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Human Resource Best Practice: Which Records To Retain

By February 3, 2012 February 19th, 2015 No Comments

27_2520977Human resource record retention in many instances has federal or state requirements for retention.  Whether it’s Federal or state mandated, there are forms that must be filed, some of which must be retained.

As well any human resource professional can attest, there is a lot of paperwork associated with hiring a new employee.

Some of these forms are necessary for complying with federal and state recordkeeping laws, while others are used to process payroll or to communicate workplace rules and practices to new employees.

The following is a list of some of these key forms:

  • I-9 (Required). Every employer must complete and retain an I-9 Form (Employment Eligibility Verification) for each newly hired employee. Section 1 of the form must be completed by the end of the employee’s first day of work and Section 2 must be completed within 3 business days. (While you may complete the I-9 before the employee’s start date, you must wait until after the job offer has been accepted.)
    Retention Period: I-9 forms must be retained for at least three years, or for one year following the employee’s separation from the company, whichever is later.
  • W-4 (Required). All new employees must complete a federal W-4 Form, Employee’s Withholding Allowance Certificate. This form tells you how much federal income tax to withhold from the employee’s pay. Some states also require a tax withholding form. Check your state law to ensure compliance. Retention Period: The W-4 must be retained for at least 4 years.
  • New hire reporting (Required). Federal law requires that employers submit certain information to their state regarding each new hire within 20 days of the employee’s start date. To fulfill new hire reporting responsibilities, employers must report: their company’s name, address, and federal Employer ID Number; and the employee’s name, address, Social Security Number, and date of hire. Typically, providing the W-4 form is sufficient for new hire reporting purposes, but some states require electronic filing and/or additional data elements. Check your state law to ensure compliance.
  • State-required forms (Required). Many states require specific forms to be provided to employees at the time of hire. For example, California requires several notices be given to new hires, including but not limited to information pertaining to state disability insurance, paid family leave, workers’ compensation, unemployment benefits, sexual harassment, and wage theft prevention laws. Many of these forms are available for download in the State & Federal Resources section of our website. Be sure to check your state law and provide new hire notices in accordance with applicable requirements.
  • Documentation to claim tax incentives (Recommended). The federal government and many states have enacted tax breaks for employers that hire new employees. Many of these tax incentives require certain forms to be completed to verify eligibility. Employers should ensure these forms are completed on or soon after the employee’s first day so they may be submitted when filing taxes. Visit the IRS website or your state’s department of revenue website for more information.
  • Payroll authorizations (Recommended). If you offer direct deposit, you should provide new hires with a direct deposit authorization form. This authorizes you to deposit their pay, or a portion of their pay, directly into their bank account each pay period. A payroll deduction authorization should also be provided for voluntary deductions, such as health insurance premiums and retirement savings plans.  Retention Period: It’s recommended that these forms be retained for at least 3 years.
  • Benefits (Recommended). All new hires should receive information about the benefit programs you offer as well as any forms required to enroll. Most major health insurers have websites with information that may help employees make their enrollment selections; refer new hires to online resources for additional information.
  • Emergency contact (Recommended). An emergency contact form lets you know who to contact in the case of an emergency. This form should be completed within the employee’s first few days of work.
    Retention Period: Indefinitely
  • Receipt of company property (Recommended). If you provide employees with company property, such as laptops, cell phones, or keys, be sure to complete a “receipt of company property” form. This form typically indicates that the employee acknowledges receipt of the company property,  and that they have a responsiblity to maintain the property in good condition. It also stipulates that the property is to be returned to the company upon separation, or earlier if requested.
    Retention Period: This form should be retained until all company property is returned.
  • Handbook acknowledgment (Recommended). Requiring employees to sign a form acknowledging that they have received and read the handbook not only demonstrates that you provided employees with important information (some of which may be required under law), but that the employee is aware of and understands the company’s policies. While the handbook should be provided to all new hires, make sure you give employees enough time to read and ask questions about the handbook before they are required to sign the acknowledgment form.
    Retention Period: Indefinitely

Since the paperwork can be overwhelming to complete, when permitted by state and federal law, new hire paperwork can be sent before the start date for the new hire.  Creating a checklist and setting timelines for completion of paperwork can help track what’s been returned and meet compliance details.

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