How Long Should We Keep Timesheets?
Employee timesheets are critical for recording wages due, time off accruals and employee absences. Many employers store their employees’ time and payroll records as a backup to their payroll processing method. Historical records are helpful if you have to double-check employees’ wages, tax withholding and payroll deductions. However, federal laws mandate how long employers must maintain an employment record, which includes the period for which employers should maintain time records as well. According to federal laws, employers should retain timesheets for a minimum of two years.
Employment records comprise information about the employee’s job assignments, performance, discipline or corrective action, and any contracts or agreements, such as a collective bargaining agreement or employment contract. Compensation information is also a part of an employee’s record, together with time records that generally contain personal information such as the employee’s Social Security number, wage rate, exempt or nonexempt classification, vacation or paid time off accrual rate, and in some cases, overtime or differential pay rate.
Depending on an employer’s recordkeeping practices, timesheets are part of the employment record or stored separately as payroll records. Either way, time records and timesheets are considered an employment record and are, therefore, subject to certain laws that mandate employers’ recordkeeping obligations.
Employers subject to the Fair Labor Standards Act must follow regulations governing minimum wage, overtime pay, exempt and nonexempt classification, and recordkeeping pertaining to everything concerning employees’ pay. The FLSA doesn’t require a specific format for maintaining employee timesheets, but the agency does require that employers maintain certain detailed information concerning nonexempt employee time and pay.
Record retention for payroll records and labor union contracts is three years. For timesheets and records containing specific information such as days worked, deductions, withholding and other details, the requirement is two years. Best practices for human resources would likely recommend maintaining all records concerning employee pay and compensation for three years, because there’s significant overlap between records employers must retain for two years and records that employers need to keep for three years.
There are separate requirements for the types of records employers should maintain for exempt workers; however, it’s in employers’ best interests to maintain records in similar fashion and for an equal time period. Doing so benefits employers in case questions arise related to comparisons between exempt and nonexempt workers. When employers keep exempt employee records based on a totally different process than nonexempt employees, it’s difficult to justify HR practices concerning exempt vs. nonexempt pay if records aren’t maintained in a consistent manner for the same length of time.
The federal government makes it easy for employers to sort out what they need to retain and for how long by establishing similar, cross-agency recordkeeping rules. The U.S. Equal Employment Opportunity Commission enforces antidiscrimination laws and as part of its enforcement authority, it requires that employers maintain payroll and other employment records for three years. In fact, the EEOC says that records that could become part of a claim under the Equal Pay Act should be retained for at least three years. Employment records, including time records that are part of an official charge of discrimination, must be retained until final resolution.