Closing a staffing firm: payroll and I-9 clocks, and the candidate trap
A staffing firm closes with the most personal data of any industry here: candidate resumes, worker I-9 forms, timesheets and pay records. Federal rules keep some of it for years, and the candidate database is the asset people think of first and the one least likely to be licensable. What can go is the firm’s way of working: job order templates, screening scripts, client communication patterns and placement notes with names removed.
Rules to read first
The wage records are at 29 CFR 516.5. The I-9 rule lives in the immigration regulations, and its text is in the table.
| Rule | What it requires |
|---|---|
| 29 CFR 516.5 | Payroll records and certain agreements are kept at least three years from the last date of entry. |
| 29 CFR 516.6 | Time cards and earnings records, and wage rate tables, are kept at least two years. |
| 8 CFR 274a.2(b)(2) | An I-9 form is kept three years after the date of hire or one year after employment ends, whichever is later. A recruiter or referrer for a fee keeps it three years after the hire. |
| State wage laws | Several states set longer payroll record periods than the federal three years. |
What the firm built that is not a person
The candidate database is a different kind of asset. Resumes carry names, addresses, work history and sometimes photographs. Candidates gave them to apply for jobs, not for model training, so the privacy notice they saw controls what can happen next.
- Job order intake forms and how requirements get restated for a recruiter.
- Screening call scripts and the scorecards recruiters use.
- Client email threads about a shortlist, with candidate names removed.
- Placement notes explaining why a match worked or did not.
- Onboarding checklists and compliance reminder sequences.
Where it sits
An applicant tracking system, a payroll and timekeeping platform, a vendor management portal for large clients, and email. The ATS is the one with a deletion schedule, since many are set to purge inactive candidates after a stated period. Ask the vendor what happens to a closed account and whether it can export the workflow history, meaning the stage changes and the notes, apart from the resumes.
What stays out
The FTC Disposal Rule at 16 CFR 682.3 requires reasonable measures to protect consumer report information when it is thrown away, which matters when a closing firm clears out its background check files.
| Record | Why it stays out |
|---|---|
| I-9 forms and supporting documents | They hold identity documents and have a retention period. |
| Timesheets and pay records | Personal and kept under the wage rules. |
| The candidate database | Candidates applied for jobs, and the notice they saw did not mention AI training. |
| Background check results | Consumer report rules limit use and disposal. |
Read next
- Closing or bankrupt companies. Who signs and what to keep.
- Records to keep before you close. A checker by industry.
- Liability. Who answers for what in a deal.
- Staffing firms while open. What a running firm can license.
Questions about closing a staffing firm: payroll and I-9 clocks, and the candidate trap
Can the candidate database be sold?
Rarely as it stands. It needs the candidates’ notice to allow it, de-identification that removes more than names, and the state and country rules for each person in it.
How long do we keep I-9 forms?
Three years after the hire or one year after employment ends, whichever is later, according to the federal text.
What do placement notes show?
They show why a match worked, which is a decision trail. With names removed they are the most useful piece a staffing firm holds.
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