payroll

How Long To Keep Payroll Records? A Guide for Small Businesses

Federal, state and local laws require you to keep payroll records. Learn how long you should keep each type of record to avoid penalty.

Stefana Zaric
Written by Stefana Zaric
March 27, 2022
Contents
Need help onboarding international talent?
Try Deel

Every business, regardless of size, must keep payroll records to comply with federal and state laws. 

An employee may request access to old pay stubs as proof of income, or a court may require payroll records in the case of a lawsuit. If a business cannot provide these records, it may face fines and other legal penalties.

So, the question stands: how long do you have to keep payroll records? The answer ranges between two and four years, depending on the document. Many businesses keep payroll records for six years just to be safe

This guide explains how long to keep each type of record, complete with a comprehensive payroll recordkeeping checklist. And if you’re looking for a complete guide to recordkeeping, check out our guide on employee payroll records.

Payroll records to keep for two years

Every employer covered by federal anti-discrimination laws must keep any explanation about their approach to employee payment for at least two years, regulated by the Equal Employment Opportunity Commission (EEOC). To be clear, these are not wage statements themselves but explanations of wages.

The EEOC’s description includes documents that have anything to do with:

  • wage rates
  • collective bargaining agreements
  • job evaluations
  • seniority and merit systems

Once the two-year period expires, an employer can get rid of the listed employment records.

Payroll records to keep for three years

According to the Fair Labor Standards Act (FLSA), employers must keep payroll records involving specific employee data for three years. You don’t have to use any particular form for recordkeeping as long as you comply with the FLSA Fact Sheet #21 (PDF), which the US Department of Labor (DOL) keeps up to date.

Employees must be able to provide a pay stub that contains the following information for each non-exempt employee over the past three years:

  • Full name
  • Social security number
  • Sex listed on government ID
  • Birthdate (for employees younger than 19)
  • Address and zip code
  • Occupation
  • Day and time when the employee’s workweek begins
  • Hours the employee works each day
  • Total hours the employee works per week
  • The basis of employee payment (hourly wage, day rate, salary, etc.)
  • Date of payment and pay period 
  • Hourly pay rate
  • Standard rate earnings
  • Overtime earnings 
  • Total wages paid each pay period
  • Additions to or deductions from an employee's wage


Additional requirements: You must keep a record of family medical leave (FMLA leave) for three years. You also must keep I-9 forms for three years after the hire date and one year after the termination date.

How long do you need to keep payroll tax records?

As the Internal Revenue Service (IRS) prescribes, employers must keep all payroll tax-related records for at least four years. These include: 

  • Employer identification number (EIN)
  • Amounts and dates of all wage and pension payments
  • Names, social security numbers, addresses, and occupations of employees
  • Copies of Form W-2 returned and marked as undeliverable
  • Employment dates
  • Amounts an employee received while on sick leave and the period they were absent
  • Copies of employees’ tax withdrawing certificates such as a Form W-4, W-4P, W-4S, and W-4V
  • Amounts and dates of every tax deposit you made
  • Records of in-kind benefits
  • Copies of filed tax returns
  • Allocated tips

State requirements for payroll taxes

At the federal level, US employers must keep payroll tax records for at least four years. However, each state has its own requirements. Most of these recordkeeping requirements are between three and eight years.  

In Arizona and California, for instance, the law requires employees to keep payroll tax records for the standard four calendar years. But in Illinois, you only need to keep these records for three years or six months after the termination date (whichever is longer).

Automate your tax document collection

Focus on your business, not your taxes. Deel automatically collects and stores all your tax documents so you never have to worry whether you missed filing a form.

Learn more

Why do some companies keep payroll records for six years? 

The above record retention requirements are a minimum. Keeping payroll information as long as possible can save you headaches and protect your business. The Small Business Association advises keeping payroll documents and employee records for six years to ensure you stay compliant with all relevant laws.

Related: our guide to small business payroll and taxes.

Payroll recordkeeping checklist

Worried about compliance? Use our payroll recordkeeping checklist to adhere to federal law. 

