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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 it will come in the form of saving time and effort in searching for and retrieving employment documents when needed.  This Friday’s Five review five best practices for document retention for California employers:

  1. Define what is kept in a personnel file

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”) expressing the following view:

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

        Performance appraisals/reviews

        Attendance records

Employers need to clearly define what they will keep (or 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. Time records must be kept long enough and must be in a “user friendly” format

Employers must 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. Also, how can time records be “inadequate”?

  • The 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.
  • Not recording all required information. For example, employers are required to record employee’s meal periods under the IWC Wage Orders (see 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. No institutional knowledge of document storage and retention policies

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 in case that person leaves the company.

4. Consider how to store documents and whether certain documents need to be kept separately

Just as I-9 forms are routinely kept separately from other employment documents for employees in order to be able to retrieve them easily if requested by the U.S. Citizenship and Immigration Services and to ensure the information is maintained confidentially, employers should consider if any other employment documents should be store separately.

For example, if an employer has arbitration agreements with employees, the arbitration agreements may be store separately for ease of access and easy of verifying which employee has entered into an arbitration agreement.

In addition, employers should consider storing documents electronically.  I’m a big advocate of electronic storage of documents because I believe it is more secure and easier to retrieve the documents, but it there is a matter of preference.  Moreover, federal and state law may regulate whether certain documents (such as time records or I-9s) can be maintained electronically.

5. Consider having a “miscellaneous document” policy

What should employers document? Conversations with employees, reviews, days absent and the reason for the absence, performance issues (both good and bad – see below), etc…. With email and the ability to scan documents or take pictures of documents on a phone, there is almost no excuse not to have everything documented. The only issue preventing employers from documenting issues is not stressing the need to do document, and the press of business.  Employers should have a miscellaneous document retention and storage policy that allows issues to be document and store in a place that can be retrieved later.

In this Friday’s Five I discuss:

  • new case decision on vacation pay and policies (Minnick v. Automotive Creations)
  • PAGA decision allowing contact information for other employees (Williams v. Superior Court),
  • new Form I-9 released and employers must start using by September 17, 2017 (download here)
  • new Notice of Rights for Victims of Domestic Violence/sexual assault/stalking required to be provided to California employees effective July 1, 2017 (download here), and
  • new law signed by Governor Brown prohibiting inquiries into litigant’s immigration status.

Here is a list of some of the required notices employers must provide to new employees in California. Sometimes I have a hard time coming up with five rules or items for the Friday’s Five list, but not this time – I blew through five items (it is California after all): 

Document Title

Link to Document

Notice to Employee (Wage Theft Prevention Act) (for non-exempt employees)

Download here

I-9 – Employment Eligibility Verification

Download here

Right to Workers’ Compensation Benefits pamphlet

Download here

State Disability Insurance Provisions pamphlet – DE 2515

Download here

Paid Family Leave pamphlet – DE 2511

Download here

Sexual Harassment pamphlet

Download here

New Health Insurance Marketplace Coverage Options Form

Form for employers with health insurance plans – download here

Form for employer without health insurance plans – download here

Other documents I often recommend that employers have in their new hire packets are:

·   Commission Agreement (if applicable)

·   Meal and Rest Break Acknowledgment of employer’s policy

·   Employee Handbook and Acknowledgment

 

Your company has updated its employee handbook, but the work is not over in California. Here are a few reminders of additional steps employers should review after conducting a handbook update and on a periodic basis. Of course this list is not comprehensive, but it comprises of a few items that sometimes take a backseat to the employee handbook update.

1. Ensure wage notice statements are issued and are correct.

Labor Code section 2810.5 requires employers to provide written notice to employees about specific employment items. For example, the law requires that employers provide notice to employees of their rate(s) of pay, designated pay day, the employer’s intent to claim allowances (meal or lodging allowances) as part of the minimum wage, and the basis of wage payment (whether paying by hour, shift, day, week, piece, etc.), including any applicable rates for overtime. The notice must also contain the employer’s "doing business as" names, and that it be provided at the time of hiring and within 7 days of a change if the change is not listed on the employee’s pay stub for the following pay period.  The recommended notice published by the Division of Labor Standards Enforcement can be downloaded here.  Also the DLSE publishes frequently asked questions that address many issues regarding the notice here. 

2. Start Using New Form I-9 By May 7, 2013.

By May 7, 2013, employers will be required to use the new I-9 Form. The new Form I-9 can be downloaded from the U.S. Citizenship and Immigration Services website here. It would be a good time to review the “Handbook for Employers, Guidance for Completing Form I-9” published by the USCIS.

3. Place all commission agreements in writing.

Beginning January 1, 2013, when an employee is paid commissions, the employer must provide a written contract setting forth the method the commissions will be computed and paid. The written agreement must be signed by both the employer and employee. Commission wages are “compensation paid to any person for services rendered in the sale of such employer’s property or services and based proportionately upon the amount or value thereof.” Commissions do not include (1) short-term productivity bonuses, (2) temporary, variable incentive payment that increase, but do not decrease, payment under the written contract, and (3) bonus and profit-sharing plans, unless there has been an offer by the employer to pay a fixed percentage of sales or profits as compensation for work to be performed.

4. Conduct pay stub audit.

Under Labor Code 226, employers must keep copies of employees’ itemized pay statements for at least three years, at the site of employment or at a central location within the state of California. The law was amended, and as January 1, 2013 it clarifies that the term “copy” means either a duplicate of the statements provided to employees, or a computer generated record that shows all information required under Labor Code 226. In addition, the law sets a new deadline for employers to either provide a copy or permit the employee to inspect the personnel file within 30 days after the employer receives the request.

5. Ensure all personnel records are maintained properly.

When reviewing which records should be maintained in an employee’s personnel file, it is important to keep in mind why an employer would ever have to produce a personnel file – to support its employment based decisions. Therefore, employers should typically maintain personnel files with the following documents: signed arbitration agreements, sexual harassment compliance records for supervisors, sign acknowledgements of policy by employee (for example, confidentiality/proprietary information agreements, meal and rest break acknowledgments, handbook acknowledgments), Wage Theft Protection Act notice, commission agreements signed by both the employer and employee, warnings and disciplinary action documents, performance reviews, documents of any grievance concerning the employee, documents pertaining to when the employee was hired, records pertaining to last day of work and documenting reason for departure from employment.

Today, February 2, 2009, employers were supposed to transition to start using a new I-9 Form.  However, Friday, U.S. Citizenship and Immigration Services department made the following announcement:

USCIS Delays Rule Changing List of Documents Acceptable to Verify Employment Eligibility Reopens Public Comment Period for 30 days

WASHINGTON—U.S. Citizenship and Immigration Services (USCIS) announced today it has delayed by 60 days, until April 3, 2009, the implementation of an interim final rule entitled “Documents Acceptable for Employment Eligibility Verification” published in the Federal Register on Dec. 17, 2008. The rule streamlines the Employment Eligibility Verification (Form I-9) process.

The delay will provide DHS with an opportunity for further consideration of the rule and also allows the public additional time to submit comments. A notice announcing the delay was transmitted today to the Federal Register. In addition, USCIS has reopened the public comment period for 30 days, until March 4, 2009.

Employers were originally required to use the new form beginning today, on February 2, 2009.  However, employers must now wait until April 3, 2009 to begin using the new form.  Click here for the USCIS’s website for download the Form I-9.