HR Record Retention Guidelines for 2024

Understanding the legal requirements for storing employee related data

Human Resources Paperwork

As businesses grow and evolve, HR departments are tasked with managing an increasing volume of employee-related documents.

However, keeping tabs on the ever-changing personnel file retention requirements is no easy task. 

Along with laws that protect employee rights, labor rules, and safety protections, all of which have their own detailed requirements, HR departments must adhere to strict personnel file retention requirements in order to keep the business compliant and in good standing.

As a result, HR administrators often create overly complicated retention policies which are difficult to manage and nearly impossible to keep track of. 

Ensuring these records are maintained accurately and securely is critical for compliance with various regulations, as well as for protecting employee privacy.

In this guide, we will outline the specific requirements for HR record retention, and provide some tips and best practices to help improve your HR retention policy.

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What Are The Benefits of Proper HR Records Retention?

Some of the benefits of improving your retention workflow include:

  • Preventing the out-of-control, exponential growth of your employee records storage requirements
  • Protecting sensitive employee information by storing it only for the minimum required amount of time
  • Improving the efficiency and productivity of your HR department
  • Reducing or eliminating the need for onsite paper storage, including filing cabinets and boxes hogging up precious office space.
  • Making regulatory compliance less of an annoyance while reducing legal risks
  • Improving the organization of your records, ensuring documents are easy to locate when needed.

2023 HR Retention Requirements 

Outlined below are the general rules for the retention of employee records. The below information is meant to serve as a guide only and may differ based on industry, the number of employees, and more. 

Form I-9

Employee I-9 Forms and supporting documents are used to confirm the identity and employment authorization for individuals hired in the U.S. Employers are required to store all employee I-9 forms for three years after the employee was hired, and up to one full year after employment has ended, whichever date is later.

Recruitment and Hiring Records

The U.S. Equal Employment Opportunity Commission requires that employers keep all personnel/employment hiring records for one year.  If the employee is terminated for any reason, his or her personal records must be kept for a full year from the date when the employee was officially terminated. For educational institutions and government employees, the requirement is doubled to two years. 

These records include on-boarding documents such as job application forms, interview notes, compensation and pay rate documents, promotion or demotion records, as well as any documents related to employee termination.

Payroll Records

According to the Age Discrimination In Employment Act, employers must keep all payroll records for a minimum of three years. Employers must also keep any records that explain reasons for wage disparity between employees of the opposite sex, including job evaluations, bargaining agreements, and wage rates for two years.

The Department of Labor also requires that employers maintain time cards, wage rate tables, job evaluations, and work schedules for at least two years.

Tax Records

According to the Internal Revenue Service, employers must maintain employee-related tax records for four fiscal years ( until the end of the 4th quarter of the 4th year.) The records mentioned include:

  • Employer identification number.
  • Amounts and dates of all wage, annuity, and pension payments.
  • Amounts of tips reported to you by your employees.
  • Record of all allocated tips.
  • The fair market value of in-kind wages paid.
  • Names, addresses, social security numbers, and occupations of employees and recipients.
  • Any employee copies of Form W-2 and W-2c returned to you as undeliverable.
  • Dates of employment for each employee.
  • Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them.
  • Copies of employees’ and recipients’ income tax withholding certificates (Forms W-4, W-4P, W-4S, and W-4V).
  • Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS.
  • Copies of returns filed and confirmation numbers.
  • Records of fringe benefits and expenses reimbursements provided to your employees, including substantiation.
  • Documentation to substantiate any credits claimed. Records related to qualified sick leave wages and qualified family leave wages for leave taken after March 31, 2021, and records related to qualified wages for the employee retention credit paid after June 30, 2021, should be kept for at least 6 years.
  • Documentation to substantiate the amount of any employer or employee share of social security tax that you deferred and paid for 2020.

Employee Benefits

All employers must keep any documents related to an employee’s benefits including 401K plan details, insurance election forms & plan termination records, COBRA documentation, and any other benefits documentation for six years after employment has ended.

Medical Records

The Americans with Disabilities Act requires that all employee medical records be securely stored for 3 years after termination. This includes any FMLA (Family and Medical Leave Act) leave requests, workers’ compensation claims and documents, results of drug and alcohol tests, ADA accommodations, and more. Any health insurance enrollment forms and COBRA notices must also be stored. 

Time and Attendance Records

While no law specifically applies to time and attendance records, it is advisable to maintain these records for the full period of employment plus 5 years. This ensures the business is in possession of all necessary records in the case of litigation or other labor related incidents.

Workers Compensation Records

Federally, OSHA (the Occupational Health and Safety Administration) requires that businesses retain all records related to workplace injuries for 5 years. At the state level, the laws for retaining these records can vary widely, so it is important to check directly with the state agency responsible for specific guidance.

Discrimination Claims

The rules regarding the retention of discrimination related documents also vary from state to state, as well as the type of discrimination documented (age, gender, race, disability).

Federally, the EEOC (U.S. Equal Employment Opportunity Commission) requires that all records related to the charge or action must be retained until the final disposition of the charge or action, meaning the expiration of the statutory period within which the aggrieved person may bring an action in the U.S. District Court.

