Payments made to employees form the database of paycheck records, also known as payroll records consisting of documents and information about employee details, paychecks, and taxes. According to US federal laws, organizations must retain payroll records for three years and four years is the retention time for payroll tax records like unemployment taxes. States like New York stipulate retention of some payroll records for six years, the same for the Employee Retirement Income Security Act.
Compliance needs for paycheck records
The Payroll Document Retention Guidelines provided by the Department of Labor, US, is the benchmark for organizations to ensure legal compliance. The guidelines of other federal agencies are also important for following the best practices. Over and above the federal laws about paycheck record retention, many states have their laws. California, New York, Illinois, and Washington have enacted legislation that determines the duration for retaining payroll records and stipulates the manner of retention. Companies can contact the paycheck records support phone number to ensure that they meet the IFLSA and IRS requirements. Updating the data on the portal of Paycheck records is mandatory for six years after the termination of the contract.
Which payroll record to keep and how long
The various terms of retaining my paycheck records vary according to the departments like the DOL (Department of Labor), IRS (Internal Revenue Service), and EEOC (Equal Employment Opportunity Commission).
The Fair Standards Act of DOL specifies the data type to retain, like employee name, address, SSN (Social Security Number), and pay rate. Most of the information is available from the pay stubs, hiring documents, and timecards that include the number of hours worked and pay rate, total earnings, earnings by type, work period, and payment date. In addition, to comply with ERISA requirements (Employee Retirement Security Act), organizations must retain retirement plan documents like 401 (k) plans and premium payment records for six years. To facilitate an audit of the retirement plan, organizations should keep the documents for an extended period, including enrollment and payment documents and payroll deductions.
Following the guidelines of the DOL and IRs should help in the proper retention of paycheck records but paying attention to the specific requirements of EEOC is equally essential for organizations.
Purpose of retaining payroll records
Maintaining the payroll records accurately is necessary for business organizations to complete the business financial statements, file tax returns, and provide government agencies and employees reports.
All businesses are subject to audit by the federal, state, and local agencies that can ask for the payroll record at any moment without notice.
My paycheck records are essential for aggrieved employees who file a complaint or lawsuit against the company, and complete records help employees create a better defense.
Destroying payroll documents
Besides retaining the payroll records for the specified duration, companies must not try to hold on to them longer but instead destroy them soon after the expiration of the retention period.
Paycheck records contain employees’ confidential and sensitive personal information, and destroying them should prevent their misuse. Incineration and shredding are the best ways to ensure destruction, but keeping the destruction record should help reconstruct the events later if required.
