Retaining Terminated Employee Files

employee filesReader Question: We have been retaining terminated employee personnel files for over 20 years. What is the recommended guideline for retaining terminated employee files?
– Sr. Administrator, Consumer Products Firm

The conventional wisdom out there says you keep files for anywhere from 3-7 years. You can be subject to Department of Labor actions that could go back 3 years, hence the 3 year recommendation. That being said if you find yourself in a situation whereby the IRS is involved you could be looking at an action going back as long as 7 years. Air on the side of caution – use 7 years as your guideline.