What Does a Retention Schedule Detail? (Free Downloadable Guide)

The United States requires employers to maintain a range of documents for a set period before they can be properly disposed of. HR departments need to know what a retention schedule detail, how long to keep employee files, and form a record retention schedule to ensure compliance with several Federal Government laws.

Your HR records retention schedule is designed to avoid confusion, promote proper records storage, inform your document management system, and mitigate the risk of accidental premature disposal.

In this guide, you’re going to learn what is entailed in an employee record retention chart and best practices for maintaining relevant business files.

What is a Retention Schedule?

Even smaller organizations find it difficult to manage vast amounts of data relating to their employees. Developing an HR records retention schedule involves implementing a systemic plan to establish how long various files and pieces of data need to be maintained before they can be disposed of.

Your file retention schedule will include legal and operational requirements for storage, access, and guidelines on how to securely dispose of files that no longer need to be maintained.

The Benefits of a File Retention Schedule

Successful implementation of retention schedules goes beyond a box-checking exercise. It comes with tangible business benefits that improve efficiency, reduce the risk of human error, and more.

Here are some of the reasons why having a retention schedule is critical:

• Control the continuous, exponential growth of records over the years
• Comply with all legal requirements
• Minimize the chances of litigation from employees and regulatory bodies
• Locate documents quickly
• Improve efficiency through a manageable records database

Federal regulations govern this area of records retention, but your file retention schedule must also comply with any state requirements. Seeking professional advice for your jurisdiction is essential to launching your HR records retention schedule.

State of California Records Retention Schedule

Changes to California’s law on record retention meant that current and former employees have the right to inspect and receive a copy of their records for a minimum of three years relating to their performance.

According to Labor Code Section 1198.5, inspections must be permitted at a reasonable time and interval. Employers must permit inspections no more than 30 calendar days after a request.

To comply with California law, employers are required to facilitate inspections by performing certain actions, such as maintaining records no less than three years after an employee has left the company.

These laws are complex and easy to misinterpret. It underlines the importance of seeking professional advice in California and all other states. These regulations heap additional responsibilities on employers that often go beyond federal guidelines.

A Detailed Guide to Your Business Records Retention Schedule

Starting your journey to a successful business records retention schedule begins with following a guided set of steps to take you into compliance.

Step One – Install a Universal Retention Schedule

Begin by ensuring all departments have a universal retention schedule to adhere to. Universal retention schedules function by being structured around a classification scheme that groups together similar records into broad categories. This scheme aims to create a consistent, conformist records organization system across the company.

Some examples of record classes could include:

• Records
• Vital Records
• Non-Records
• Archival Records

Each category will have its own retention schedule that complies with federal and state regulations.

Classifying by importance makes it easier to achieve compliance because legal retention periods can be appended to each category instead of particular records.

Step Two – Figure Out Document Retention Periods

Retention periods dictate how long certain records need to be maintained until they can be safely disposed of. This is where many businesses struggle because while there may be universal retention schemes, there are no universal retention periods.

Every type of record, such as payroll, taxes, medical forms, and various other types of corporate HR documentation, will have its own defined retention period.

Consulting with an attorney or HR professional can provide you with the latest guidance on document retention periods.

Step Three – Create Your Disposition Schedule

Understanding what a document retention schedule detail doesn’t stop at the records, you are required to maintain it. It must also outline how documents must be disposed of to ensure you have a data protection policy you can rely on.

Improper disposal is not only a violation of data security and privacy guidelines but can also open you up to legal action.

Sensitive information should be shredded securely, such as by taking advantage of an on-site shredding service that provides a Certificate of Destruction. The same goes for electronically stored documents on external hard drives.

Professional services specializing in electronic hardware disposal enable you to cover yourself if a breach occurs during the disposal process. Establishing these procedures early in the lifetime of your business ensures maximum data security from day one.

You may even consider outsourcing your records management system to calculate your retention dates for you automatically. These systems calculate destruction dates based on records classification, established HR retention schedules, and the date the record was created.

Step Four – Review and Update Policies Regularly

Regulatory and legal requirements constantly change at the federal and state levels. Staying updated on the latest requirements is essential to maintaining your compliance. Statutory changes could impact your retention periods.

