CSLB Contractor's Law & Business Practice Exam

For how many years should a contractor keep employee records?

1. 1 year

2. 2 years

3. 3 years

4. 5 years

The correct answer is: 3 years

Keeping employee records for three years is crucial for compliance with various labor laws and to ensure that all employment-related documentation is readily available for review if necessary. This duration aligns with the guidelines established by the Fair Labor Standards Act (FLSA), which requires employers to maintain payroll records, as well as other employment records that reflect the terms and conditions of employment. Having records for this period helps protect both the employer and employees by providing a clear history of employment, wages, hours worked, and any agreements made. This can be particularly important if there are disputes regarding wages or employment status, allowing for proper documentation to support either party's claims. While some records may have shorter retention requirements, such as those related to taxes, three years is generally the standard for broader employment records. This balance between compliance and practicality is essential for effective human resource management within contracting businesses.