Employment policies and practices are governed by a wide range of federal, state and local laws which ensure working conditions at your business remain fair to your employees. As part of these employment laws, you’re also required to create and retain records demonstrating that you’ve complied with all applicable regulations governing your business. This documentation is the essential layer of proof you must have to demonstrate your compliance in the event that your business is audited or faces an employment lawsuit down the road.
Failing to maintain the proper documentation required by law can expose your business to HR compliance violations that result in costly fines and other serious penalties. Understanding the proper documentation required by law will help you avoid the damage to your business’ bottom line and reputation that can occur as part of an HR compliance violation.
Federal law requires you to verify that each new employee you hire is authorized to work in the United States. The I-9 form is the record that proves this verification occurred, and you must retain it for three years from the date of hire or one year after the employee’s termination, whichever period is longer.
Job applications, resumes and offer letters should also be kept on file, since they document the basis for your hiring decision. If your hiring process includes background checks, federal law requires you to obtain written authorization from the applicant before running one, and that signed authorization must be retained as part of the employee’s file.
The Fair Labor Standards Act requires you to keep payroll records for at least three years, including:
Records used to calculate pay, such as time cards and piece-work tickets, must be retained for two years. You’re also required to keep employee W-4 forms on file for as long as the employee works for you. The IRS requires you to retain federal employment tax records for four years after the tax becomes due or is paid, whichever is later.
The Employee Retirement Income Security Act of 1974 (ERISA) requires you to retain benefits plan documents and related records for six years, including:
In addition, if an employee requests a workplace accommodation or takes protected leave, keep documentation of that request and your response on file. This record shows how you handled the situation at the time it occurred.
The Occupational Safety and Health Administration (OSHA) requires employers who are subject to its recordkeeping rules to maintain injury and illness logs, known as OSHA 300 logs. These records must be retained for five years following the end of the calendar year they cover. If a workplace injury results in a lost-time claim or medical treatment beyond first aid, the incident must be recorded on this log at the time it occurs.
The Equal Employment Opportunity Commission (EEOC) requires you to retain personnel records for at least one year from the date a personnel action occurs, such as a hire, promotion, demotion or termination. If a discrimination charge is filed, you must keep the related records until the case is resolved.
Personnel records that fall under this requirement include:
The following compliance laws govern the termination of an employee:
Federal documentation requirements set a baseline for compliance, but many states require you to retain certain employee records for longer periods than federal law requires. Checking your state’s specific requirements, in addition to federal law, protects you from falling short of a state compliance obligation that is more stringent than the guidelines established by federal law.
If your business lacks the resources for a dedicated in-house HR team, it can be challenging to stay current on these rapidly evolving documentation requirements. Working with a PEO company will ensure your business maintains the proper documentation to avoid HR compliance violations.
At PassioHR, we provide comprehensive PEO services to small and medium-sized businesses, including HR consulting to ensure you remain compliant with all employment regulations. Our team of HR experts is continuously monitoring changes in these laws, and we understand how to prioritize different requirements associated with federal, state and local laws. This expertise will ensure you always have the proper documentation, and all HR compliance matters are handled properly.
Contact us today to schedule a consultation.
You must retain an I-9 form for each employee for three years from their date of hire or one year after their termination, whichever period is longer.
Federal law requires you to retain records covering hiring and work authorization, payroll and tax information, employee benefits, workplace safety incidents, and personnel actions such as promotions, demotions and terminations. Specific retention periods vary by record type, ranging from one year for certain personnel records to six years for benefits plan documents under ERISA.
Failing to maintain required HR documentation can expose your business to fines and penalties if a government agency audits your records or investigates a complaint. Missing documentation also weakens your ability to defend your business if an employee files a wage claim, discrimination charge or wrongful termination lawsuit.
Yes. Federal law sets minimum retention requirements, but many states require you to keep certain records for longer periods or impose additional recordkeeping obligations beyond what federal law requires. You should check your state’s specific requirements in addition to federal law.
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