Record retention is a daunting task for employers--there are so many different
requirements, based on a variety of criteria. For example, virtually
every federal employment law, ranging from the Americans with Disabilities Act
to Title VII of the Civil Rights Act, stipulates certain record retention rules
for all private sector employers. Many state and local jurisdictions impose
additional requirements, and there are special federal requirements that impact
government contractors and public sector employers.
Expert opinions differ as to how long employee records should be retained.
For example, employee time cards must be kept for 3 years under the Fair Labor
Standards Act and only 2 years under the Equal Pay Act, although some advisors
say employers should keep these records for 7 to 10 years or even longer. When
you look at employee benefits, the dilemma becomes even more challenging.
Benefit record retention
At the federal level, at least six statutes include employee benefit record
retention requirements, but do not necessarily focus on the same recordkeeping
criteria. For example:
The Age Discrimination Employment Act (ADEA) requires that employee benefits
and insurance plan records be kept for 1 year after the termination of the
The Employee Retirement Income Security Act (ERISA) requires that employee/beneficiary
pension benefit records be kept for at least as long as an individual's
participation in the plan. It also requires Form 5500 welfare and pensions
reports and filings be kept for 6 years.
The Family and Medical Leave Act (FMLA) requires that records of benefit
premium payments for an employee while the individual is on FMLA leave be
kept for 3 years after the leave ends.
The Internal Revenue Code (IRC) requires that records supporting the employer's
benefit plan tax deductions (e.g., payroll and plan contribution records)
be kept for as long as the employer keeps its other tax records but no less
than 3 years.
The Social Security Act (SSA) requires that health claim payments for Medicare-covered
individuals be kept for at least 3 years.
The Health Insurance Portability and Accountability Act (HIPAA) requires
that policies and procedures, required privacy communications, and required
documentation records be kept for 6 years from the date of their creation
or from the date when they were last in effect, whichever is later.
These and a number of other federal statutes also have record retention requirements
that pertain to other employment issues, such as discrimination, hiring, leaves,
medical records, payroll, personnel files, health and safety, termination, testing,
and withholding taxes.
Record retention is complex and time consuming. However, in addition to complying
with various federal and state laws, keeping good, well-organized records can
be very helpful in documenting and supporting an organization's employment
The best way to ensure that your records are in good order is to establish
and publish a record retention policy. It's wise to consult with legal
counsel. Also, you may want to engage the services of record retention specialists
who can help you customize your record retention policies and practices to fit
your specific situation.