If I Shred It, Will I Dread It?

Are your personnel and payroll files bursting at the seams? Are you ready to oil up the shredder and start turning old payroll records into compost, biofuel, or fodder for a practical joke? 

Before you start purging, take a look at your document retention policies and make sure that they're up to date. Different federal and state laws dictate how long certain kinds of documentation must be maintained. So before you shred it, make sure it's "expired" under all relevant laws, litigation holds, and your internal document retention policies.

Here’s a quick run-down on some of the records retention requirements at the federal level:

Internal Revenue Service (IRS) - four year retention period for the following:

• Name, address, social security number and occupation of each employee;
• Dates of employment for each employee;
• W-4 form (Employee WIthholding Allowance Certificate) for each employee;
• Total compensation paid to each employee during the calendar year;
• Dates and amounts of total compensation paid each pay period (including tips and non-cash payments);
• Employee tip reports;
• Fair Market Value of in-kind wages paid;
• Pay period covered for each pay date;
• Details of fringe benefits provided to employee (including Summary Plan Description and any relevant policy documentation);
• Dates and amounts of annuity and pension payments;
• Fringe benefits records;
• Compensation subject to withholding for federal income, social security and Medicare tax;
• Explanation of any differences in total compensation and taxable compensation;
• Dates and amounts of wage continuation payments made by employer or third party to an absent employee because of sickness or injury;
• Dates and amounts of tax deposits;
• Dates and amounts of adjustments or settlements of taxes;
• Compensation subject to Federal Unemployment Tax Return (FUTA) and all information shown on Form 940;
• State unemployment contributions made;
• Employee copies of Form W-2 that were returned as undeliverable.

Department of Labor (DOL) - three year retention period for the following:

• Basic identifying information (name, address, gender, occupation, and date of birth if employee is under age 19):
• Hours worked each workday and each workweek;
• Dates of the beginning of each employee's work week;
• Regular rate of pay for overtime weeks;
• Straight-time earnings (including straight-time portion of overtime earnings);
• Overtime earnings
• Total wages paid for each pay period including additions and deductions;
• Dates and amounts of compensation paid (including pay period covered);
• Wage rate tables and piece rate schedules (2 years only);
• Work time schedules that establish hours and days of employment (2 years only).

Family Medical Leave Act (FMLA) – three year retention period for the following:

• Basic payroll and identifying data (name, address, occupation, pay rate, hours, deductions,  etc.);
• Dates FMLA leave is taken;
• Hours of FMLA leave (if leave is taken in increments of less than one full day;
• Copies of written notice of leave from employee to employer and notices given to employee as required under FMLA;
• Documents regarding employee benefits or employer policies and practices regarding paid and unpaid leaves.

 Fair Labor Standards Act (FLSA) - three year retention period for the following:

• Basic identifying data (name, address, gender, occupation, date of birth if employee is under age 19);
• Hours worked each workday and each workweek;
• Dates of the beginning of each employee's work week;
• Regular rate of pay for overtime weeks;
• Straight-time earnings (including straight-time portion of overtime earnings);
• Overtime earnings;
• Total wages paid for each pay period including additions and deductions;
• Dates and amounts of compensation paid (including pay period covered);
• Certain plans, trusts, contracts or collective bargaining agreements;
• Written agreements or memoranda summarizing terms of oral agreements;
• Certificates and notices listed or named in FLSA regulations;
• Sales and purchase records reflecting total dollar volume of sales or business and total volume of goods purchased or received.

Image: "We are all here to do what we are all here to do", Costume Sculpture by Fabio Lattanzi Antinori

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics and is the host of The Proactive Employer Podcast. Follow her on Twitter at ProactiveStats. 

Comments

[E. James (Jim) Brennan]

Thank you very much, Stephanie, for updating the long and frequently changing list of Federal HR/compensation record retention requirements. It is a frequently asked question (FAQ) and this current answer should be posted in every top HR office... until it changes with new rules containing new requirements and a newly updated post is required.

[Margaret O'Hanlon]

Stephanie, great post -- and even greater photo! It is a perfect representation of our files, desks, email boxes, brains . . . I'll treasure it!