Question:

My mid-sized retail company is trying to streamline some of the policies and procedures we have accumulated. In particular, we have four record retention policies for various employment documents. Can we limit that, while complying with the law?

Answer:

Depending on how you count, there are at least seven laws that create employment record retention requirements – so it is not surprising that your company has developed several policies over time. While it is important for a business to know what laws apply and the requirements to meet, there are some shortcuts that can simplify your policies. Always remember that if your company is involved in litigation (or thinks it may be), it should retain all records that are or may be related to the litigation regardless of your retention policies.
For simplicity, the retention requirements described below are the longest periods that apply to certain categories of documents, even though there may be shorter retention periods for similar documents under other laws, or shorter periods for certain subsets of documents.
 
Recruitment Documents (Two Years)
One category of employment records sometimes overlooked are those relating to recruitment, which should be retained for at least two years. This includes documents unrelated to specific employees, such as job postings, and notices to employment agencies. This also includes individual-specific documents (for employees and applicants), such as resumes, applications and test results.
 
Time and Schedule Records (Three Years)
Time and schedule records must be retained for at least three years. Do not rely on your bookkeeper or payroll company to retain the records because this is the employer’s obligation. Retain all timecards or other records of days and hours worked, employment contracts, piece rate information, schedules, and related documents for a minimum of three full years.
 
Payroll Records (Four Years)
Payroll records need to be retained for four years, including employees’ names, employee number, address, age, sex, title, and pay rate. Also retain pay stubs and other records of wages and deductions. General company information such as the duration of the work week, paydays and pay-periods, and unemployment insurance records also fall into this category.
 
Other Requirements (Up to Thirty Years)
Employers should also be aware of additional requirements relating to: employee personnel files (three years after termination); workers’ compensation records, including first aid and drug/alcohol testing records (although most such records will be maintained by your insurer, the employer must maintain injury and testing records for up to six years); leave of absence records (three years).
 
The Safe Approach
Rather than trying to craft various policies to comply with various applicable laws, many employers choose a more cautious retention policy. This typically means keeping all records for the duration of employment plus four years. Such a policy covers almost all relevant laws, though there are three categories that must be removed and saved even after that time period: pension and welfare plan documents (six years); workplace injury records (up to six years from the date of injury); and certain safety and toxic chemical records (thirty years).
As you can see, crafting a compliant yet reasonable employment record retention policy is no simple matter. But, by following the guidelines above, never destroying anything when you have knowledge of a claim or potential claim, and consistently applying your own policy, a company can meet its record retention obligations.