How Long Should You Keep Payroll Records: FLSA and IRS Rules

Under federal law, you generally need to keep payroll records for at least three to four years: three years for core wage-and-hour data under the Fair Labor Standards Act, and four years for employment tax records under IRS rules. Several related categories carry their own timelines, and some states require longer. The safest approach to how long to keep payroll records is to identify which rule applies to each document and follow the longest applicable period.

FLSA Wage and Hour Records

The Fair Labor Standards Act, through 29 CFR Part 516, splits payroll records into two tiers.

Core payroll records must stay on file for at least three years from the date of last entry. These include each employee’s full name, home address, occupation, pay rate, hours worked each workday and workweek, total straight-time earnings, overtime pay, total wages per pay period, deductions, and payment dates.¹

Supplementary records carry a two-year retention period. That category covers the day-to-day backup: time cards showing daily start and stop times, production tallies used to calculate piece-rate pay, wage rate tables, and shipping or billing records kept in the normal course of business. The clock starts from the date of last entry for time records and from the last effective date for wage rate tables.²

The distinction matters when you decide what to purge. After two years you can shred the daily time sheets, but the payroll summaries built from those sheets need to stay another year. Three-year records are the “what did we pay” layer; two-year records are the “how did we calculate it” layer.

IRS Employment Tax Records

Employment tax records get a longer window. Under 26 CFR 31.6001-1, you must keep all records related to income tax withholding, Social Security and Medicare contributions, and federal unemployment tax for at least four years. The clock starts from the later of the tax due date or the date the tax was actually paid.³

This covers W-4 forms that govern withholding amounts, quarterly 941 filings, annual W-2 wage summaries, and the underlying data supporting Form 940 (federal unemployment tax). Keep copies of every return you file, plus the records behind the numbers: total payments to employees, exempt payments, taxable wage calculations, deposits made, and any credit adjustments.⁴

The four-year minimum assumes your returns are accurate. If you underreport income by more than 25 percent of gross income, the IRS assessment window stretches to six years. If you never file or file a fraudulent return, there is no time limit at all.⁵

FMLA Leave Records

Employers covered by the Family and Medical Leave Act must keep FMLA-related records for at least three years. Required documentation includes the dates leave was taken, hours of leave when taken in partial-day increments, copies of written leave notices from employees, copies of written notices you gave employees, benefit plan documents, premium payment records, and records of any disputes over whether leave qualifies.⁶

Medical certifications and recertifications need special handling. Any records containing an employee’s or family member’s medical history must be stored in confidential files separate from the regular personnel folder. If the Americans with Disabilities Act also applies, access is limited to supervisors who need to know about work restrictions, first-aid personnel, and government investigators.⁶

Form I-9 Employment Verification

Every employer must keep a completed Form I-9 for each employee hired after November 6, 1986. The retention formula is three years after the date of hire or one year after employment ends, whichever is later.⁷

The math plays out differently based on tenure. An employee hired in January 2024 who leaves in March 2024 triggers a retention deadline of January 2027 (three years from hire), because that date falls after March 2025 (one year from termination). Someone hired in January 2020 who leaves in December 2025 must have their I-9 kept until December 2026, since three years from hire has already passed.⁸

Civil fines for I-9 paperwork violations currently range from $288 to $2,861 per form, with amounts climbing for substantive errors or patterns of non-compliance. A simple spreadsheet that calculates each employee’s retention deadline prevents accidental early destruction.

OSHA Injury and Illness Records

Employers required to maintain OSHA logs must save the 300 Log, the annual summary, the 301 Incident Report forms, and any privacy case list for five years following the end of the calendar year the records cover. An injury logged in October 2026 must remain on file through December 31, 2031.⁹

Five years is the longest standard federal retention period most employers will encounter for payroll-adjacent records. Because workers’ compensation claims and personal injury lawsuits can surface years after an incident, these often end up being the most consequential records you keep.

