The Lowdown on Payroll Records

December 28, 2017

Keeping appropriate payroll records may seem like a daunting task. Lucky for you, we've made a downloadable payroll record checklist for just this reason.

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Record keeping. It’s easily one of the biggest responsibilities a Human Resources professional manages. And it’s a very important one, too. Federal and state law mandate how long you must maintain certain employment records. For the purpose of this article, we’re just going to discuss federal requirements. It’s a good idea to check with your state’s Department of Labor and Employment website to ensure your company is in compliance. If your state law conflicts with federal law, follow whichever requirement is longer.

Please also feel free to ask a member of the Journey team if you have any specific questions regarding record keeping.  Journey will be able to provide you answers, or depending on the questions and need, you’ll be connected to a local HR professional.

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The Fair Labor Standards Act (FLSA) outlines how long employers should retain all employee records, not just payroll records. We thought we’d provide you with a outlines how long employers should retain all employee records to help you keep that all-important employee information organized and easily referenced. But first, let’s dig into what information goes into payroll records.

Payroll Records 411

First: the general information. That includes the employee’s full name, social security number, complete address, signed offer letter, and other information that you’ll find on the Payroll Record Checklist.

  • Employee’s full name
  • Social Security number
  • Complete address
  • Birthdate (if younger than 19)
  • Gender
  • Occupation
  • Signed offer letter

You’ll also need to keep track of time-related information such as when the work week starts,  (It’s not always Monday!) and time and attendance records.

  • Day and time the work week commences
  • Time clock and/or other time and attendance records
  • Total daily hours worked
  • Total pay period hours worked
Related:  The History of Compensation: Where Your Salary Came From

Following that is pay-related information. This includes the employee’s W-2 form, regular and applicable overtime, bonus and commission wages, payroll deductions, and raise documentation.

  • Pay rate (hourly or pay period)
  • Regular pay rate
  • Total pay period straight-time wages
  • Total pay period overtime wages
  • Additional wages (bonus pay, commission)
  • Expense reimbursement documentation
  • Payroll deductions and documentation
  • W-4 Form
  • State withholding form, if applicable
  • Pay records for each period (includes date the wages are paid and the pay period)
  • Time off history and associated pay period(s), and remaining time available
  • Direct deposit authorization
  • W-2 Form(s)

Got it. Now how long do I need to hold onto all this?

The easy answer is three years. That’s what the FLSA requirements mandate. But really, you’ll want to hold onto different types of records for different periods of time. And don’t forget to check with your state to determine what those laws require.

4 1In a nutshell, you’ll want to hold onto records that document how you determined the employee’s pay rate for two years. Keep payroll records for three years. Employment tax records need to be retained for four years. It’s a good idea to hold onto individual employee records for five years after a termination, as evidenced by recent lawsuits.

“Maintaining a strong record keeping policy is one of the best HR practices that a company can do, and Journey can help with this,” says Jaime Zuder of Journey Employer Solutions.  “Journey provides the tools to keep all of those important HR records electronically. We encourage our clients to review our demo page, or reach out to us directly on how to take full advantage of Journey’s technology.  In the long run, it makes everything you do more efficient, when all your payroll, tax, and HR data is stored electronically in one place.”

Related:  Transitioning Payroll Companies: Taking the Pain out of the Move

“Accurate record keeping is essential for businesses to maintain.  It’s important for employers to have these records readily available in case of a wage and hour audit.  In addition, some states require employees to have access to their personnel records upon request.  Establishing a consistent process for the business from day one will help to ease the burden if/when a request is made.” – Andrea Rainey – SPHR, an HR Business Partner with Strunk HR, LLC.

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