HR Laws and Record Keeping: What Documents to Keep and How Long
Fleshing Out the Complex Requirements
The HR record keeping requirements in the U.S. is quite complex, since several federal agencies are in charge of administrating various federal employment laws and regulations. Said laws are in place primarily to protect the rights and welfare of employees. Employers, confronted with any complaint for unfair labor practice, have to present the appropriate documentations to disprove the employee’s claims.
The burden of proof always rests on the employer, and the ability to cope with this burden is through the support of an organized system of HR record keeping. What to keep, however, is crucial since the requirements by each federal agency also vary. Add to that the statutory requisites of the respective U.S. states in which the employer’s business operates.
Below you’ll find the list of documents required by each federal agency along with the number of years that each document should be retained and maintained within the official place of business.
Compensation and Federal Tax Records
I. The Fair Labor Standards Act (FLSA)’s record keeping regulations (29CFR Part 516) requires every U.S. employer to maintain records that will attest to its compliance with the provisions of the act:
- Minimum Wage
- Overtime Pay
- Youth Employment Standards
The records should specifically contain the following information for every non-exempt employee/worker, in any form of record, for as long as the data kept for future presentation are accurate and legible:
- Full nam.
- Residential address and zip code.
- Exact date of birth, particularly for workers aged 18 years and below, at the time of hiring.
- Sex or gender.
- Work or occupation.
- The time when employee’s daily work schedule begins and the day when the employee’s workweek begins.
- The number of required hours of work per day.
- The total number of actual hours worked per workweek.
- Basic pay rate on which the employee’s wages are calculated and paid; e.g. $10 per hour; $550 per week; $5 per piece
- Equivalent regular hourly pay rate.
- Total daily and weekly earnings paid on a straight-week period.
- Total overtime earnings paid during the workweek.
- Total salaries paid in each pay period.
- Deductions or additions to the employees wages in every pay period.
- Date each pay period was paid.
For this purpose, the following records should be maintained at the place of employment or at the central record-repository office of the business entity. Moreover, they should be open for inspection by an authorized representative of the U.S. Dept. of Labor’s (DOL) Wages and Hour’s Division, at any time during the prescriptive retention period, unless a DOL representative makes a request for extension, computation or transcription for a specific document or information.
Three-Year Retention Period
1. Payroll record.
2. Collective bargaining agreements.
3. Sales and purchase records of the business.
Two-Year Retention Period
1. Time cards or piece-of-work records, whichever is applicable.
2. Wage rate tables.
3. Work and Time Schedules – For employees with fixed schedules, it will suffice to maintain a record that contains a notation that the exact daily and weekly schedules indicated were followed by the employee. However, if the employee rendered a total number of hours that is longer or shorter than the schedule indicated, a notation regarding the total number of hours worked must also appear on the record to signify the exception or deviation from the schedule.
4. Records on which payroll additions and deductions were based.
II. Federal Insurance Contribution Act (FICA) and Federal Unemployment Tax Act (FUTA) - The information required is basically the same as those mandated under the FLSA, although additional documents are likewise compulsory to furnish data pertaining to the following:
- Annuity and pension benefits.
- Fringe benefits paid.
- Tips paid.
III. Federal Income Tax Withholding (IRS) – As a rule, the IRS keeps copies of all tax remittances for a period of six years; hence, the obligatory records for this purpose are those that pertain to the following:
(1) The wage amounts on which the taxes withheld were based.
(2) The related documents containing the employee’s conformity or agreement to the additional tax withheld.
(3) Proofs of actual taxes withheld, which should indicate the dates when the applicable taxes were deducted from the employee’s salary.
(4) Documented reasons for any difference between the total tax remitted and the total tax withheld.
(5) Withholding Tax Forms W-4 and W4-E
IV. Equal Pay Act – The same as the FLSA record keeping requirements plus documented justifications for wage differentials based on gender difference, if any.
V. The Davis Bacon and Related Acts (DBRA) constitute the federal regulations for all contractors and subcontractors performing federal construction contracts. This includes those contracted with the District of Columbia or for other similar projects in the same area that were provided with federal assistance exceeding $2,000. Contractors are mandated to pay the wage rates at not less than the prevailing minimum rate plus the fringe benefits of laborers and workers according to their classifications.
Under DBRA, the hourly rate shall include information regarding the bona fide members’ rates of contributions for their anticipated costs of fringe benefits or cash equivalents. This is aside from the compulsory records required under the FLSA.
