How Long Do You Have To Keep Payroll Records?

how long to keep payroll records
5
min read
April 7, 2021

Payroll records help you stay organized, but how long do you have to keep them for?

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While there are a few payroll records you can offload at the two-year mark—including records that pertain to pay grade increases, timecards, schedules and wage rate tables—you will need to keep the majority of your payroll records on hand for at least three years.

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As the years pass and you hire more hourly employees, those payroll records can quickly become a lot to keep track of. So, the question is, what are the specific recordkeeping requirements? And which records can you take off your hands (and out of your office)?


Let's review how long you need to keep different types of payroll records—and when it’s safe to clear them out.

Why Is Keeping Payroll Records Important?

First things first—before we jump into how long to keep your payroll records, let’s talk about why proper recordkeeping is so important in the first place.


Federal, state, and local laws require you to keep your payroll records. If you don’t keep them, not only are you breaking the law, but you’re putting yourself at serious risk. If you were to ever get audited, sued, or have any other type of legal action brought against you or your small business, you wouldn’t have the records to defend yourself—and you could lose a lot of time, money, and energy as a result.


Clearly, payroll record retention is a must for protecting your business. But again, the question is—how long do you need to retain those records?

Payroll Records To Keep For Two Years

Different types of payroll records have different retention requirements—or, in other words, you can get rid of some of your payroll records sooner than others. But the very soonest you can get rid of any payroll records? Two years—and even at the two-year mark, there are very few payroll records you can get rid of: 


The first type of payroll record you can get rid of after two years are any records concerning pay grade increases. According to the United States Equal Employment Opportunity Commission (EEOC), “employers must keep for at least two years all records (including wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements) that explain the basis for paying different wages to employees of opposite sexes in the same establishment.”


According to the US Department of Labor (DOL) Wage and Hour Division, you can also offload records on which wage computations are based at the two-year mark, including timecards, work and time schedules, and wage rate tables.

Payroll Records To Keep For Three Years

While there are a few records you can offload at the two-year mark, you’ll need to keep the majority of your payroll records on hand for at least three years.


Under the Fair Labor Standards Act (FLSA)—and as summarized by the Department of Labor (DOL)—employers must keep the following employment records and payroll information on all non-exempt employees for at least three years:


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The FLSA doesn’t require employers to use any particular form in their recordkeeping; how you track this information is up to you. Just make sure to keep payroll records with all the required identifying information for each employee on hand for at least three years to comply with the FLSA record retention requirements.


According to the US Citizenship and Immigration Services (USCIS), you’ll also need to keep I-9 forms for three years after the date of hire or one year after the date of termination—whichever is later. 

How Long Does The IRS Require You To Keep Payroll Tax Records?

Any records having to do with payroll taxes, you’re going to need to keep on hand for longer—more specifically, for four years.


According to the Internal Revenue Service (IRS), you’ll need to keep all records of employment taxes (and, if necessary, make them available for IRS review) for at least four years, including:


Want To Play It Safe? Keep All Your Payroll Records For Six Years

When you have a lot of employees, keeping track of payroll records—and how long to keep them—can feel overwhelming. And while the time companies keep records on file varies between two and four years (depending on the record), the Small Business Association (SBA) recommends businesses keep their payroll records for six years.

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Because different federal government agencies, states, and local municipalities may have different requirements, keeping your records for six years (instead of four) will ensure you’re in compliance with all relevant employment laws—and that your business is protected if anyone requests those records. Here's a payroll records checklist you can use to stay compliant:

