Employers in California should periodically review their employee documentation and record retention policies to ensure compliance with state laws. Below are five critical areas to audit as of 2025:

1. Are Employee Time Records Maintained for at Least Four Years?

California law requires employers to track hourly employees’ start and stop times, meal periods, and total hours worked. Time records are crucial in wage and hour lawsuits, which can reach back four years. Employers should:

  • Ensure timekeeping systems are accurate and configured properly.
  • Regularly audit the system to confirm it tracks required data.
  • Implement a complaint procedure for employees to report timekeeping issues.

2. Are Pay Stubs and Schedules Properly Backed Up?

Under Labor Code Section 226, employers must retain pay stubs for at least three years; however, many extend this to four years due to the statute of limitations on wage claims brought under the Unfair Competition Law. Employers should:

  • Store electronic copies of pay stubs that meet legal requirements.
  • Avoid relying solely on payroll companies for record retention, as access may be lost if switching providers.
  • Retain employee schedules for four years, as they are often critical in defending wage claims.

3. Are Employee Files Maintained Confidentially and for Four Years?

Senate Bill 807 (SB 807), effective January 1, 2022, amended California Government Code Section 12946 to require employers to retain personnel files for at least four years after creation or employment action (e.g., termination). Employers should:

  • Keep personnel files confidential and secure.
  • Maintain and preserve any and all applications, personnel, membership, or employment referral records and files for at least four years after they are initially created or received.
  • Retain personnel files of applicants or terminated employees for a minimum of four years after the date of the employment action taken (e.g., non-hire of an applicant or termination of an employee).
  • Employers in California are required to retain records of completed sexual harassment training for a minimum of two years. These records should include:
    • The names of employees who participated in the training
    • Dates of the training sessions
    • Copies of training materials used
    • Any certificates issued documenting the completion of training

While California law does not define “personnel files,” guidance from the Division of Labor Standards Enforcement (DLSE) suggests including documents used to evaluate promotions, compensation, or disciplinary actions.

4. Are Forms I-9 Retained Correctly?

Federal law requires employers to keep Form I-9 for three years after hire or one year after termination, whichever is longer. Employers must also:

  • Store I-9 forms separately from other personnel records for easy retrieval during inspections.
  • Ensure compliance with production deadlines if requested by authorities (within three business days).

5. Are Managers Trained on Record Retention Policies?

Policies are only effective if managers understand and follow them. Employers should train supervisors on:

  • Proper documentation of employee discipline, tardiness, absences, and accommodations.
  • Standard forms available for documenting workplace issues.
  • Procedures for submitting and storing records electronically or in paper form.

By maintaining proper records and training staff on retention policies, employers can mitigate litigation risks while ensuring compliance with California’s stringent requirements under SB 807 and related laws.