Final answer:
Employers in the U.S. must keep payroll records for each employee for tax and labor law compliance, including verifying legal work status and adhering to various worker protection laws.
Step-by-step explanation:
Federal law mandates that employers must maintain certain payroll records for each employee to comply with taxation and labor regulations. These records are essential for assessing payroll taxes, which are comprised of deductions from an employee's wages and taxes that employers pay based on the employee's wages. Employers are usually required to report these taxes quarterly and annually, with electronic reporting often being mandatory for all but the smallest employers.
Such records include details to verify an employee's legal right to work in the United States, as stipulated by the Immigration Reform and Control Act of 1986, which also introduced the I-9 form. Moreover, to protect employees' rights and create a fair labor environment, employers must comply with federal laws concerning minimum wage, overtime pay, prohibition of child labor, workplace health and safety, non-discrimination, and family leave policies.
The collection and payment of payroll taxes are enforced by federal, state, and local governments, with the Social Security Administration and state governments maintaining extensive records for government spending analysis.a