How Long Do You Have to Keep Timesheets and Payroll Records?

Every contractor eventually asks this question, usually while staring at a drawer that won't close. The rules come from several directions at once, federal wage law, the IRS, your state, and your insurers, and each one has its own number. The good news is that the practical answer collapses into one simple policy.

01

The federal wage rules: 3 years and 2 years

Under the Fair Labor Standards Act, there are two buckets.

Keep for 3 years: payroll records. The core records of what you paid: name, address, occupation, workweek, total hours each day and week, straight-time and overtime earnings, deductions, pay date and pay period. Also in the 3-year bucket: collective bargaining agreements and sales and purchase records used in wage computations.

Keep for 2 years: the records the wages were computed from. This is where timesheets live. Time cards and punch records, work schedules, wage rate tables, and records of additions to or deductions from wages. In other words, the raw material behind the paycheck.

Notice the trap: the paycheck summary is a 3-year record, but the punch-level evidence that proves the summary is a 2-year record, and the punch-level evidence is exactly what you want in your hand if the summary is ever challenged.

02

The IRS: 4 years

Employment tax records need to be kept for at least 4 years after the date the tax becomes due or is paid, whichever is later. That includes amounts and dates of wage payments, the tax deposits you made, and the forms behind them. Since payroll and employment tax are two views of the same money, the 4-year IRS clock effectively covers your payroll paperwork too.

03

States and insurers can want more

Some states set longer periods for payroll and personnel records, and statutes of limitations for wage claims run longer in some states than the federal retention minimums. Separately, your workers' comp carrier audits your actual payroll after each policy year, and a general liability audit can reach back as well. We covered what that audit actually asks for in How to Prepare for a Workers' Comp Audit.

04

The policy that ends the question: keep everything at least 4 years

Tracking four different clocks for four kinds of paper is a job nobody will do. The sane policy for a small crew is one number: keep all time and payroll records for at least 4 years, and longer if your state or your attorney says so. Digital storage makes the old reason for short retention, physical space, irrelevant. Punch records for a 15-person crew for 4 years are a rounding error on a hard drive.

Here's what "everything" should mean, per worker and per pay period:

1. Punch-level times: each clock-in, clock-out, and break, with dates.
2. Weekly totals: regular and overtime hours as computed.
3. Rates: the hourly rate or rates in effect, including any travel or multi-rate arrangement.
4. The pay itself: gross, deductions, net, pay date.
5. Corrections: what changed after the fact, who changed it, and when.

That last item earns its place. A timesheet that was edited three days later with no trace is a timesheet a lawyer can take apart. A record that shows the original punch, the correction request, and the approval reads like what it is: an honest system operating normally.

05

Paper is where records go to die

If your records live on paper timecards, retention isn't really your problem; legibility is. Paper fades, gets rained on, rides around in trucks, and gets summarized into a spreadsheet whose formulas nobody remembers. When a claim shows up 20 months later, "we kept it" and "we can produce it" turn out to be different things. If you're still on paper, the switch is smaller than you think, and we wrote a guide for it: How to Switch from Paper Timecards to Digital.

06

How this works in Clox

Clox keeps the punch-level record for you: every clock-in and clock-out lands the moment it happens, tagged to a job and task, with corrections tracked through an approval flow instead of silent edits. Every punch is also signed and hash-chained, so a record can be shown later not to have been altered after the fact, and anyone you share it with can check it on a public verify page. When you need to hand records over, you can export the records you would pull for a workers' comp or DOL audit in a few clicks, punch detail and weekly totals both.

07

The short version

Three years for payroll records and 2 years for time cards under federal wage law, 4 years for the IRS, sometimes more under state law. Adopt one rule, at least 4 years for everything, store it digitally with the punch detail and the correction history intact, and the drawer never has to close on anything again.

Clox is free for 14 days with no credit card, and there's a 30-day money-back guarantee. Your crew clocks in from their phones, and the records keep themselves. Start a free trial and let this week be the first one that files itself.