Personnel and Anti-Discrimination Records

Federal anti-discrimination laws enforced by the EEOC impose a baseline one-year retention period for personnel records. This covers hiring documents, promotion and demotion records, pay rates, termination paperwork, and selection-for-training records. The clock runs from the date the record was created or the personnel action occurred, whichever is later. For involuntary terminations, keep the terminated employee’s records for one year from the date of termination.¹⁰

The Age Discrimination in Employment Act adds more: payroll records must be kept for three years under the ADEA, and employee benefit plans or written seniority systems must stay on file for the entire time the plan is in effect plus one year after it terminates.¹¹

Independent Contractor Records

Payments to independent contractors reported on Form 1099-NEC follow standard income-tax recordkeeping rules rather than employment-tax rules. The general IRS guidance is to keep records supporting an item of income for three years from the date you filed the return reporting that income, or two years from the date you paid the tax, whichever is later.⁵

Hold onto copies of each 1099-NEC you issue, the W-9 you collected from the contractor, invoices, contracts, and proof of payment. If the IRS later reclassifies a contractor as an employee, you’ll want every document that supports your original classification. A practical rule: keep contractor records for at least four years, matching your employment tax records, because a reclassification dispute could pull them into the employment-tax orbit.

State Rules That Extend Federal Minimums

Federal timelines are a floor, not a ceiling. A number of states require employers to keep payroll records for longer periods, with some mandating retention for six years or more. These extended windows often track the state’s statute of limitations for wage claims, which can range from under a year to six years depending on where you operate. State unemployment insurance records typically carry their own three-to-five-year retention requirements.

Check your state’s department of labor website for the specific retention period and use whichever timeline is longest. If you operate in multiple states, the state with the longest requirement effectively becomes your company-wide standard, because managing different destruction schedules state by state invites mistakes.

Quick-Reference Retention Table

Core payroll records (FLSA): 3 years from date of last entry
Supplementary records (time cards, wage tables): 2 years
Employment tax records (W-4, W-2, 940, 941): 4 years after tax due date or payment date, whichever is later
FMLA leave records: 3 years
Form I-9: 3 years after hire or 1 year after termination, whichever is later
OSHA 300 logs and incident reports: 5 years after end of calendar year covered
Personnel records (EEOC): 1 year from record creation or personnel action
ADEA payroll records: 3 years
Benefit plans and seniority systems (ADEA): full duration of plan plus 1 year
Independent contractor records (1099-NEC): 3 years from return filing (4 years recommended)

When a Legal Hold Overrides the Schedule

Normal retention schedules stop applying the moment you receive notice of a lawsuit, government investigation, or EEOC charge. At that point, you must preserve every record that could be relevant until the matter reaches final disposition, including all appeals. After an EEOC charge, “final disposition” means the later of the date litigation ends or the expiration of the 90-day window for the charging party to file suit after receiving a right-to-sue notice.¹¹

Issue a written litigation hold to everyone who handles records as soon as you learn of a potential claim. Routine destruction that wipes out relevant documents after you knew about a dispute can lead to sanctions and adverse inferences in court.

Penalties for Failing to Keep Records

The consequences go beyond fines. In a wage dispute, missing records shift the burden of proof. If an employee claims they worked unpaid overtime and you can’t produce time records, courts will typically accept the employee’s reasonable estimate of hours worked. That dynamic alone makes retention far cheaper than the alternative.

On the fine side, the DOL adjusts civil money penalties for inflation annually. The most recent FLSA penalty figures effective January 16, 2025 include $1,313 per violation for homeworker recordkeeping failures and $2,515 per violation for repeated or willful minimum-wage or overtime violations.¹²

I-9 violations start at $288 per form for technical errors and reach $2,861 per form for more serious paperwork failures. OSHA recordkeeping violations carry their own schedule. State labor agencies often impose additional fines that can exceed federal amounts. Penalties add up per violation, per form, or per employee, so a single audit covering dozens of workers can generate a bill in the tens of thousands.

1
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers
2
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers – Section: Subpart A
3
eCFR. 26 CFR 31.6001-1 – Records in General
4
Internal Revenue Service. Employment Tax Recordkeeping
5
Internal Revenue Service. How Long Should I Keep Records
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eCFR. 29 CFR 825.500 – Recordkeeping Requirements
7
USCIS. 10.0 Retaining Form I-9
8
Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens
9
OSHA. 29 CFR 1904.33 – Retention and Updating
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eCFR. 29 CFR 1602.14 – Preservation of Records Made or Kept
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U.S. Equal Employment Opportunity Commission. Recordkeeping Requirements
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U.S. Department of Labor. Civil Money Penalty Inflation Adjustments