Employers in California should periodically review their employee documentation and record retention policies to ensure compliance with state laws. Below are five critical areas to audit as of 2025:

1. Are Employee Time Records Maintained for at Least Four Years?

California law requires employers to track hourly employees’ start and stop times, meal periods, and total hours worked. Time records are crucial in wage and hour lawsuits, which can reach back four years. Employers should:

• Ensure timekeeping systems are accurate and configured properly.
• Regularly audit the system to confirm it tracks required data.
• Implement a complaint procedure for employees to report timekeeping issues.

2. Are Pay Stubs and Schedules Properly Backed Up?

Under Labor Code Section 226, employers must retain pay stubs for at least three years; however, many extend this to four years due to the statute of limitations on wage claims brought under the Unfair Competition Law. Employers should:

• Store electronic copies of pay stubs that meet legal requirements.
• Avoid relying solely on payroll companies for record retention, as access may be lost if switching providers.
• Retain employee schedules for four years, as they are often critical in defending wage claims.

3. Are Employee Files Maintained Confidentially and for Four Years?

Senate Bill 807 (SB 807), effective January 1, 2022, amended California Government Code Section 12946 to require employers to retain personnel files for at least four years...

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