Employers should be aware of their obligations to maintain payroll records under the Fair Labor Standards Act. Section 516.5(a) of the Fair Labor Standards Act requires the retention of certain payroll records for three years from the last date of entry and Section 516.6 requires the retention of additional payroll records for two years. Failure to maintain these records can result in the Department of Labor assessing penalties and back wages against employers.

Further, employers should treat these regulations as the minimum requirement for retention of payroll records. This is because state-specific recordkeeping laws often impose additional recordkeeping obligations for payroll records. For example, Pennsylvania’s Unemployment Compensation regulations require that an employer retain certain payroll records for four years. Such documentation can also be useful in the defense of an employment discrimination claim and help refute any employee allegations that they were not fully compensated for work performed.

Of course, if an employer anticipates litigation and payroll records are relevant evidence, an attorney should be retained, and such documents should be subjected to a legal hold process. Thus, when crafting policies to guide an organization’s information governance efforts, such as document retention and legal hold policies, employers should consider the manner that information assets are used by various stakeholders in the business as well as applicable recordkeeping laws and regulations. This allows organizations to utilize the records in a manner that maximizes their usefulness to an organization while minimizing costs and legal risk.

If your organization is seeking support with information governance, our team has solutions to assist clients in their efforts to maximize the usefulness of information assets while minimizing the cost and risk associated with their use. At CODISCOVR, we deliver client-focused, defensible, and solutions that are tailored to each organization’s specific needs. Reach out to Nicholas Berenato, Information Governance Principal, CODISCOVR. Nick is an attorney that collaborates with clients to address legal and financial exposure from their information assets through information governance. He develops strategies and policies to enable clients to effectively manage their data in a manner that minimizes costs and allow clients to leverage their data to support their business processes.