Retaining Employment Records: What California Employers Must Know in 2025
Mike Hayden
February 27, 2025
When it comes to protecting your business from lawsuits, claims, and settlement demands, maintaining accurate payroll and employment records is essential. With California’s strict labor laws and the heightened risk of audits or legal disputes, having proper documentation can make all the difference in proving compliance and defending against claims.
Many business owners assume their payroll provider stores all necessary records, but the truth is that employers are ultimately responsible for retaining and managing these records. If you’re ever audited or receive a personnel file request from an attorney, having immediate access to your own records is critical.
Here’s how you can ensure your business stays compliant and protected.
Understanding California’s Record Retention Laws
Employers must adhere to both federal and state record retention laws, which dictate how long employment-related documents must be kept. These records should be maintained either in hard copy or electronic format for at least the minimum required period.
Payroll Records
Employers must retain payroll records for at least three years under California law.
Payroll records must include hours worked daily and weekly, wages paid, overtime hours, and meal/rest break penalties.
Wage statements (pay stubs) must clearly display this information, and copies should be securely stored.
Employee Time Records
Time records must be kept for at least four years to cover potential wage and hour claims.
Records must accurately reflect clock-in/out times, meal breaks, and overtime worked.
Employers should use a reliable digital timekeeping system to ensure accuracy and prevent unauthorized edits.
Employment Records
Personnel files, including pre-employment documents, hiring records, performance evaluations, and disciplinary actions, should be retained for at least four years after termination.
Employees have the right to request a copy of their personnel file, so maintaining an organized and compliant system is crucial.
Best Practices for Storing Employment Records
Do not rely solely on payroll providers like Infiniuim HR to store records—ensure your business maintains copies of all time, payroll, and employee files. You can store files electronically
Keep records confidential and store them securely—access should be limited to authorized personnel only.
If switching payroll providers, download and store all payroll history before making the change.
Proper Record Disposal
Once retention requirements have been met, employers must ensure proper document destruction to prevent unauthorized access. Simply discarding records in the trash can pose security risks. Employers should:
Implement a document disposal policy that includes secure shredding or electronic deletion.
Train responsible staff on compliance and confidentiality to prevent accidental data breaches.
Final Thoughts
Proper record retention is not just about compliance—it’s about protecting your business from potential liability. With California’s strict labor laws and PAGA-related claims, ensuring you have accurate and complete employment records can help avoid costly penalties and legal headaches.
If you’re unsure about your compliance, Infinium HR is here to help. Our HR experts can guide you in establishing proper record-keeping policies, implementing best practices, and ensuring you’re fully protected.