later.
• Keep these four years – all Payroll documents, including – home address records, and all wage records, including weekly OT earnings, straight time pay, deductions, bonuses, pay period designations and payment dates.
• Use a five-year retention window for staff member health info like medical and first-aid records from on-the-job injuries, and drug and alcohol testing records.
• Keep this benefits data for six years (or one year after plan termination) – elections and enrollment forms, benefit change documents, and COBRA notices.
• Retain 401(k) files indefinitely.
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