Posted on March 18th, 2025
California Employers: Don’t Get Caught Off Guard—5 Essential Record Retention Reminders
As a California business owner, managing employee records is one of the most critical tasks you face. Ensuring that you retain the right records for the required amount of time is not just a good business practice—it’s required by law. Failing to do so could result in costly fines, lawsuits, and compliance issues that can negatively impact your company. Let’s dive into five essential record retention reminders that every California employer should know in 2025.
1. Keep Employee Time Records for at Least 4 Years
California labor law mandates that employers keep accurate records of employees’ start and stop times, meal breaks, and total hours worked. These records are crucial in the event of a wage dispute, as the law allows employees to file claims for unpaid wages going back four years.
What you need to do:
- Ensure that your timekeeping system is accurate and complies with California regulations.
- Regularly audit your timekeeping system to confirm it is tracking the required data.
- Implement a process that allows employees to report any issues with timekeeping systems immediately.
2. Pay Stubs & Schedules: Back Them Up!
Employers are required to retain pay stubs for at least three years. However, many experts recommend holding onto them for four years due to the statute of limitations on wage claims brought under the Unfair Competition Law. In addition, keep employee schedules for at least four years, as they are critical in defending wage claims.
Pro Tip: Avoid relying solely on payroll companies for record retention. If you change providers, you might lose access to old pay records. Store these documents securely and maintain backups to ensure compliance.
3. Keep Employee Files Secure (and for 4 Years!)
California law, specifically Senate Bill 807 (SB 807), requires employers to retain personnel files for at least four years after an employee leaves the company. This includes all records related to applications, promotions, compensation changes, and disciplinary actions. Additionally, sexual harassment training records must be maintained for at least two years.
What you need to do:
- Store all personnel records securely and confidentially.
- Keep all records of completed sexual harassment training for at least two years.
4. Form I-9: Don’t Mess This Up
Federal law requires employers to keep Form I-9 (the Employment Eligibility Verification form) for at least three years after an employee is hired or one year after the employee is terminated—whichever is longer.
What you need to do:
- Store Form I-9s separately from other personnel records for easy retrieval.
- Ensure compliance by being ready to provide Form I-9s to authorities within three business days upon request.
5. Train Your Managers on Record Retention
Having a clear record retention policy is essential, but it’s just as important to ensure that your managers understand and follow the policy. Without proper training, your efforts may be in vain.
What you need to do:
- Train managers on the proper documentation processes for employee discipline, tardiness, and any other workplace issues.
- Ensure managers know how and where to store employee records (electronically or physically).
- Provide guidance on the necessary forms to use and ensure that all documentation remains compliant with legal requirements.
Final Thoughts: Maintaining proper record retention practices is not just about staying organized—it’s about protecting your business from potential legal headaches down the road. Regularly review your retention policies and ensure your team is trained to handle employee records appropriately. The time and effort you invest now in managing your records will save you from costly mistakes in the future.
By following these five essential record retention reminders, you can rest easy knowing your business is compliant with California’s stringent laws, while also safeguarding against potential litigation. Take the time to ensure your records are in order today!