VI. The Walsh Healy Public Contracts Act – Provides the regulations enforced by the Employment Standards Administration Wage and Hour Division over contractors engaged in the manufacture or supply of materials, articles or equipment for the U.S. government including the District of Columbia for contracts exceeding $10,000. Contractors are required to pay employees performing work as assemblers, handlers, shippers or transporters of goods based on the prevailing federal minimum wage for all hours worked plus time-and-one-half the regular pay rate for all hours worked in excess of 40 hours per work week.
In addition to the FLSA compulsory records, all contractors are required to retain a record of the current work permit for minors.
Compulsory Documents Pertaining to Employment Actions
(A) - Americans with Disabilities Act (ADA), under the Civil Rights of 1964 – The obligatory records are required from employers with at least 15 employees.
All records that pertain to the processes of application, recruitment, hiring/rehiring, pre-employment testing, promotions, demotions, transfers, training-selections, layoffs, recalls, terminations, and requests for reasonable accommodations. This includes the records of those that were hired for temporary employment.
The retention period is for one year from the time the employment was recorded or the time that personnel action was taken. However, where there are complaints filed or lawsuits filed, all records related to the employee/s who filed the complaint or charges shall be kept on file until the issue under dispute has reached final settlement.
(B) – The Age Discrimination in Employment Act (ADEA) – mandates the same requirements prescribed by the ADA to oversee employers with twenty or more workers against age discrimination in employment in accordance with fair labor standards, for unpaid minimum wage and overtime wages, liquidated damages, conference, conciliation and persuasion.
The same record keeping obligations under the FLSA shall likewise be retained for any disputes regarding allegations of employment actions in violation of this law.
The same records mandated by the ADA shall also be retained for any allegations of employer regarding disability discriminations. In the event that a complaint or lawsuit has been filed by an employee, all records related to the complaining employee shall be retained and maintained until such time that all charges filed by the employee have been settled or resolved.
Additional documents required under this mandate include:
- Job advertisements and postings
- Copies of employee benefit plans
- Policies and procedures based on seniority system
- Policies and procedures based on merit system
(C) The Immigration Reform and Control Act (IRCA) –A public law enacted to control and prevent illegal immigration to the U.S.
This law requires that the “Employee Eligibility Verification Form (INS) Form I-9)" be kept on file and maintained separately from the regular personnel files. Retention period is for three years, which may commence after the date of hire, or for one year after the date of termination, whichever of the two presents a later date. Moreover, said documents shall be available for inspection at any time by the authorized representatives of the “Immigration and Naturalization Services” or the “Department of Labor.”
(D) The Employee Polygraph Protection Act (EPPA) – This law basically prohibits the employer from using lie detector tests as a tool for employment screening or during the course of employment unless the reason is within the bounds of the exceptions allowed by the enactment:
In cases where a polygraph or lie detector test is allowed and has been performed, the documentations regarding the reasons for administering the test as well as the results shall be held and kept on file for three years.
Continue to page 2, for more on HR Record Keeping: What to Keep?
Compulsory Documents Pertaining to Employment Actions (continued from page 1):
(E) The Uniform Guidelines on Employee Selection Procedures (UGESP) – This embodies the Equal Employment Opportunity Commission (EEOC)’s guidelines for data collection activities related to the race, gender, condition of disability and veteran status of job applicants and employees. The guidelines require that data gathered in relation to the aforementioned should be kept separate from the employee’s regular personnel files to preclude any employment decisions being made on the basis of such personal data. In addition, the following HR record keeping mandates shall be observed:
Employers with 100 or more employees shall perform an analysis that presents the impact of the selection process being used by the company for each job. Said analysis shall be categorized by gender for each racial or ethnic group that constitutes at least two percent of the labor force in proportion to the workforce in the area or to two percent of the applicable workforce. Moreover, the required analysis of the selection process shall be conducted annually. Where the results obtained show that there are adverse impacts, all records must be maintained for two years after the noted impacts have been corrected.
Records required include applications, tests and other types of procedural requirements of the hiring and selection process used as a basis for decisions regarding hiring, promotion, demotion, transfer, training and termination.
Employers with less than 100 employees shall keep records that show the annual number of persons hired, promoted and terminated who qualified for each job based on gender, or appropriate by race and national origin.
(F) Federal Contractor Compliance Advisor - Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended (VEVRAA). This law prohibits the discrimination against members of veterans protected by this act which requires all affirmative actions in connection with the employment of such veterans. The Office of Federal Contract Compliance Program shall monitor and evaluate the contractor-employer’s affirmative action programs and practices plus the related documents kept in good faith:
Aside from the personnel records similarly required by the FLSA, there are other records to keep and maintain for two years if the employer has more than 150 employees. Otherwise, the retention period is for one year. Such other records include:
- Requests for reasonable accommodations.
- Results of physical exams.
- Job advertisements and postings.
