Several US federal agencies have established recordkeeping requirements for employers. These regulations are in place to ensure that businesses maintain records related to wages, hours worked, tax withholdings, employee benefits, workplace safety, and compliance with labor laws such as the Fair Labor Standards Act (FLSA), Occupational Safety and Health Act (OSHA), and Family and Medical Leave Act (FMLA), among others.
This can all be a lot to keep up with, so we’ve put together this guide to US recordkeeping laws for employers. It covers everything US employers need to know about recordkeeping, including records that must be retained, how long they must be kept for, which employers are exempt from recordkeeping requirements, and potential penalties for failing to comply with US recordkeeping laws.
This Article Covers
Recordkeeping Requirements for US Employers
- Hiring Records
- Form I-9 (Employment Eligibility Verification)
- Payroll Records
- Occupational Safety and Health (OSHA) Records
- Tax Records
- Employee Benefits
- Family and Medical Leave Act (FMLA) Records
- Americans with Disabilities Act (ADA) Records
- Drug Test Records
Recordkeeping Requirements for US Employers
Diligent recordkeeping is in the interest of both US employers and employees. For employers, recordkeeping is an important tool for managing their workforce efficiently. Maintaining accurate and comprehensive records can help employers monitor employee performance, track compliance with workplace policies, manage payroll effectively, and make informed business decisions. It also minimizes the risk of legal disputes relating to workplace discrimination, overtime, equal pay, and wrongful terminations.
From the employee’s perspective, proper recordkeeping is needed for transparency and fairness in how they are treated in terms of pay, benefits, and working conditions. It provides a clear basis for addressing grievances related to compensation, discrimination, or unfair labor practices. For example, if an employee’s overtime pay is in question, accurate timekeeping records provide undeniable evidence of the hours worked. Similarly, in cases of job-related injuries, well-maintained OSHA logs are critical for processing workers’ compensation claims. There are multiple types of records that US employers are responsible for:
1. Hiring Records
- Required Records: Federal laws, such as the Fair Labour Standards Act (FLSA) require employers to maintain detailed records including job applications, resumés, job advertisements, screening tools/tests, interview notes, and records related to hire/no-hire decisions. These also encompass documentation related to promotions, demotions, transfers, performance appraisals, terminations, reasonable accommodations requests, training records, incentive plans, merit systems, and seniority systems, as well as EEO-1 survey and self-identification forms if applicable.
- Covered Entities: This requirement applies to all employers.
- Retention Period: Records must be kept for one year after the creation of the document or the hire/no-hire decision, whichever is later. After an employee’s termination, employers must retain existing employment records for one year from the termination date. Federal contractors have a longer retention period of two years, unless they have fewer than 150 employees or a government contract of less than $150,000, in which case the period reverts to one year.
- Penalties for Failing to Keep Records: Failing to maintain these records can lead to difficulty in defending against claims under the Equal Employment Opportunity Commission (EEOC), potential fines, and sanctions. Insufficient documentation may also hinder the employer’s ability to prove non-discriminatory hiring and employment practices in the event of an audit or legal challenge.
- Specific Industry Requirements: Federal contractors and subcontractors who do over $10,000 in government business in one year are subject to extended requirements under Executive Order 11246, to prevent discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin.
2. Form I-9 (Employment Eligibility Verification)
- Required Records: Every employer must complete and retain a Form I-9 for each employee to confirm their legal right to work in the United States.
- Covered Entities: These requirements apply to all US employers.
- Retention Period: Three years after the date of hire or one year after the date of termination, whichever is later.
- Penalties for Failing to Keep Records: Civil fines ranging from hundreds to thousands of dollars per violation, depending on the nature of the violation.
- Specific Industry Requirements: None that differ from general requirements, but all industries must comply.
3. Payroll Records
- Required Records: Payroll recordkeeping laws require maintenance of basic employee data, including employee name, address, social security number (SSN), gender, date of birth, occupation, and job classification; along with pay information such as pay period details, gross wages, deductions, and net wages.
- Covered Entities: Applies to all non-exempt workers under employers covered by the FLSA. Note that certain small businesses and specific types of employment may be exempt from these requirements.
- Retention Period: Payroll records should be retained for at least three years.
- Penalties for Failing to Keep Records: Employers can face penalties, back wages payments, and potential lawsuits for not adhering to these recordkeeping requirements.
- Specific Industry Requirements: For exempt employees (those who are salaried and meet certain tests regarding their job duties and are paid at least $684 per week), the recordkeeping requirements are less stringent. Employers do not need to record hours worked for these employees, although they still must keep records of their wages and other data.
4. Occupational Safety and Health (OSHA) Records
- Required Records: Employers must maintain OSHA Forms 300, 300A, and 301, which log work-related injuries and illnesses. This documentation must also include details of any employee exposure to toxic substances.
- Covered Entities: Companies with 10 or fewer employees throughout the last calendar year are exempt from keeping OSHA injury and illness records, unless specifically directed in writing by OSHA or the Bureau of Labor Statistics under §§1904.42. However, all employers, regardless of size, are required under OSHA to report any work-related incidents that result in a fatality, in-patient hospitalization, amputation, or loss of an eye.
- Retention Period: Five years following the end of the calendar year that these records cover. Any medical records of employees who have worked for an employer for less than one year do not need to be kept for longer than the term of employment, if they are provided to the employee upon their termination.
- Penalties for Failing to Keep Records: Employers can face substantial fines and citations for failing to maintain these records, particularly if violations are found to be willful or repeated.
