How long to keep what: the California retention table

Retention is the least interesting compliance topic and one of the most consequential, because it is the only one where doing nothing quietly destroys the evidence you will need. Every other obligation announces itself when you breach it. This one goes wrong in silence, at the moment somebody clears out a drawer.

The two figures worth memorising are these. Payroll records — hours worked, wages paid, deductions — must be kept for at least three years under Labor Code 1174. Personnel records must be kept for at least four years, a period extended by SB 807 in 2022, and if you are notified that a discrimination complaint has been filed, you must keep the relevant records until the matter is resolved or the deadline for a civil action has passed, whichever is later.

Notice that those two numbers are different, and notice which is longer. Most small businesses treat everything as one pile with one lifespan, and because payroll feels like the more regulated category the pile usually inherits the three-year figure — which quietly under-retains the personnel side by a full year.

Three years for payroll, four for personnel. One pile with one date gets the shorter of the two wrong.

The minimum is also not the right answer, for a reason that has nothing to do with the retention statutes. A wage claim can reach back three years, and where a claim is framed under the unfair-competition statute the reach is longer still. A record that has been lawfully destroyed is not a defence — it is simply an absence, and in wage disputes an absence tends to be resolved in favour of the employee, because the obligation to keep the record was the employer's. Destroying something on the earliest lawful date can therefore cost more than storing it would have.

There is also a category people forget entirely, which is the material that is not obviously a "record": the schedule that shows what shift somebody was assigned, the message approving a change of hours, the note from the meeting after a complaint. None of it is enumerated in a retention statute, and all of it is the sort of thing that decides a case, because it is contemporaneous and nobody made it for a lawyer.

The practical policy is shorter than the explanation. Keep payroll and time records for four years rather than three, so a single date governs everything and the longer obligation is the one you satisfy. Keep personnel files for four years after separation, not four years after creation. Keep anything relating to a complaint indefinitely, or at least until well past every applicable deadline. And write the policy down, because a retention practice you cannot describe is indistinguishable, after the fact, from having deleted something on purpose.

Store to the longest window that applies, not the shortest one you can defend. The storage is cheaper than the inference.

One caution in the other direction: retention is not a licence to keep everything forever. Personal information collected from employees carries its own obligations — it should be kept only as long as the purpose requires, and a decade of location pings or old identity documents is a breach exposure rather than a defence. The rule is to keep what evidences the employment relationship and dispose of what merely accumulated.

If you want a starting point today, answer three questions. Do you still have the time records for a person who left thirty months ago? Could you produce a signed wage notice and the acknowledgements for a hire from two years back? And if a complaint arrived tomorrow about something last spring, is the schedule from that week still somewhere? A "no" to any of them is not a filing problem — it is a defence you have already lost without hearing about it.