Benefits & Compensation News

Benefits recordkeeping: What you must keep – and for how long

The trouble with recordkeeping at a lot of companies: You don’t know how complete your records are until you get involved in litigation or an audit. But by then, it’s often too late to fill in any critical gaps.

That’s why it’s essential to know — before you’re charged with any wrongdoing — what documents you need to hold onto and what you can trash without putting your company at risk.

To be on the safe side, many employment law attorneys recommend you keep everything for at least five to seven years after an employee has left.

That’s sound advice — if you’ve got the storage and personnel to keep track of all those docs for that long. But it may be overkill, and often isn’t necessary to comply with many employment law record retention requirements.

Here’s a rundown of document retention rules under laws such as the FMLA, COBRA, FLSA, ERISA, HIPAA, ADEA and Equal Pay Act, courtesy of the employment law experts at the law firm Lindquist & Vennum:

Employee leave

The FMLA requires employees to hold on to a slew of employee leave-related paperwork for at least three years, including:

  • Identifying data regarding the employee on leave, which includes names, address, occupation, pay rate, terms of compensation, days worked, hours worked per day, and additions or deductions in pay
  • Dates and hours of FMLA leave
  • Copies of employer notices to employee(s)
  • Documents describing employee benefit and premium payment info
  • Docs describing any disputes over FMLA benefits, and
  • Copies of the company’s FMLA policy.

Benefits plans

A slew of laws (ERISA, COBRA, ADEA, HIPAA) lay out what benefits plan-related documents companies must hang onto, and the length of time docs must be saved varies by the enforcing law. Here’s a summary of the essentials:

  • Employee benefit plan governing documents — keep indefinitely
  • Summary plan descriptions and notices — keep indefinitely
  • Records backing up the information reported on Form 5500, such as vesting and distribution info, coverage and nondiscrimination testing data, benefit claims info, enrollment materials, election and deferral data, and account balance and performance data — keep for six years after the Form 5500 filing date
  • Evidence of fiduciary actions — keep indefinitely
  • HIPAA privacy record documents — keep six years from the date it was created or the date it was last in effect, whichever is later, and
  • COBRA notices — no required retention period, but it’s recommended these documents be kept for at least six years from the date they were given.

Compensation

Most compensation-related documents, with the exception of Certificates of Age (keep those until termination), do not need to be kept longer than three years, including:

  • Records containing employees’ names, addresses, dates of birth, occupations, pay rates and weekly compensation — keep for three years
  • Collective bargaining agreements and changes/amendments to those agreements — keep for three years
  • Individual contracts — keep for three years
  • Written agreements under the FLSA — keep for three years
  • Sales and purchase records — keep for three years, and
  • Basic employment and earnings records, like wage rate tables used to calculate wages; salary, wages and overtime pay info; work schedules; and additions to or deductions from wages — keep for two years.

Hiring

There are a number of hiring and recruitment-related materials employers must hold on to, including:

  • Hiring documents, like job applications, resumes, job inquiries and records of hiring refusals — keep for one year from date of action
  • Job movement docs, such as promotion, demotion, transfer, layoff and training selection info — keep for one year from date of action
  • Test materials, including test papers and employee test results — keep for one year from date of action
  • Physical examination results — keep for one year from completion, and
  • I-9 forms — keep for three years after the date of hire or one year after the date of termination, whichever is later.

Litigation changes the equation

Once you’re on notice that any matter may become the subject of litigation or an audit, you must keep all documents related to that matter until the case has come to a conclusion — no exceptions.

In addition, you must anticipate litigation when you receive a notice that a lawsuit is being filed, notice of a DOL or EEOC charge, an attorney demand letter, or an internal complaint.

What you must keep in those instances includes:

  • the personnel file of the complainant
  • all documents related to his or her application, hiring, promotions, transfers, disciplinary actions, evaluations, training, pay and medical records
  • job postings
  • job descriptions
  • complaint records of other employees
  • investigation notes and documents
  • supervisor notes and records, and
  • anything related to an alleged harasser or wrongdoer.

Bottom line: The best way to successfully fend off litigation or an audit is to be able to produce strong, comprehensive documentation.

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