By Patricia M. Trainor, J.D.
Recordkeeping can be an area of confusion for HR managers, because they are told to keep certain documents for a certain amount of time, but they are also warned not to keep them too long. Susan Fahey Desmond, attorney at Watkins, Ludlam, Winter & Stennis, PA in Gulfport, Mississippi, provided some guidance for HR at BLR's 2009 National Employment Law Update this week in Las Vegas.
What Are Documents?
Desmond explained that what constitutes a document is not always obvious. Personnel files and medical records are clearly documents. Less obvious, documents kept electronically and at satellite locations are also documents. Satellite documents include those located in branch offices or in supervisor's own personal files--even if they are handwritten notes or business diaries.
Federal, and often state, laws require documents to be retained for certain periods of time. However, Desmond noted if both federal and state laws have retention periods for the same type of document, employer should follow the law with the longer retention period. Additionally, employers should consider retaining documents for as long as the statute of limitations for any potential cause of action.
Moreover, as soon as litigation is imminent, documents must be preserved indefinitely and are subject to “discovery” and production to an adverse party. This means that when litigation is reasonable anticipated, email and other document destruction must cease.
If documents are disposed of improperly, an employer risks being fined by the court. Even more detrimental, the court may instruct the jury that it can presume that the employer destroyed the documents to hide something. Such a presumption can influence a jury to award punitive damages if the employer loses the case.
The Importance of a Written Retention Policy
Desmond emphasized the importance of maintaining a written retention policy that clearly delineates what documents must be preserved and what document should be destroyed. Such a policy will protect the employer in court if the plaintiff argues that documents were wrongfully destroyed.
Employers should also have a records management program designating which records will be maintained, the retention period, and the procedures for document destruction. The goals of a record management program are: to retain documents that are necessary to comply with the law; to retain documents that benefit the company; and to securely maintain the materials that must be kept. Desmond observed that often employers have a records management program in place, but it is not followed. She emphasized that to be effective, a records management program must be followed.
How to Keep Records
Desmond recommends that employers maintain the following separate files:
- Personnel file – with W-4s, applications, and disciplinary write-ups. Drug test results and credit reports should be in separate sealed envelopes in the personnel file.
- I-9 Forms – Desmond noted that the Department of Homeland Security is required to give employers only three days' notice of an audit. Keeping I-9 forms separate from the personnel file will make it easy to access the forms in such a short time. Additionally, Desmond recommended keeping two I-9 binders or files. One for active employees kept alphabetically and one for terminated employees kept chronologically. This will facilitate a destruction schedule, as I-9s must be kept for three years after the date of hire or one year after the date of termination, whichever is longer.
- Medical files – with ADA and FMLA records, and sick leave notices.
- Group Health Plan file – containing medical information received from the company's group health plan that is HIPAA- protected.
- Workers' Compensation files – with all documents related to the employee's workers' compensation claims.
Document Production to the EEOC
Desmond recommended that if the EEOC requests documents, the employer carefully review the request and contest the production of documents that are unrelated to the claim. Desmond also suggested marking the records considered exempt from a Freedom of Information Act (FOIA) request. This is because if the case goes to trial, the plaintiff's attorney will make a FOIA request for all documents the EEOC possesses. However, some documents, such as certain medical information, are exempt from FOIA and need not be turned over to the plaintiff. Also, Social Security numbers should be redacted to minimize the possibility of identity theft.
If documents are kept at a storage facility, HIPAA requires a Business Associate Agreement if the facility is storing any group health plan information. Desmond also recommended that the employer make sure there is an indemnity clause in the contract with the facility holding the organization harmless in case of a breach of security and that the facility has adequate insurance to cover any possible judgment.
Desmond stated that documents should not just be thrown in the trash can. They must either be shredded or incinerated.