Are You Keeping Up with Employee Recordkeeping Requirements? You Might be Surprised

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Did you know that employers who don’t file the required Affordable Care Act (Obamacare) reporting forms with the IRS may be subject to a $3 million maximum penalty? That’s enough to keep you up at night! And that’s just one legal requirement.

Employers today face a wide range of employee recordkeeping requirements, as this infographic from ComplyRight, a company dedicated to freeing small business owners of compliance burdens, makes clear. And those requirements seem to grow every year.

Paperwork and recordkeeping burdens can fall harder on small businesses because smaller entities have less staff to manage HR functions, or may not have dedicated HR resources at all. But the good news is that technology can help you stay on top of regulatory compliance requirements as an employer.

Here are some employee recordkeeping requirements that may surprise (or shock) you:

Job Postings

When employers post advertisements for new job openings, they must retain a record for one year according to the Age Discrimination in Employment Act (ADEA).

Job Applications

Employers covered under the ADEA, Americans with Disabilities Act (ADA) and/or Title VII of the Civil Rights Act (Title VII) must keep all job applications on file for at least one year. The one-year requirement applies to seasonal and temporary workers, too.


Solicited resumes must be kept on file for one year, per the ADEA and ADA. However, there is no requirement to retain unsolicited resumes.

Termination Records

The ADA and Title VII requires that all termination records be kept for one year after the employee’s termination date.

Benefit Plans

The ADEA requires benefit plans to be kept on record for one year following the termination of the plan under the ADEA. In addition, the Employee Retirement Income Security Act (ERISA) requires benefit plan records to be kept on file for six years.

Performance Evaluations

The Fair Labor Standards Act (FLSA) requires performance evaluations to be kept for two years.

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Unemployment Tax Records

According to the Federal Unemployment Tax Act (FUTA), you should keep unemployment tax records for four years from the tax due date or payment, whichever is later.

I-9 Forms

I-9 forms and additional verification information verifying that employees are permitted to work in the U.S. need to be kept for three years from the date of hire or one year after the date of termination, whichever comes later. The applicable law is the Immigration Reform and Control Act (IRCA).

Employment Contracts

If you have employment contracts with employees, you are required to keep all contracts for three years per the FLSA.

OSHA Forms for Injury and Illness

Employers with 11 or more employees must keep all forms reporting injury or illness for a minimum of five years after the end of the calendar year.

A Dizzying Compliance Landscape

As the above list illustrates, employers are subject to an ever-growing patchwork of employee recordkeeping laws.

It’s not just the number of legal requirements that makes compliance challenging. It’s the fact that the laws are ever changing — and complex.

Laws often are filled with nuance, exceptions and detailed definitions. Recordkeeping requirements can cover some employers based on their size or industry, but not others.

Laws also change frequently, and new laws and regulations are added. If you are caught unaware of a change or a new law, your company could end up paying hefty fines. Remember, lack of knowledge is usually not a defense.

Technology: Essential Foundation for Employer Compliance

Employee recordkeeping is one of those areas today where technology levels the playing field for small businesses.

A good employee recordkeeping app can help you better meet legal requirements that apply to your business — that’s a given.

But today’s best-of-breed recordkeeping software can add so much more value.

The best apps aid productivity by helping small business teams work smarter, not harder. Tip: look for software that’s fast to get started, intuitive and easy to use. Look also for features such as automatic prompts and reminders for added efficiency.

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A good employee recordkeeping app can save money by managing risk. You gain peace of mind and sleep better knowing your small business has the tools to comply with complex recordkeeping requirements, just like large corporations.

Here’s one other huge benefit of technology: electronic records instead of paper. Maintaining hard copies of employee records not only requires a large amount of physical space but also demands extreme organization. The average employee wastes 400 hours each year searching for paper documents.

Electronic documentation is gaining traction over paper, according to ComplyRight. It’s no surprise why. When records are stored electronically, information is consolidated in one place and easily searchable. Staff can retrieve employee data in a few clicks.

And as your company grows, and records multiply, electronic recordkeeping systems make it easier to organize and retrieve growing volumes of data. Without the drag of inefficient paper, you can scale your business faster, too.

Where to Find Employee Recordkeeping Help

To see a thorough list of employee recordkeeping requirements and identify the ones that apply to your business, download the free “Employee Record Retention Guidelines for Employers and HR Managers” from ComplyRight.

And check out the Employee Records App from HRDirect. It’s free and quick to get started — and it simplifies managing employee records.

Manager Photo via Shutterstock

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