- Specific Industry Requirements: A full list of industries covered by the OSHA recordkeeping rule can be found on osha.gov.
5. Tax Records
- Required Records: The Internal Revenue Service (IRS) requires US employers to keep tax records including copies of W-4 forms, payroll records detailing wages paid, taxes withheld, Federal Insurance Contributions Act (FICA) contributions, and records of tax deposits.
- Covered Entities: All employers who withhold taxes are required to maintain these records.
- Retention Period: Records must be kept for at least four years after the date the tax becomes due or is paid, whichever is later.
- Penalties for Failing to Keep Records: Penalties, interest on unpaid taxes, and potential criminal charges for more severe offenses.
- Specific Industry Requirements: None beyond standard IRS requirements.
6. Employee Benefits
- Required Records: Detailed records of employee benefit plans must be maintained by employers, including plan descriptions, annual reports, financial records, and documents concerning plan operations and administration.
- Covered Entities: This requirement applies to any employer that offers pension plans, health insurance, and other welfare benefit plans governed by the Employee Retirement Income Security Act (ERISA).
- Retention Period: These records should be retained for at least six years following the filing date of the documents based on the information they contain.
- Penalties for Failing to Keep Records: Failure to maintain these records can lead to fines and penalties from the Department of Labor, as well as potential lawsuits from participants and beneficiaries. If a discrimination claim is filed against your business, these records are needed for legal protection.
- Specific Industry Requirements: While the basic requirements apply to all industries offering such benefits, companies with more complex structures or multiple benefit offerings might face additional scrutiny and compliance demands.
7. Family and Medical Leave Act (FMLA) Records
- Required Records: FMLA recordkeeping requirements include maintenance of dates and hours of FMLA leave taken by employees, copies of employee notices, documents describing employee benefits and FMLA policies, and records of any disputes over the designation of leave as FMLA leave.
- Covered Entities: These requirements apply to employers with 50 or more employees, who are covered under the Family and Medical Leave Act.
- Retention Period: Three years.
- Penalties for Failing to Keep Records: Employers who fail to keep these records may face penalties and are at a disadvantage in defending against claims related to FMLA compliance.
- Specific Industry Requirements: There are no additional industry-specific requirements beyond what is mandated by the FMLA itself, which aims to protect and manage the rights of employees to take unpaid, job-protected leave for specified family and medical reasons.
8. Americans with Disabilities Act (ADA) Records
- Required Records: US employers are required to maintain records of any requests for disability accommodations, the assessment process of these requests, the decisions made, and any actions taken. This includes documentation of the interactive process between the employer and the employee, the employee’s disclosed disability if applicable, and any medical documentation provided in confidence. Employers must also keep records of training sessions and policies related to ADA compliance.
- Covered Entities: All employers with 15 or more employees are covered under the ADA and are required to comply with these recordkeeping requirements. These requirements aim to ensure that employees with disabilities are provided reasonable accommodations and are not discriminated against based on their disability.
- Retention Period: ADA-related records should be retained for at least one year from the date of the making of the record or the personnel action involved, whichever occurs later. For example, records related to accommodation requests and related decisions should be kept for at least one year after the decision has been made.
- Penalties for Failing to Keep Records: Employers who fail to maintain adequate ADA records may face legal consequences, including penalties and fines. Poor recordkeeping can also adversely affect the outcome of lawsuits or audits if the employer cannot provide evidence to support compliance with ADA requirements, such as proving that reasonable accommodations were offered and that decisions were made in a non-discriminatory fashion.
- Specific Industry Requirements: None beyond standard ADA recordkeeping requirements.
9. Drug Test Records
- Required Records: Employers who conduct drug testing are required to maintain records of drug test results, which include the dates of testing, the types of tests administered, the individuals tested, test results, and any follow-up actions taken based on the results. Furthermore, documentation related to the notification of testing, consent forms signed by employees, and communications regarding the results should be preserved.
- Covered Entities: This requirement generally applies to employers who have decided to implement a drug testing policy. Certain industries, particularly those involving transportation, safety-sensitive positions, or those regulated by federal agencies such as the Department of Transportation (DOT), are more likely to be subject to mandatory drug testing and thus to stricter recordkeeping requirements.
- Retention Period: The retention period for drug test records can vary depending on state law and the specific industry regulations. For example, DOT regulations require that negative test results be retained for a minimum of one year and positive test results and documentation of follow-up testing be retained for a minimum of five years.
- Penalties for Failing to Keep Records: Failure to properly maintain drug test records can lead to penalties, particularly in regulated industries. Inadequate recordkeeping can also impact legal disputes related to employment decisions, such as termination or denial of unemployment benefits based on positive drug tests. Additionally, failure to secure these sensitive records can lead to breaches of employee privacy and potential lawsuits.
- Specific Industry Requirements: Industries regulated by the DOT, including aviation, trucking, railroads, mass transit, pipelines, and maritime, have specific guidelines that must be followed regarding drug testing and record retention. Employers in these industries must ensure compliance with federal guidelines, which include not only maintaining accurate and complete records but also ensuring that these records are stored securely to protect employee privacy.
Final Thoughts
In summary, while recordkeeping might initially seem like a burdensome regulatory requirement, its strategic importance in managing human resources, ensuring compliance, protecting against legal action, and upholding employee rights cannot be overstated. As such, both employers and employees greatly benefit from diligent recordkeeping practices that uphold the integrity and efficiency of business operations.
Learn more about US Labor Laws through our detailed guide.
Important Cautionary Note
This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.
