How long must employee files be kept following the last day of employment?

Employee files must be retained for a period of 2 years following the last day of employment, which aligns with various federal and state regulations regarding employee records. This timeframe is crucial as it helps ensure that former employees can have access to their employment records if needed in the future, such as for disputes regarding employment history or if they need to provide proof of employment for various reasons.

This retention period also allows employers to meet compliance obligations related to employment taxes, benefits, and any potential legal claims that may arise after an employee has left the organization. By holding onto these records for 2 years, employers are better equipped to respond to inquiries or investigations that may surface during this time frame.

In contrast, shorter retention periods like 1 year may not provide enough coverage for legal purposes, while indefinite retention can lead to unnecessary storage of outdated documents, increasing administrative burdens, and potential liabilities related to privacy concerns. Therefore, the established 2-year requirement strikes a necessary balance between accessibility for the former employee and efficient management of personnel records.