Key HR Record Retention Regulations

There are several laws and regulations governing HR record retention. Some of the most significant include:

  1. The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards for both full-time and part-time workers in the private sector and in federal, state, and local governments.
  2. The Family and Medical Leave Act (FMLA) grants eligible employees the right to take up to 12 weeks of unpaid, job-protected leave within a 12-month period for specific family or medical reasons. These reasons include the birth and care of a newborn child, adoption or foster care placement of a child, care for an immediate family member with a serious health condition, or recovery from a serious health condition that prevents the employee from performing their job.y the employee.
  3. Occupational Safety and Health Act (OSHA) ensured that employees work in safe and healthy environments. The act aims to reduce workplace hazards, prevent work-related injuries, illnesses, and deaths, and to establish and enforce safety and health standards for employees across various industries.
  4. Equal Employment Opportunity Laws serve to prevent employers from discriminating against individuals based on factors such as race, religion, sex, gender, or nationality when making decisions related to employment, including hiring, termination, and the development of workplace policies or practices.

Why is HR Record Retention Important?

Employee record retention requirements are in place to protect employee rights and the confidentiality of their personal data. The importance of these rules becomes clearer when you consider the following

Employee Access to Personnel Files

While the laws surrounding access to personnel files vary from state to state, employees generally have the right to request and access the information contained in their own personnel file, including job applications, compensation records, performance evaluations, and disciplinary records for as much as a full year after termination. 

Equal opportunity employment 

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing laws that prevent businesses from discriminating against employees and job applicants on the basis of race, color, religion, sex, nationality, disability, or age. The additional recordkeeping requirements imposed by these laws allow for the preservation of employment data including compensation and pay wages, promotions/demotions, seniority merit systems, and any other data that may demonstrate a clear bias against of in favor of an employee based on the above criteria. 

Litigation

When a business is involved in employment-related litigation, all documents related to the matter must be stored by the employer until the end of litigation in order to preserve evidence. Failing to meet this requirement or an inability to recall a stored document could be seen as an attempt to obfuscate case evidence. 

Information requests

Federal agencies such as the Internal Revenue Service or U.S. Citizenship and Immigration Services (USCIS) may request documents in your personnel files. While the practice is relatively uncommon, failing to provide the information requested could lead to dire consequences. 

The Proper Disposal of Employee Records

It is common practice for businesses to store personnel files for seven years after an employee’s termination, regardless of various regulatory requirements. This duration covers the maximum state and federal statutes of limitations, so it is perceived as a best practice.

Unfortunately, this approach often leads to the prolonged storage of sensitive records, extending well beyond their period of necessity. Retaining documents longer than required is not only insecure, it also creates inefficiency, clutter, and frustration for HR departments forced to manage mountains of employee records.

Once you have fulfilled your legal requirement to store your employment records for the specified amount of time, it is important to create an effective disposal plan for your data. All paper employee and applicant records, as well as confidential employee data maintained by an organization’s HR department must be destroyed once the retention dates have passed.

Securely disposing of employment records that fall outside your retention policy is as important to maintaining compliance as meeting the required storage timelines.

Since employment records contain personally identifiable information like Social Security numbers, home addresses, etc., it’s important that attention and care are given to how the disposal of this information is carried out. This applies to all employee records, not just those governed by Fair and Accurate Credit Transactions Act (FACTA).

The Federal Trade Commission provides the following recommendations regarding the disposal of employee data: 

  • All electronic employee files should be deleted from all storage locations, preventing the data from being reconstructed in the future.
  • Paper documentation should be securely shredded or burnt, to prevent data theft and permanently destroy the data. 
  • It is recommended to hire a third-party provider who specializes in secure document shredding, which provides your organization with a certificate of destruction that serves as proof of proper document disposal.

HR departments should work with the IT department regularly, at least two times a year, to review and purge relevant electronic records. In the case of paper documentation, HR departments should destroy documents that contain sensitive information with a secure paper shredding service.

HR Record Retention Best Practices

To ensure compliance and streamline your HR record retention processes, consider the following best practices:

  1. Develop a Comprehensive Retention Policy: Clearly outline the types of records your company maintains, their corresponding retention periods, and the procedures for securely disposing of documents once they’ve reached the end of their retention period.
  2. Implement a Document Management System: A robust document management system can simplify record storage, retrieval, and destruction, while also enhancing security and accessibility.
  3. Train Your HR Team: Ensure that all members of your HR team understand the importance of record retention and are familiar with the company’s policies and procedures.
  4. Conduct Regular Audits: Periodically review your record retention processes to identify any gaps or areas for improvement.
  5. Stay Informed About Regulatory Changes: Keep abreast of any changes to laws and regulations that may impact your HR record retention requirements and update your policies accordingly.

The Importance of a Document Management System

While employers are generally allowed to store employee records in paper format, most industry leaders recommend the use of a document management system, or specifically a HRMS (Human Resources Management System). 

An HRMS makes adherence to key HR regulations and record-keeping practices a breeze by enabling the automation of document retention and destruction, reducing manual labor and its associated costs. 

A well-organized document management system can significantly improve your HR record retention process by:

  1. Centralizing Record Storage: Storing all HR documents in a single, secure location simplifies access and retrieval while reducing the risk of lost or misplaced records.
  2. Automating Retention Periods: A document management system can automatically track retention periods and flag records for review or destruction when they reach their expiration date.
  3. Enhancing Security and Privacy: Advanced document management systems can protect sensitive employee information through encryption, access controls, and audit trails.
  4. Facilitating Collaboration and Compliance: A document management system allows HR teams to collaborate more effectively and ensures that all members are adhering to the company’s record retention policies.
  5. Streamlining Document Retrieval: A document management system can help HR professionals locate specific records quickly and efficiently, saving time and resources.

With the help of our HR document scanning service, your organization can convert any existing paper documents into HRMS compatible digital files, making the transition to an electronic system easy and affordable. 

We can help you implement a document conversion workflow, whereby newly generated paper records are digitized, categorized, and uploaded as text-searchable PDF files into your HRMS.

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