By Brooke Marshall, Director, HR Partnerships at HR-Rethought
Do you get energized when it comes to spring cleaning? Opening those windows, airing out the house, washing curtains and bedspreads, and organizing those closets and garages – aaaah, springtime! Doesn’t this all sound therapeutic and necessary?
In the HR world, records retention and understanding the parameters of when to keep and when to purge documents and records can have a similar cathartic effect. In today’s increasingly regulated business landscape, proper HR records retention is no longer a nice-to-have—it’s a critical component of compliance, risk management, and organizational efficiency. Whether you’re a small startup or a multinational enterprise, having a clear strategy for storing, securing, and disposing of HR records can save you from costly penalties and legal disputes. Let’s explore why HR records retention matters and outline key parameters to guide your organization.
Why does this matter?
Legal Compliance: employment laws at the federal, state, and local levels often mandate specific timeframes for retaining documents such as payroll records, I-9 forms, and personnel files. Failing to meet these requirements can lead to hefty fines and legal liabilities.
Risk Management: accurate, complete HR records serve as vital evidence in the event of an audit or legal claim. Having well-organized records can help demonstrate compliance with labor laws, equal employment opportunity regulations, and more, mitigating the risk of penalties or litigation.
Operational Efficiency: beyond compliance, maintaining organized records ensures quick access to information when needed—whether for onboarding new employees, handling internal audits, or evaluating performance data. This efficiency saves time, reduces confusion, and allows HR teams to focus on strategic initiatives.
Employee Trust: proper recordkeeping shows employees that their data is secure and managed responsibly. In an era where data breaches can severely damage reputations, demonstrating robust data management practices can bolster employee confidence and overall morale.
Now, let’s talk about how long you should keep those records:
- Federal Mandates:
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- I-9 Forms: Retain for at least three years after the hire date or one year after the employee’s termination date – whichever is later.
- Payroll Records (FLSA): Generally kept for at least three years.
- EEO-1 Reports: Required for certain employers, typically retained for at least one year (or longer if involved in a discrimination charge).
- OSHA Records: Some occupational health and safety records must be kept for five years, while others (like medical records) may need to be retained for the duration of employment plus 30 years, depending on the situation.
- State and Local Laws:
- States often have their own guidelines which can exceed federal requirements. For instance, some states mandate that personnel files be kept for up to seven years post-termination. Always verify the rules in your specific jurisdiction.
How long do I retain by record type:
Recruitment and Hiring Records: applications, resumes, interview notes, and other hiring-related documents should be kept for at least one year from the date of the hiring decision. If the position is subject to Affirmative Action Plan requirements, keep records for two years.
Personnel Files: general employment history (promotions, demotions, performance reviews, disciplinary actions) usually retained for three to seven years after separation, depending on state laws and the nature of the records.
Payroll and Benefits Records: payroll, tax documents, and benefits enrollment information often need to be retained for three to seven years to comply with both the IRS and the DOL.
Medical and Leave Records: keep separately from general personnel files for privacy reasons. Retention periods can range from one year (for FMLA documentation) to several years for workers’ compensation and other health-related documents.
Now, let’s talk security and confidentiality:
Access Controls: limit who can view sensitive data by implementing role-based access. Only authorized HR staff or legal counsel should handle confidential records.
Encryption and Secure Storage: whether storing records electronically or in physical cabinets, ensure they’re safeguarded. Digital records should be protected with strong encryption and password protocols; physical documents should be locked in secure areas with limited access.
Separate Storage for Sensitive Information: keep medical, leave, and I-9 records separate from general personnel files to prevent unauthorized disclosure and to simplify audits.
I need to destroy documents, now what?
Retention Policy Documentation: maintain a written policy outlining the retention periods for each record type, along with guidelines for secure destruction.
Secure Disposal Methods: shred, incinerate, or permanently delete files once they exceed the required retention period. In the case of digital records, use certified data-wiping tools to ensure the data cannot be recovered.
Legal Holds: if a lawsuit, audit, or investigation is pending, place a “legal hold” on relevant records—suspending their normal destruction schedule until the matter is resolved.
Don’t overdo it or underdo it!
Over-Retention: storing records indefinitely can expose your organization to unnecessary risk if those documents become subject to legal discovery. To solve, adhere to retention schedules and regularly purge documents past their required retention date.
Under-Retention: disposing of documents too early can result in non-compliance, leading to fines or an inability to defend against legal claims. Ensure you stay current with the latest laws and regulations. If in doubt, consult legal counsel or professional HR associations for guidance.
Create a policy and train: without a centralized and clearly communicated policy, departments may adopt inconsistent practices, increasing the risk of non-compliance. Employees who aren’t trained properly may mishandle sensitive data or discard it prematurely. To avoid, develop a unified, organization-wide records retention policy and ensure everyone follows it. If you can, leverage HR software to automate retention scheduling where possible, and provide regular, role-specific training and quick-reference materials so staff understand the “why” and “how” of proper records retention.
What Now?
By taking a proactive and organized approach to HR records retention, you’ll not only safeguard your organization but also enhance its credibility and operational effectiveness in the long run.
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