- Applications, resumes, tests and test results.
- Interview notes and documents related to hiring, promotion, assignments, demotion, transfer, layoff and termination.
- Rates of pay or terms of compensation.
- Basis for training selection and acceptance for apprenticeship.
- All data pertaining to any complaints of disability discrimination and the actions taken.
Compulsory Records on Benefits, Health, Safety and Related Matters
(a) The Employee Retirement Income Security Act (ERISA) - The federal enactment sets the minimum standards for pension and health benefits that are voluntarily established by private industries for the purpose of providing protection to employees under a plan.
The law mandates that all employers participating under this program maintain ERISA-related records that will disclose to its participants and beneficiaries the descriptions, reports and other materials provided as information to the Department of Labor, Internal Revenue Service and Pension Benefit Guaranty Corporation (PBGC).
The aforementioned reports and disclosure requirements shall be kept and maintained for as long as they are relevant to the process of determining the benefits of a participating employee. This includes the following additional compulsory documents:
- Summary plan description and its updates along with the changes or modifications made.
- Notable amendments to the plan that may result in a decrease in benefits or substantial decrease in the number of plan participants and other similar reportable events.
- Notice of plan termination.
(b) The Family and Medical Leave Act (FMLA) - This enactment entitles eligible employees to take unpaid, job-protected leave for medical and special family reasons. The employee’s group health insurance shall have a continuance of coverage under the same terms and conditions, as if the eligible employee had not taken any leave.
Aside from the basic documents required by FLSA, the following records should be kept in place and maintained for three years:
- Official records showing dates when the leave was taken by eligible employees; it must be properly designated as FMLA leave.
- Official records of the hours on leave if the leave was taken intermittently.
- Copies of notices disseminated to employees describing the employee benefits and their related policies and procedures regarding the guidelines for paid and unpaid leave.
- Records of premium payments received as employee benefits.
- Records of any complaints or disputes regarding the designation of the FMLA leave.
(c) The Occupational Safety and Health (OSH) Act - This law was enacted to ensure the safety and well being of the workers in the workplace and the environment of the entire facility.
The following documents concerning work-related incidents with sustained injuries and illnesses should be kept and maintained on file for five years:
- Official log of all pertinent information regarding incidents of injuries and illnesses that transpired in relation to employees’ jobs or designated functions.
- Investigation reports and supplementary record of injuries, illnesses and fatalities, if any, which shall be available for inspection by the authorized representative of the OSHA.
- Annual summary of workplace-related injuries, illnesses and fatalities, which should be posted in a conspicuous place in the accident-prone premises.
- Officially documented medical records and incidents of exposure to toxic substances as they affect each employee.
Statutory Requirements per State
The list presented above comprises the main documents required by the federal government for HR record keeping. Any statutory law that requires additional documents to keep and maintain can be gleaned from a compilation of state and local statutes prepared by the Society for Human Resource and Management. This is done by exploring the category of the statutory laws to which the federal law corresponds. (Find the link in the Reference section below).
Reference Materials and Image Credit Section:
SHRM State and Local Statutes and Regulations https://www.shrm.org/LegalIssues/StateandLocalResources/StateandLocalStatutesandRegulations/Pages/default.aspx
Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act - (FLSA) https://www.dol.gov/whd/regs/compliance/whdfs21.pdf
Recordkeeping and Reroting Requirements Under Title VII and the ADA https://www.access.gpo.gov/nara/cfr/waisidx_08/29cfr1602_08.html
Office of Federal Contract Compliance Programs (OFCCP) - https://www.dol.gov/ofccp/regs/compliance/faqs/dir279faqs.htm#Q1RKa
The Immigration Reform and Control Act (IRCA) – [https://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextchannel=b328194d3e88d010VgnVCM10000048f3d6a1RCRD&vgnextoid=04a295c4f635f010VgnVCM1000000ecd190aRCRD](https://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6 d1a/?vgnextchannel=b328194d3e88d010VgnVCM10000048f3d6a1RCRD&vgnextoid=04a295c 4f635f010VgnVCM1000000ecd190aRCRD)
Fact Sheet #36: Employee Polygraph Protection Act of 1988 https://www.dol.gov/whd/regs/compliance/whdfs36.htm
Employment Tests and Selection Procedures - https://www.eeoc.gov/policy/docs/factemployment_procedures.html
Employee Retirement Income Security Act — ERISA https://www.dol.gov/dol/topic/health-plans/erisa.htm
The Family and Medical Leave Act (FMLA) –https://www.dol.gov/whd/fmla/
The Occupational Safety and Health (OSH) Act – https://www.dol.gov/compliance/laws/comp-osha.htm
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