Employee document storage and retention policies: it is not cutting edge legal theory or management philosophy, but companies that think about and actively develop a plan will save large amounts of money. The costs savings will come from being able to better defend litigation because the key documents were maintained, and by saving time and effort in searching for and retrieving employment documents when needed. This Friday’s Five reviews five best practices for document retention for California employers:
1. Define what is kept in a personnel file and communicate this to managers.
Often surprising to many employers, the terms “personnel records” or “personnel file” are not defined under California law and there is considerable ambiguity about what documents should be keep in an employee’s personnel file.
While not legally binding on employers, there is some guidance from the Division of Labor Standards Enforcement (“DLSE”):
Categories of records that are generally considered to be “personnel records” are those that are used or have been used to determine an employee’s qualifications for promotion, additional compensation, or disciplinary action, including termination. The following are some examples of “personnel records” (this list is not all inclusive):
Application for employment
Payroll authorization form
Notices of commendation, warning, discipline, and/or termination
Notices of layoff, leave of absence, and vacation
Notices of wage attachment or garnishment
Education and training notices and records
Employers need to clearly define what they will keep (or will not keep) in an employee’s personnel file so that all management understands which documents need to be placed in the personnel file of an employee and where to locate documents pertaining to employees.
2. Keep confidential employee medical information separate from personnel file.
State and Federal law requires that employers keep medical information obtained about employees separate from the employee personnel file. For example, California Regulations require that:
- Medical information and records obtained as part of the interactive process must be maintained separate from the employee’s personnel file and kept confidential. 2 CCR § 11069(g)
- Employers must keep information obtained regarding the medical or physical conditions or history of the employee confidential. 2 CCR § 11071(d)(4)
I referenced this issue in a recent video:
3. Time records must be kept long enough and must be in a usable format.
Employers have the burden to record and maintain accurate time records under California law. If the employer knows employees are not properly recording their time, the employer needs to enforce a policy to have employees accurately record their time, even if it requires disciplinary action. Employers need to review their time records to ensure employees are following proper procedures. Some issues employers need to watch for include:
- Time records that do not record the employee’s actual time working. For example, the employee records their start and stop time and the same time every day even though the employer knows it changes.
- Not keeping time records long enough. The statute of limitations can reach back four years in wage and hour class actions, and these records will be the primary issues in most cases. See below for further information.
- Not recording all required information. For example, employers are required to record employee’s meal periods under the IWC Wage Orders (requirement is found section 7 – Records).
- Not keeping the time records in a manner that is usable. Maintaining records in a form that makes reviewing the records almost impossible is almost equivalent to not maintaining them in the first place. Some thought should be put into how an employer is keeping old time record information and how that data could efficiently be reviewed in the future if needed.
3. Ensure there is that the institutional knowledge of a company’s document storage and retention policies is maintained.
Is there one person with full knowledge of the employment policies implemented by the company? Institutional knowledge about the various policies put into place by the company, when they were implemented and why they were implemented is critical knowledge. Also, this information should not reside with just one person, but instead there are a few key people who know where this information is retained and how to retrieve it during times of litigation.
5. Develop a checklist for managers to follow regarding records policies.
Employers need to develop of checklist and review the checklist with managers to ensure the requirements are being met. Some items employers should consider placing on the checklist include:
- Are employee personnel files maintained confidentially and for at least four years?
- Is medical information kept separately from the employee’s personnel file?
- Are employee time records maintained for at least four years?
- Are employee schedules maintained for at least four years?
- Do the managers have set forms for the following:
- Employee discipline and write-ups
- Documenting employee tardiness
- How is the employee documentation provided to Human Resources or the appropriate manager?
- Who is involved in reviewing disability accommodation requests?
- How are employee absences documented?
- Are personnel files maintained in a secure location or backup on line?