Posted on January 22nd, 2019
Did you know that you have to provide copies of payroll records on demand? Read on to learn more.
Your employee demands to see a copy of their payroll records — but you haven’t saved the information on file.
Could you get into legal trouble? Unfortunately, the answer is yes.
As a California business owner, there are countless different rules and regulations that you try to keep track of. One of those rules now involves giving both past and present employees a chance to see their paycheck records on demand.
Wondering what the law says, and how to avoid trouble? We’ve got all the information you need here. Keep reading to learn how and why to provide employees with payroll records.
Why Employees Might Need Payroll Records
Do employees really need to see their old payroll records? The law says yes — but let’s take a look at some of the reasons why the request might get made.
Many times, an employee who wants to see their paycheck records is planning litigation. Knowing this will help you prepare for what’s coming. You should generally expect some type of conflict coming up when an employee wants to see their payroll records and prepare accordingly.
They could be working with an employment lawyer who is looking into their employment history. However, the lawyer can’t request to view the records — only the employee can do that.
Having the documents ready to go can help your legal case later on. If you follow the laws and have the correct information available for employees, it may be harder for a lawyer to build a case against you.
The Laws Governing Paycheck Records
Why do you have to give employees payroll records when they request them? Because in California, it’s the law.
As of this year, Labor Code Section 226 requires employers like you to offer not just current, but former employees these records when they ask for them.
Prior to this year, the law required businesses to allow these employees to look at or make copies of their records.
But a new bill signed into law this fall made it so you have to actually provide the employee with a copy of the information, not just make it available for them to view.
How Long to Keep Payroll on File
California law requires that employers keep payroll records on their past employees for at least six years. This may sound like a long time, but it’s important to follow these guidelines so you won’t run into trouble.
However, once the six-year time limit is up, it’s a good idea to destroy any payroll records, as they might contain sensitive personal information.
That way, you won’t have extra information laying around where it’s at risk of being compromised.
How to store these records? For many companies, it will make the most sense to store it online. But if you are storing physical copies of records, you’ll want to make a particularly organized system.
For example, you could color-code your files based on what’s in them, and who is allowed to see them. Employee payroll records should be off-limits to most of your staff and only accessed by supervisors when absolutely necessary.
What to Do When an Employee Requests Payroll Records
Let’s take a look at the step-by-step process of an employee making a payroll records request, and what you should do in each step along the way.
1. Request Made
In California, employees are allowed to make both written or oral requests for their payroll records. Even if the request isn’t in writing, you still need to comply.
NOTE: If you feel like the employee is potentially going to sue you contact an attorney immediately before handing over the records!
After the request is made, you have three weeks — 21 days — to comply with the request. If you miss the deadline, the penalty is $750. That’s why it’s so important to have your records ready to go at a moment’s notice.
Chances are, the employee won’t tell you why they’re requesting their records. They also don’t need to give you a reason: you’re legally required to give the records upon request, without any reason given.
A wise former employee will also make a respectful request. However, some might use rude language in their request, if their employment ended on bad terms. It’s always important to save copies of your correspondence with employees. But if the request uses unprofessional or abusive language, that might become an especially important document to show in court later.
2. Records Given
Now, it’s upon you to give the records to the employee requesting them.
They might give you a deadline that they need the records by. However, you’re not required to meet this deadline. You just need to make sure you provide the records before the 21-day deadline.
You and the employee may decide how the records will be provided. If they request hard copies, you must send them. But they might decide that they’d rather view the records on-site, or at a third place that works for everyone involved.
3. Follow-Up
Once the records have been requested, you won’t know what happens next until it happens. However, it’s good to be prepared for litigation to follow this type of request.
Make sure to seek out legal counsel, or alert your existing legal team, after this kind of request is made. That way, you’ll be prepared for the steps that might happen next. If possible, your legal team will help you resolve as many issues as you can before litigation begins.
Do You Have the Defense You Need?
After receiving a request for payroll records, you might find yourself worried that you don’t have the proper legal advice you need to move forward.
We’re here to help. As a small business owner, we understand that you might not have a lot of financial resources to use for this problem.
That’s why we offer a free 15-minute consultation to help you know what to do next — book yours here.