Payroll Records Checklist
Payroll recordsWhat the record isHow long to keep the record
Time cardUnder the Fair Standards Labor Act (FLSA), employers must keep records on which wage compensation are based—including time cards, which keep track of the total hours an employee works during a pay period (including daily clock in time, clock out time, and mandated rates).Two years
Work schedulesAnother wage computation record employers need to keep on file are work schedules, which outline when each employee is scheduled to work during the pay period.Two years
Wage rate tablesAnother wage computation record employers need to keep on file are wage rate tables, which are used to determine employee pay based on variables like project type, work type, or employee type.Two years
Pay grade increasesAnother wage computation record employers need to keep on file are pay grade increases, which outline any increases in pay grade for the employee.Two years
Employee's full name and social security numberThe FLSA mandates employers keep employment records for each employee that contain certain identifying information, including the employee's full name and social security number.Three years
Employee addressUnder the FLSA, employers must also keep a record of the employee's address and zip code.Three years
Employee birth dateUnder the FLSA, employers must also keep a record of the birth dates for all employees under the age of 19.Three years
Employee's sexUnder the FLSA, employers must also keep a record of the employee's sex.Three years
Employee's occupationUnder the FLSA, employers must also keep a record of the employee's occupation/job title.Three years
Workweek start timeUnder the FLSA, employers must also keep a record of the time and the day of the week the employee's workweek begins.Three years
Total number of hours workedUnder the FLSA, employers must also keep a record of the total number of hours worked each work day and workweek.Three years
Basis of wage payUnder the FLSA, employers must also keep a record of the basis on which employee's wages are paid (for example, "$15 per hour" or "$750 per week").Three years
Total straight-time earningsUnder the FLSA, employers must also keep a record of the total daily or weekly straight-time earnings.Three years
Total overtime earningsUnder the FLSA, employers must also keep a record of the total overtime earnings for the workweek.Three years
Wage additions and deductionsUnder the FLSA, employers must also keep a record of any and all additions to or deductions from the employee's wages.Three years
Total wages paidUnder the FLSA, employers must also keep a record of the total wages paid each pay period.Three years
Pay periodsUnder the FLSA, employers must also keep a record of the date of payment and the pay period that payment covers.Three years
Form I-9Under the US Citizenship and Immigration Services (USCIS), employers must keep a record of Form I-9—which verifies employment eligibility in the United States—for each employee.Three years or one year following the date of termination (whichever is longer)
EINThe IRS requires employers to save all records of employment taxes, including a record of your employer identification number (EIN).Four years
Dates and amounts of all wage, annuity, and pension paymentsTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of the amounts and dates of all wage, annuity, and pension payments.Four years
Amounts of tips reportedTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of the amounts of tips reported.Four years
Fair market value of in-kind wages paidTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of the fair market value of in-kind wages paid.Four years
Identifying informationTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of the names, addresses, social security numbers, and occupations of employees and recipients.Four years
Undeliverable Form W-2sTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of any employee copies of Form W-2 that were returned to the employer as undeliverable.Four years
Dates of employmentTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of the dates of employment for each employee.Four years
Absentee payTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of any periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third-party payers made to them during and/or for said period.Four years
Income tax withholding certificatesTo ensure compliance with the IRS' employment tax records regulations, employers must also keep copies of employees' and recipients' income tax withholding certificates (including Forms W-4, W-4P, W-4S, and W-4V).Four years
Tax depositsTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of dates and amounts of any tax deposits the employer made.Four years
Tax returnsTo ensure compliance with the IRS' employment tax records regulations, employers must also keep copies of returns filed.Four years
Allocated tipsTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of allocated tips.Four years
Fringe benefitsTo ensure compliance with the IRS' employment tax records regulations, employers must also keep records of any fringe benefits provided, including substantiation.Four years

Let Hourly Keep Track Of Your Payroll Records For You

Manually managing and maintaining your payroll records on your own can take a lot of time, energy, and resources. With Hourly, you don’t have to worry about how, where, or how long to keep your payroll records. We’ll take care of organizing your employee information and keeping all relevant files on record. And if you ever need employee payroll information—whether from last month or last year—you can easily access your records through our mobile app.

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Want to experience first-hand how Hourly can help you manage the payroll process? Sign up for your 14-day free trial today!

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