Records Retention—Better Safe Than Sorry

Records Retention—Better Safe Than Sorry

“Out with the old, in with the new!” A phrase fitting in regard to saying “Goodbye” to 2020 and “Hello” to 2021. The phrase could also be applied to employee records. With all the personnel files on hand, both electronic and paper, it is tempting to have an annual house-cleaning at New Year’s, but this can quickly lead to trouble. If you destroy a document too soon, you may be discarding a legal defense. If you try to keep everything, you may be violating federal rules on the “reasonable” disposal of sensitive documents.

A general rule: “When in doubt, don’t throw it out.” And remember, deciding what to keep or not to keep applies to both paper and electronic records. Read on for more specific insight regarding the types of files you may have on hand.

How Should I Handle Personnel Files?

Generally speaking, Human Resource (HR) managers are responsible for maintaining personnel files, but many documents that go into personnel files may originate with managers/supervisors.

Check with HR before discarding documents related to:

  • Hiring, promotions, demotions, and terminations
  • Disciplinary matters
  • Employee performance
  • Work hours and leave requests
  • Accommodation requests
  • Selection for training opportunities
  • Safety and health

How Should I Handle Desk Files?

Desk files are personal files that managers keep on their employees. While they aren’t “official” personnel files, they contain information that will eventually make it into those files (i.e. performance-related notes to be included in a review, lists of dates when employees were absent or late for work, suggestions about training and development courses that might be appropriate, etc.).

Desk files should be temporary, and supervisors should follow these three steps to ensure desk files remain temporary.

  1. Date them and add to official documents in a timely manner.
  2. Incorporate them into formal performance reviews, formal disciplinary warnings, etc.
  3. Dispose of them after including the information in a formal document in a timely manner.

What Does The Law Say?

Major requirements under federal employment laws include:

  1. Under the Fair Labor Standards Act (FLSA) you must:
    1. Keep basic employment and earning records like timecards, wage-rate tables, shipping and billing records, and records of additions to or deductions from wages for at least two years.
    2. Keep payroll records, certificates, agreements, notices, collective bargaining agreements, employment contracts, and sales and purchase records for at least three years.
  2. Under the Equal Pay Act, you must keep for at least two years the records that show why you may pay different wages to employees of different sexes, such as wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements.
  3. The Equal Employment Opportunity Commission (EEOC) says employers should keep all employment records for at least one year from the employee’s date of termination. The federal age-bias law requires that you retain payroll records for three years.
  4. Companies covered by the Family and Medical Leave Act (FMLA) must retain the following records for three years:
    1. Basic payroll data.
    2. Dates FMLA leave is taken, including hours of leave for times of less than a full day.
    3. Copies of written notices given to employees as required by the FMLA.
    4. Documents describing benefits, policies and practices regarding paid and unpaid leave.
    5. Premium payment records for employee benefits.
    6. Records of disputes over the designation of leave as FMLA.
    7. Records relating to medical certifications, recertifications or medical histories created for FMLA purposes, kept in separate files from the usual personnel files.
  5. Under the Immigration Reform and Control Act, you must keep completed copies of an employee’s I-9, Employee Eligibility Verification Form, for three years after employee is hired. If employee works longer than three years, keep the form for at least one year after employment ends.

Final Thoughts

All employers need a document policy. Create a document-retention policy and follow it. The policy should include a list of records and how long they should be kept. This will also help you know which records you have in-house and where they are stored; which is necessary if you are presented with a lawsuit.

Work with your legal counsel to determine the recommended retention rules for your organization, including any specific state requirements. The HR department should retain and destroy personnel records in accordance with corporate policies on business records retention, as well as federal and state laws governing record retention. This is for the record.

For The Public Record is a monthly blog featuring thought leadership from the most seasoned experts at ClearStar, across all functions of the background screening process. Click here to subscribe.

 


Sherrie Franks, PHR, SHRM-CP - Chief of Staff

Sherrie Franks serves as Chief of Staff for ClearStar. She manages all aspects of the internal human capital processes including talent acquisition, payroll, benefits, performance management, and human relations. She joined ClearStar in 1994. She is a certified Professional in Human Resources® (PHR®) and SHRM Professional in Human Resources (SHRM-CP). She has a BBA in Business Management .

Before joining ClearStar, Sherrie worked in education and non-profit faith-based organizations. She also served on the Forsyth-Dawson Counties Board for Fellowship of Christian Athletes (FCA).

At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.

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