How Long Should You Keep Certified Payroll Records?

While there is no provision in the prevailing wage laws which specifies a records retention period for CPRs (Public Works Manual, Office of the Labor Commissioner, Section 3.1.13), California Labor Code 1174 and the Fair Labor Standards Act (FLSA) both require that all payroll records must be kept for a minimum of three years. The IRS requires an employer to retain records relating to payroll taxes for a minimum of four years from the time taxes are due or payment is made. Also, awarding agencies may have various specific payroll retention/ compliance requirements that an employer is required to follow.


Recommended Time to Keep Payroll Records is 7 Years

Although most retention laws and regulations only require the employer to keep payroll records for three or four years, the general rule recommended by most attorneys, accountants and bookkeeping services is to keep payroll records for at least seven (7) years.

Keeping payroll records for 7 years instead of 4 ensures compliance not only with federal regulations but also State and agency requirements.  Retaining records for 7 years should also allow sufficient time for defending lawsuits, audits and potential employment termination or wage claims.

This retention period of 7 years is recommended not as a final authority, but as a generally accepted “best practices” guide.  A contractor’s CPA or tax attorney, may recommend a different approach based on the specific needs of the business.

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