Document Retention Requirements (Part 1): Understanding the Basics

By:  Jonathan Driggs

I am often asked questions about how long an employer needs to keep various employment-related records.  Ultimately, the complete answer depends upon which types of documents are involved.  In this month’s article, we’ll review the basic minimum standard under federal discrimination laws, and a few other fundamental principles related to document retention.  Next month we will discuss some of the document-specific requirements.

Federal anti-discrimination laws (the laws that make discrimination illegal based upon race, sex, religion, disability, age, etc.) set the minimum standard for document retention at one year.  Let’s first define what documents we’re talking about.  The Code of Federal Regulations (29 CFR §1602.14) defines a “personnel or employment record” broadly as any:

 “…record made or kept by an employer (including but not necessarily limited to requests for reasonable accommodation, application forms submitted by applicants and other records having to do with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship)….”

It’s pretty clear from this statement that most documentation an employer creates regarding employment related issues is covered under the retention requirement.  It is also important to understand how the term “one year” is defined.  These same regulations state that employment records “shall be preserved by the employer for a period of one year from the date of the making of the record or the personnel action involved, whichever occurs later.”  For example, if an applicant fills out an application on January 2, 2011, but the applicant is not considered by the employer for employment until April 3, 2011, the document should be retained for at least one year from the last date (April 3, 2011).

What’s driving the one year requirement?  The statute of limitations for federal discrimination claims is 300 days.  The Equal Employment Opportunity Commission wants employers to preserve all relevant documentation during the time period in which claims could be filed.  To stay in compliance with federal discrimination law recordkeeping requirements, keep the following in mind:

 ·        Define the “one-year” time period generously, making sure the last “personnel action” taken related to the document has clearly moved beyond the one year mark.

·         For employees, it often makes sense to keep all employment records for at least one year after employment has ended (obviously, there is a judgment call to make here, especially for longer term employees).

·         Employers who have a charge or lawsuit of discrimination filed against them, and have not retained applicable records, can be found to be in violation of the recordkeeping provision of the law and fined.  Without the records these employers also seriously jeopardize their ability to defend themselves against discrimination cases.  Ouch!

·         One common area of problems is employers not retaining applications and interview notes for applicants who are not hired for the one year time period.  “Failure to hire” cases focus heavily on the applicant pool involved, so it is important to retain these documents.

 A couple of other general points on document retention:

 ·         Once an employer becomes aware of a threatened or actual claim against them, they are legally required to retain all relevant documentation (including documentation for any employees in similar positions to the complainant).  Penalties for intentional and non-intentional destruction of documents can be severe.  Caution: be careful with auto-destruct programs for email systems that could cause you to unintentionally violate this requirement if they aren’t set up correctly.

·         In order to minimize ID theft, Utah law requires employers to destroy applications for those individuals who are not hired within two years of receiving the application unless the law requires otherwise (we’ll talk about an exception next time).  Talk about a double-edged sword!

 Wow!  The subject of documentation is complex!  As a result, employers are encouraged to consult with legal counsel regarding the specifics of their own situation and develop a compliant policy.  The subject of document retention is often overlooked until a situation blows up and the documents are needed.  So it’s best to plan ahead and avoid unpleasant (and potentially costly) surprises.   

 Remember, the information contained above describes basic minimum standards under federal discrimination laws.  In many cases employers may be required to retain certain employee records for longer than the one year time period.  Next month we will discuss some of the record keeping requirements applicable to specific types of employment-related documents.

 

This article should not be construed as legal advice.  Copyright ©2012 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved.

 Jonathan K. Driggs is an employment law attorney with over 19 years of experience, including 3 years with the Utah Labor Commission.  www.jkdlawpc.com

 Call an HR Attorney as often as you need, for a low, fixed monthly fee!  In partnership with Payroll Experts, Jonathan is offering his “HR Legal Compliance Service” to Payroll Experts clients at discounted rates.  For a low, fixed monthly fee, you can call Jonathan as often as you need to get answers to your HR legal compliance and employee relations questions.  Get rid of the attorney’s ticking clock!  For more information, please contact Payroll Experts at (801) 221-3732 and ask about the “HR Legal Compliance Service.”

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