Provided by: Jennifer Kirschenbaum, Esq.
November 16, 2022
How long do I have to maintain employee records?
Good question! Short answer (to be safe), 7 years, which includes a cushion…
Full answer provided by our K&K employment team -
Every business should be aware of what employment-related documents must be retained and for how long. The “urge to purge” when filing cabinets are filled to their capacity must be avoided in light of the many state and federal laws and regulations that require that certain personnel records, whether stored electronically or on paper, be kept for a specified time, even long after the termination of a worker’s employment. The list of New York State and federal laws and regulations dictating the minimum retention periods is long, and only some of the most relevant are addressed below.
However, despite what these recordkeeping requirements dictate, best practice from a risk management perspective dictates that all employment-related records until the statutes of limitation have expired on all possible causes of action which may potentially be brought by a former employee.
New York State:
6 Years – Payroll Records. New York State’s Labor Law (“NYLL”) imposes record retention requirements concerning, among other things, wage payments, minimum wages, and hours worked. NYLL Law Section 661 and its related regulation require employers to keep records of hours worked and wages paid by each employee subject to the State minimum wage requirements (i.e., most employees) for a period of not less than six years. The statute substantially overlaps with the requirements of the federal Fair Labor Standards Act (“FLSA”) discussed below. There is a six-year statute of limitations for wage-based lawsuits arising under the NYLL.
4 Years – Workers’ Compensation. Virtually all employers in New York State must provide workers' compensation coverage for their employees. Employers covered by the New York Workers’ Compensation Law must keep four years of payroll records showing the number of employees working, and their wages. Employers are also required to keep a record of all injuries sustained by an employee in the course of employment for a period of eighteen years, whether or not such injury results in death or not. These records should include the “who, what, when, where and how” regarding the injury.
3+ Years – NYS and NYC Human Rights Law. The New York State Human Rights Law (“NYSHRL”) and New York City Human Rights Law (“NYCHRL”) are similar statutes that prohibit employment discrimination. Using the City statute as an example, once the New York City Commission on Human Rights (NYCCHR) initiates an investigation or has commenced one in response to a filed complaint, it has the power to demand that an employer continue to make, and preserve, records made and kept in the ordinary course of business during the preceding year. NYCCHR Demands are effective when served and remain in effect until the proceedings relating to a filed complaint are terminated, or a civil lawsuit is commenced. If no charge is filed and no civil lawsuit is commenced, the demand expires two years from the date it was served. The NYCCHR also has can subpoena all records that relate to an investigation into an unlawful discriminatory practice. The statute of limitations under both of these statutes is either one year for a worker to file a discrimination charge with the relevant agency or, alternatively, three years to file a lawsuit in court. However, as discussed further below, in certain instances to time to commence such litigation can be tolled (i.e., paused or delayed).
3+ Years – Fair Labor Standards Act (“FLSA”). This federal wage and hour law
requires retention of payroll records for the term of an employee’s employment plus three years. Additionally, employers must keep for at least two years all records that justify the basis for paying different wages to male and female employees (such as wage rates, time sheets, job evaluations, and seniority and merit systems). The records may be kept at the place of employment or at a central records office. Wherever they are kept, the records must be available for inspection by the Department of Labor within 72 hours of the Department’s notice to inspect them. The statute of limitations on a FLSA wage and hour claim is three years.
3 Years – Family and Medical Leave Act (“FMLA”). Covered employers (for private-sector employers, those with 50 or more employees in 20 or more workweeks in the current or preceding calendar year) must make, keep, and preserve the same records under the FMLA as those required by the FLSA, for three years. Additionally, copies of employee notices of leave furnished to the employer under the FMLA, if in writing, and copies of all general and specific written notices given to employees are also required to be kept. Although no particular order or form is required, the records must be capable of being reviewed or copied.
3 Years – Age Discrimination in Employment Act (“ADEA”). Covered employers (those with 20 or more employees) must retain for three years payroll or other records containing an employee’s name, address, date of birth, occupation, rate of pay, and compensation earned per week. They must also retain for a period of one year from the date of a personnel action, employment and/or personnel records relating to (1) job applications, resumes, job advertisements, and records pertaining to failure or refusal to hire; (2) promotion, demotion, transfer, selection for training, layoff, recall, or discharge; and (3) job orders submitted to employment agencies or unions.
1 Year – Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. The Equal Employment Opportunity Commission (“EEOC”) is responsible for enforcing several federal discrimination laws, including Title VII of the Civil Rights Act of 1964 (“Title VII”), the aforementioned ADEA, and the Americans with Disabilities Act (“ADA”). A federal regulation issued under Title VII and the ADA requires a covered employer (those with 15 or more employees) to preserve all personnel or employment records it makes or keeps for a period of one year from the date of the making of the record or the personnel action involved, whichever occurs later. The personnel or employment records encompassed by this federal regulation include requests for reasonable accommodation, application forms submitted by applicants and other records having to do with hiring, promotion, demotion, transfer, layoff or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship.
3 Years - United States Citizenship and Immigration Services (“USCIS”) Forms. USCIS Employment Eligibility Verification Forms (Form I-9) must be kept by an employer for each individual hired for employment in the United States either for three years after the date of hire or for one year after employment is terminated, whichever is later.
This multitude of recordkeeping requirements is tempered by the potential of employment discrimination charges and/or litigation, and the need to retain documents necessary to defend against such claims. Unlike statutes of limitations for personal injury claims, which are fairly straightforward (e.g., 3 years from the date of the car accident), statutes of limitations for federal employment discrimination claims are often variable, depending on factors such as: (1) when the plaintiff believed or should have reasonably believed that she was subjected to discrimination, (2) whether the discriminatory act is a “continuing violation” (more common in “hostile work environment” cases than in those involving specific discrete employment decisions) , (3) whether there is a state or local agency equivalent to the EEOC which enforces a law that prohibits discrimination on the same basis as the relevant federal law (as in New York), and (4) how long it takes for the EEOC to issue a “right to sue” letter to the plaintiff.
For example, should an employer receive notice from the EEOC that a charge has been filed against it with that agency, it should retain personnel or employment records relating to the issues under investigation as a result of the charge (including those related to the charging party or other persons alleged to be aggrieved as well as to all other employees holding or seeking positions similar to that held or sought by the affected individual(s)). These records must be kept until the latter of either: (i) the final disposition of the charge by the EEOC; (ii) should the charge not be resolved and a notice of right to sue be issued by the EEOC, the date of expiration of the 90 day statutory period within which the aggrieved party may bring suit; or (iii) the conclusion (including any appeals) of litigation brought by the charging party or EEOC.
Thus, though not required by law, the best practice for a company in New York is to retain its employees' personnel files for the length of the employee's employment plus six years. For example, as noted, an individual may file a lawsuit under the NYSHRL or NYCHRL for unlawful discriminatory practices in employment up to three years after the alleged unlawful practice.
However, should the employee first file a charge of discrimination with the EEOC, that three year period would automatically be tolled. Such an EEOC charge could well remain pending - and, as a result, the NYSHRL’s and NYCHRL's three-year limitations period could well be tolled - for at least two years.
As further noted, the NYLL’s statute of limitations for state law-based wage claims is six years. Thus, a blanket file retention policy of six years post-termination of employment is recommended, rather than risk selectively culling an employee’s file earlier, and wrongly choosing which documents may be necessary at a later date.