All businesses are required to keep certain records about their current and past employees, but which ones and for how long?
At the federal level, there are two agencies that regulate record keeping. First is the IRS, which is responsible for enforcing the Internal Revenue Code. The second is the United States Department of Labor (DOL). The DOL’s Wage and Hour Division is responsible for enforcing the federal Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), the Immigration Reform and Control Act (IRCA), and laws governing govern wages paid by federal government contractors.
Both agencies have separate rules regarding the type of records that must be kept and how long you must keep them. To further complicate your requirements, there are numerous state, local, and other regulatory agencies that may require additional record keeping. State agencies enforce State Unemployment Insurance Tax Laws, state wage and hour laws, child support and creditor garnishment laws, and unclaimed or abandoned wage requirements.
Keeping these records accurate and up to date is extremely important to the health of your business. Without the proper records, you will not be able to meet regulatory requirements should you be audited by any of various federal, state, and local agencies. Failure to comply with these requirements can mean large fines and the potential for large compensation if you fail to provide the required information when requested.
internal revenue service
The following records must be kept for four years after the tax due date or actual payment date.
- Name, address, occupation, and social security number of each employee
- Total compensation and date paid, including tips and non-cash payments
- Compensation subject to withholding for federal income tax, social security and Medicare
- Pay period for each compensation period
- Explanation of the difference in total compensation and taxable compensation
- Employee Form W-4
- Dates of employment (start and end)
- Tip reports for employees
- Wage continuation made to an absent employee by the employer or a third party
- Details of fringe benefits provided to the employee
- Copy of the employee’s request to use the cumulative method of withholding wages
- Tax adjustments or settlement
- Amounts and dates of tax deposits
- Total compensation paid to the employee during the calendar year
- Compensation subject to FUTA
- State unemployment contributions made
- All information displayed on the 940
- Copies of returns filed (941, 643, W-3, Form W-2 Copy A and returned W-2 forms)
work Department
The following records must be kept for three years from the date of the last entry.
- Employee’s name as it appears on the social security card
- Full address and date of birth if under 19 years of age
- sex and occupation
- The beginning of the employee’s work week Regular rate of pay for overtime weeks
- Hours worked each day and work week
- Regular earnings, including the regular portion of overtime earnings
- Overtime premium earnings
- Total wages paid for each pay period, including additions and deductions
- Payment date and payment period covered
- Records showing total sales volume and goods purchased
- The following records must be kept for two years after the last date of entry
- Employment and earnings records, employee hours of work, basis for determining wages and wages paid
- Order, shipping and billing records showing customer orders and delivery records
- Wage Rate Tables and Piece Rate Schedules
- Work schedules establishing hours and days of employment
work Department
In addition to the general requirements of both the IRS and the DOL mandated by various federal laws. Is it so:
Family and Medical Leave Act
Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act of 1990 do not have a general record requirement under the law, but to meet the requirements, all records related to hiring, promotion, demotion, transfer, layoff or termination, pay rates, and selection for training or apprenticeship must be maintained for one year from the date of the action.
The Age Discrimination in Employment Act of 1967 requires you to keep the following records for three years:
- Name
- direction
- birthday date
- occupation
- pay rate
- compensation earned
You also keep the following for one year from the date of the action:
- job application
- resume
- response to posted job offers
- records related to the failure to hire an individual
You must also keep all records related to
- dismissal or dismissal of an employee
- work orders sent to a placement agency
- employee-administered employee physical examinations used to make personnel decisions
- job ads
The Immigration Reform and Control Act requires you to keep copies of Form I-9 for three years after the date of hire.
