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Avoid Record Loss
Ensure Continued Access
to Outside Provider Records
California Labor Code 226(a) requires employers to keep payroll records for three years. Best practice is four-years retention to enable defense against certain wage claims having a four-year statute of limitations. Time records should be kept for the same amount of time.
Many employers rely on payroll and timekeeping companies to store such records. Sometimes management learns too late -- after a lawsuit is filed -- that access to those records has disappeared because the employer stopped using that provider.
Management should thus take proactive steps to protect payroll and timekeeping records. When engaging a provider, an employer should confirm whether and how it will be able to access those records after the relationship ends. As backup, a company should download and preserve them for each pay period. Before switching services to another, the employer should ensure it has obtained all applicable records from the current provider.
The same is true with other forms of records. For example, an employer that outsources HR functions should make sure it will have access to all employee documents after it stops using that service.
Take-Aways:
Employers should ensure they have access to outsourced record-keeping even after they terminate a relationship with that provider.
For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.
See also:
Helena Kobrin
September 18, 2026
If you are an employer facing possible litigation, or have an employee issue on which you need immediate guidance, call us to set up a consultation, or submit your message.
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