Adjusting your retention periods appropriately for your various record categories will ensure that obsolete documents are not maintained unnecessarily and relevant employee records are kept for as long as required.

Step Five – Rollout Your System

Unlike other systems within your organization, retention schedules are not a one-time rollout. Retention schedules must become part of the company’s infrastructure and perfectly align with your new or existing records management program.

All employees must be trained and educated on retention policies and procedures within the HR department. Compliance requires a company-wide effort, meaning that the rollout of the system continues as regulations change, new technological solutions are integrated, and new HR personnel are onboarded.

Employer Requirements and Best Practices

Firstly, you need to understand how to divide employee records and the employer record retention requirements of each type of document. In this section, you will learn about the best practices that go toward creating a retention system you can rely on.

What Forms Part of Each Employee Record?

There are three divisions that make up a personnel file. Here’s a breakdown of each category and the types of documents within each:

• Personnel File Records – Resumes, job applications, pre-employment testing, performance reviews, position changes, transfers, rate changes, promotions/demotions, disciplinary actions, and job descriptions.
• I–9 Records – One completed I-9 form per employee plus any other relevant documentation.
• Medical Records – Workers’ compensation records, drug testing, hiring, ADA, and FMLA documentation.

Ensuring that these physical and electronic records are organized into the above three categories is critical for staying organized within the HR department.

Employer Record Retention Requirements for Federal Legal Compliance

The various documents within each employee personnel file have their own retention schedules. Note that federal guidelines occasionally supplant state guidelines so that you may discover some contradictions between the two.

Here’s a rundown of common documents and their retention guidelines:

• Employee Personnel Records – Four years following employment termination
• Recruitment Records/Interview Notes – One year
• I–9s – Either one year after termination or three years after hiring, whichever date is later
• Medical Records – Three years for FMLA documents and six years for HIPAA
• W–4s – Four years
• Equal Pay Justification Documents – Two years
• Title VII Records – One year
• Payroll/Tax – Four years, but some states require six years
• COBRA – Six years
• OSHA – Five years
• Form 5500 – Six years
• Employee Benefit Records – Six years post-plan termination
• Termination Records – One year

Determine an Access Policy

Data security is a significant concern for all organizations. HR departments must define access policies in accordance with data security best practices.

When determining access, ask the following questions:

• Who needs access to this document to perform their roles?
• How often do they need to access this document?
• When do they need to access this document?
• How can that individual gain access to that document?

Minimizing the number of people who can gain access to a particular document bolsters security and mitigates the exposure to liability.

Identify Retention Goals

Retention schedules are an asset to any business. Defining the triggers that lead to a particular action enable businesses to stay agile, achieve compliance, and avoid storing obsolete documentation.

For example, termination is the most common trigger event for many documents because the disposal trigger only begins from the date of termination.

Here are some parameters to consider when establishing and updating a retention schedule:

• Which documents must be kept according to the law?
• How long must each document be kept?
• Which events would trigger the archiving or disposal of a document?
• Are there any outstanding reasons that may necessitate keeping a particular document for longer?

Lower security tolerances will always lead to longer storage periods. These tolerances differ by organization, industry, size, and more.

Implement Security Categorizations

As part of your retention schedule, you should also set up a security framework for each document type based on its sensitivity.

Determine what level of security each document requires, identify whether the information within a document is required by law, and whether secure disposal is necessary for that document.

How Will You Store Your Documents?

Retention schedules and data security go hand-in-hand. Establish a plan for secure storage and archiving for your documentation. There should be a defined workflow for storage and archiving.

Many companies choose to go completely paperless to reduce the burden on their HR departments. It’s also recommended to group documents by access points.

An increasing number of firms even prepare a backup retention schedule, with different parameters and timeframes for preserving and disposing of secure backups. Creating backups is a pivotal part of disaster management, but security and retention requirements must also define how such a plan can be implemented.

Educate Your Personnel

Due to the fact retention schedules are not a one-time rollout, firms must have a system for educating personnel on legal obligations, company policies, and best practices for ensuring the security of employee personnel files and charts.

Some companies choose to designate an in-house team within HR to bring new hires up to speed, whereas others decide to outsource the responsibility.

There are no set patterns for how you maintain an HR team that’s sharp and knowledgeable. Figure out what works for your organization based on its size, needs, and budget.