Business Owners Failed This Record Keeping Quiz — But Failing to Comply Is a Much Bigger Offense

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A few weeks ago, we asked you (via pop quiz) if you’re keeping the right records.

We’ll be honest: The results weren’t great.

The average score for nearly 400 quiz takers was about 24 percent — a solid and indisputable fail.

And we weren’t surprised. Record keeping regulations are complex and strict, and because those regulations are enforced by the IRS, the Department of Labor (DOL), OSHA, and more, there’s no single cheat sheet to help you abide.

Unfortunately, ignorance of those regulations won’t save you from getting hit with a severe penalty if you fail to comply. And failing to keep the right records is a much larger and more devastating offense than failing our pop quiz.*

But here’s the good news: We’ve got the answer guide to the record keeping pop quiz … and we know you’ll do better next time.

1. How long should employers keep employment tax records?

Only 12 percent of quiz takers got this question right. According to the IRS website, employers must “keep all records of employment taxes for at least four years after the date that the tax becomes due or is paid, whichever is later.” [Source]

2. Are “hours worked” required in employment tax records?

Nearly 68 percent of quiz takers answered this question incorrectly. The correct answer is no. However, employee wages, tips, Social Security numbers, and tax deposits are required. [Source]

3. How long should employers keep income tax returns?

Just 22 percent of quiz takers answered this question correctly. According to the IRS website, employers must “keep income tax returns for at least three years.” Even longer if you’re claiming credit, loss, or refund. [Source]

4. How long should employers keep personnel and employment records?

Only 7 percent of quiz takers got this question right. The U.S. Equal Employment Opportunity Commission (EEOC) requires employers to keep all personnel or employment records for one year. [Source]

5. Do employers need to provide pay stubs to employees?

A whopping 82 percent of quiz takers got this answer wrong. The correct answer is no. The DOL website claims that “employers do not need to provide pay stubs,” but this could soon change. [Source]

6. How long should employers keep payroll records?

Around 36 percent of quiz takers got this question right. According to DOL Fact Sheet #21, employers are required to keep payroll records for three years. [Source]

7. How long should employers keep employee timesheets?

Womp womp. Only 16 percent of quiz takers answered this question correctly. According to DOL Fact Sheet #21, employers are required to keep employee timesheets for two years. Hey, TSheets can help with that! [Source]

8. How long should records of employee illnesses and injuries be kept?

Approximately 40 percent of quiz takers got this question right. (That’s the highest grade yet, but, unfortunately, still a fail.) According to OSHA Form 300, employers are required to keep these records for five years. [Source]

9. Do employers have to keep a record of employees’ dates of birth?

Nearly 80 percent of quiz takers answered this question incorrectly. According to DOL Fact Sheet #21, the correct answer is yes — but only for employees aged 18 or younger. [Source]

10. How long should employers keep Family Medical Leave Act records?

Around 35 percent of quiz takers answered this question correctly. The DOL website states that “employers must keep the records specified by FMLA regulations for no less than three years.” [Source]

*Please consult a professional tax or legal advisor regarding specific record keeping requirements and how they impact your business. TSheets does not recommend particular record keeping practices and leaves those decisions to the discretion of your organization.

4 Comments

  1. […] Psst! Want the answers? Find them here! […]

  2. Jeannie McQuaid says:

    I’m killing myself laughing. As the person responsible for payroll for a company in Ontario, Canada. all records relating to tax, payroll remittances, hours, earnings, pension contributions, vacation accrued and taken, must be kept for a minimum of seven years after the year in which they occurred.
    A pay stub detailing hours, wage rate, total earnings, itemized payroll deductions and vacation pay must be provided to every employee with every pay.

    But here’s the thing: keeping this information has never been easier because it is all captured in electronic payroll and HR systems. (TSheets helps) Being able to access seven years of history is a good thing from a due diligence perspective. Why would anyone want to purge this kind of data any sooner?

    [Reply]

  3. Axel Kehlenbeck says:

    Your example of geofencing is exactly what I was going to suggest. Running a landscape company, the biggest issue employees have Keith tsheets is clocking in and out of each job as much as 30 times a day. This is also a bit time consuming. Automatic clock-in to customers from the schedule upon arrival would be a huge enhancement for companies like ours.

    [Reply]

    Myranda Mondry Reply:

    @Axel Kehlenbeck, good timing! We’re in the midst of working on an exciting new feature that goes above and beyond modern geofencing technology. As always, we strive to create amazing experiences based on customer feedback. Contact Nate, one of our awesome product owners, at nate@tsheets.com to share your location-based scheduling and time tracking insights and needs.

    [Reply]

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