Strategies for Effective Records Management

It takes time, money and precious man-hours to maintain organized business records. However, many processes depend on effective records management, so this isn’t a task that can be taken for granted. Compliance with federal and state regulations requires that certain employee records be maintained for a pre-set minimum period.

Personnel files are traditionally paper based because certain documents in the file need to be signed, witnessed and made available to regulatory authorities as needed. This can make file maintenance tedious, so human resource specialists need a system that will help them decide what records to keep, what to discard and when.

Form I-9

Each employee is required to complete the Form I-9 and present a valid proof of identity and work authorization that is verified by personnel. I-9 forms are retained for three years from the date of hire or until one year after the end of employment, whichever comes later. In line with privacy considerations, the I-9 should be kept as a master file separate from individual personnel files. If an I-9 compliance review is ever required, other employee records won’t be exposed to third parties.

Basic Employment Records

Basic personnel records include the application form and work contract, containing demographic information. Additionally, records of hours worked and wages earned, promotions and employee evaluation should be retained for two to three years, depending on the type of record. Even when the employee is terminated, records must be kept for at least a year from the date of separation.

Wage Records and Payroll-related Documents

Payroll records should be retained for at least three years from the creation date although new regulations related to the passage of the Lilly Ledbetter Fair Pay Act may change these guidelines. Vacation pay records and other information that backstop the data on employees’ wage statements need to be maintained for at least three years.

Federal or state laws do not specifically list automatic deposit forms showing wages credited to employees’ accounts, but it makes sense to keep these records on file based on the three-year guideline.

Effective Records Management Practices

Outsourcing payroll functions provides a way to rationalize workflow in the human resources department. For seamless interface with businesses, third party payroll specialists use digital records transmitted electronically to clients, reducing the paperwork involved.

New regulations could make records management an even bigger headache for small to medium businesses. Consider outsourcing some of these back office functions to professionals who can ease the load and create a system that works for your company.