Final answer:
Employers must maintain records of employee names, employee salaries, and proof of payments to comply with legal requirements, process payroll taxes, and manage employee benefits and compensation.
Step-by-step explanation:
Employers are responsible for maintaining a range of records related to their employees. These records include employee names, employee salaries, and proof of payments. Keeping accurate records ensures compliance with various legal requirements and supports the payroll process. These records are critical for accurately processing payroll taxes, such as deductions from an employee's wages and the taxes paid by the employer based on the employee's wages.
Additionally, these records are essential for administering benefits (e.g., employee insurance, retirement plans, Social Security, and additional benefits like Medicare), handling supplemental pay, ensuring proper compensation, and facilitating the management of the workplace (e.g., attendance, timesheets, overtime, and time off).
Employers must also adhere to certain legal exceptions, like those outlined in the Freedom of Information Act, which protect sensitive information such as medical records. Rigorous maintenance of these records also helps in determining the total compensation per hour for employees and is necessary for both internal and external auditing purposes.