Payroll records retention is a critical task for every business to undertake. However, with so many pieces of information to keep on all your employees, it can often feel overwhelming. If you're wondering where to begin, how to store information, where to store it, or anything else regarding payroll records retention, this short guide will put you on the right track.
National, Provincial, and Local Law
The first order of business is to familiarize yourself with the laws regarding records retention on a national and proviencial level as well as on a local level. Document retention isn't just a convenience, there are laws surrounding it, and you need to be compliant with those laws at all times.
Have a Policy
It's critical to have a clear policy in place for your record retention practices. Everyone should know which files are kept, where they're stored, how to retrieve them, scheduling related to them, and methods of destruction that need to be followed. A records administrator is a necessity in order to keep everything in order. It's also important to realize that digital records have requirements attached to them when it comes to what is permissible in court. Make sure your digital records are always up to par so that in the event of litigation your company can obtain the best defense.
Partition Employee Records
Make sure you have certain types of information stored separately. The records you need to keep apart from general information include benefit and health-related documents, investigative documentation, personnel files, working files for supervisors and other similar types of information.
Conflicts in Retention Requirements
When trying to figure out the best methods of payroll records retention, keep in mind that looking at both federal and state laws is an absolute necessity. The reason for this is that sometimes there's a conflict between what the federal law tells you to do and what the state law requires. You might think that the federal law will trump the state law in this situation, but the rule of thumb is to follow the most conservative law. Very often, the most conservative law is the sate law.
Paper vs Digital
There is no difference in record retention requirements between digital and paper records except for the laws that apply to the formatting of digital records. It's more convenient to have an electronic records system, and often more accurate, but you're required to follow all the laws no matter how you choose to store your records.
Record Guidelines
While laws may differ, a few general principles apply in almost all cases. Keep these in mind when developing your payroll records retention protocol.
- Contractual documents should be kept for at least two years after the termination date of the contract.
- Any documents relating to allegations of discrimination or similar conduct should be kept for at least three years from the date of filing.
- Benefits information must be kept for at least six years after the final payment under any particular benefits plan.
The scope of legislation surrounding records retention is vast, but this quick guide should help you set a course in the right direction. Always check with a legal expert if you need specific advice, and when deciding whether to destroy or retain a piece of information, always err on the side of caution.