Record

Description

How long to keep

Work schedule

Employers must keep records outlining when an employee is scheduled to work within a given pay period.

Two years

Time card



According to FLSA, employers must keep records containing employees’ total hours within the pay period.



Two years

Wage rate tables

Employers use wage rate tables to determine employees’ pay based on specific variables, such as employee type, work type, or project type. 

Two years

Pay grade increases

Pay grade increase records contain information about any employee increase in pay.

Two years

Employee’s full name and social security number

The FLSA requires employers to keep records containing specific information identifying an employee, such as full name and social security number.

Three years

Employee address 

Employers must keep information such as employee address, including zip code. 

Three years



Employee birthdate

Under FLSA, businesses must record the birth dates for all employees under 19. 

Three years

Employee gender

An employer must keep a record of an employee’s sex. 

Three years

Occupation

Employers must keep records of employees’ job titles. 

Three years

Workweek start time

Employers must keep track of the day and time an employee’s workweek begins. 

Three years

The total number of hours worked

Every employer must record the total number of hours worked per day or workweek. 

Three years

Basis of wage pay

FLSA mandates employers keep records of the basis on which employees are paid. 

Three years

Standard time earnings 

Every employer must keep records of employees’ daily or weekly standard (non-overtime) earnings. 

Three years

Overtime earnings

FLSA mandates that employers keep records of the total overtime earnings of employees (weekly). 

Three years

Additions to and deductions from wages

Employers must also keep records of wage additions and deductions. 

Three years

Total wages paid

Every employer must keep track of the total wages paid each pay period. 

Three years

Pay periods

According to FLSA, employers must keep records of the payment date and pay period covered. 

Three years

Form I-9

Form I-9 verifies employment eligibility in the US for each employee, so the US Citizenship and Immigration Services (USCIS) mandates employers keep a record of it. 

Three years after the hire date or one year after the termination date. 

EIN

The IRS mandates employers keep a record of their employer identification number.

Four years

Dates and amounts of wage and pension payments

The IRS prescribes employers keep records of amounts and dates of wage and pension payments. 

Four years

Amounts of reported tips

Employers must keep records of amounts of tips reported to comply with the IRS’s recordkeeping requirements.

Four years

Fair market value of in-kind wages paid

Also, to stay compliant with the IRS’ employment tax records regulations, employers must keep records of the fair market value of in-kind wages paid.

Four years

Identifying information

Employers are required to keep records of names, social security numbers, addresses, and occupations of employees to meet IRS’ recordkeeping requirements. 

Four years

Returned W-2 Forms

An employer must keep records of every Form W-2 returned and marked as undeliverable. 

Four years

Dates of employment

According to IRS employment tax records regulations, every employer must keep records of every employee’s employment date. 

Four years

Absentee pay

The IRS prescribes that employers keep records of any period an employee was paid for during the sick leave and the amount paid by the employer or third-party payers within that period. 

Four years

Income tax withholding certificates

Every employer must keep copies of an employee’s income tax withdrawing certificates (W-4, W-4P, W-4S, and W-4V).

Four years

Tax deposits

Employees must keep records of whenever they made any tax deposit (dates and amounts).

Four years

Tax returns

Employers must keep copies of tax returns to comply with the IRS’ employment tax records regulations.

Four years

Allocated tips

According to the IRS, employers must keep records of allocated tips. 

Four years

Fringe benefits

Every employer must keep records of their fringe benefits. 

Four years

Deel helps you manage payroll and keep payroll records stress-free

Stressed about payroll record retention? We’re here to help. Deel offers a global payroll software that makes it easy to pay your team, stay on top of payroll taxes, and keep records organized. 

Sound like something your business could use? Learn more about global payroll and book a demo to see Deel in action.

This guide is provided for informational purposes. Consult a legal professional or official sources for more information.

Deel makes growing remote and international teams effortless. Ready to get started?

+

Countries

+

Customers

+

Legal experts

+

Currencies