Webinar: Employee Recordkeeping: Knowing Your Requirements

 

employee recordkeeping

When it comes to the storage and retention of employee files, what you don’t know can hurt you. In fact, proper recordkeeping is an essential aspect of being a compliant organization.

Join Kara Govro, Senior Legal Analyst at our HR partner, Mineral, for a deep dive into general federal recordkeeping compliance, including required retention times for employment documents, payroll and tax information, and other important employee file recommendations.

This session was recorded on July 15, 2021.

Presentation Slide Deck

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Webinar Transcript:

Kara Govro (00:05):

Hi, everybody. Welcome. Thanks for joining us today. We’re excited to welcome you to the training on employee record keeping. Before we begin, let me introduce myself real quick. My name is Kara Govro. I have been on the team here for about six and a half years as a senior legal analyst. I practiced employment law prior to that, as well as bankruptcy law. And I also have some human resources background as well as human resource running in the family. So my favorite topic, good thing I got a job in it, and record keeping is, of course, one of the more nitty-gritty but also very important aspects of human resources and employment law for that matter. So we are going to spend a very quick 30 minutes or so with this topic today. Just a couple housekeeping items. We will email you the recording and the slides within about 24 hours.

Kara Govro (01:08):

Don’t necessarily set your watch to that, but almost certainly we’ll get it to you within about a day. So you don’t need to be taking screenshots or anything if there’s good stuff on here that you want to refer back to. We do have one poll and then a tiny survey at the end. We’d love your feedback on those. And then we have a lot of content packed into a small space today, but I do have my Q and A box open. So if you want to use the Q and A to send me questions, I may or may not be able to get to those.

Kara Govro (01:39):

All right. So let’s jump in. Our agenda, we are going to talk about file types, five in particular, that we recommend employers keep we’ll also talk about file retention in quite a bit of detail, how long do you need to be keeping these files. Then we’ll talk about storage options and file access and destruction of files. So starting with file types, like I said, we’ve got five that we generally recommend. We will look at each one individually. First up is the file you almost certainly have, which is the basic personnel file on each employee. So, there’s going to be a lot of stuff in there, their application, their resume, their signed job offer, their signed handbook acknowledgement form, that’s really important, any performance evaluations you’ve done, status changes. If your state requires sexual harassment prevention training, or you just require it as an organization, course completion certificates would go in there and, of course, disciplinary documentation or really anything else that you think might be helpful should the employee sue you down the road.

Kara Govro (02:58):

So basic personnel file, probably going to get pretty fat by the end of someone’s employment, assuming they’re with you for more than a few days. Someone asked is a signed job description a requirement? I don’t know if that really has to do with record-keeping. Technically no, but always a good idea to get a signature on a job description just to see that employees are fully aware of it. It should have been, of course, in the job posting and possibly as part of the offer letter as well. So is it absolutely required? No. Is it a really good idea to have that? Yes.

Kara Govro (03:39):

Another file we’re going to have on an employee is their medical or benefits file. So, this is a highly confidential file, even more so than the personnel file. And we’re going to have one of these for each employee who’s eligible for medical anything or benefits anything. So if you’ve got a very part-time employee who’s not currently eligible for benefits, you don’t necessarily need to open up a blank file on them. You can wait either until they receive benefits or until something medical happens that you need that file for. So, this file is going to include all insurance and medical enrollment forms. Other medical documents may be added over time, like doctor’s work releases after a medical leave of absence, documentation of an accommodation requests for a temporary or permanent disability. You’ll also want to include COBRA notification in this file once their employment has ended.

Kara Govro (04:41):

And then finally, I said this at the start, but this file in particular is extra confidential, because we do have requirements under federal and often state law to keep medical information separate, confidential, only access on a need to know basis. That’s why we don’t want this in the personnel file. The personnel file could certainly be accessed by more people, one would think, who may need in and out of that, but the medical file, you would like to keep it particularly private. And just upfront, I know I’m referring to files as if they are paper, you can keep pretty much everything electronically. I say pretty much because there might be some things that are hard to get in an electronic format, but there’s no reason that anything has to be on paper. And I’ll talk a little bit more about electronic versus paper storage later, but just upfront, I’m not saying that you have to have anything on paper.

Kara Govro (05:51):

So employees should also have a separate payroll file for the sake of confidentiality. Again, we would probably recommend maintaining all the payroll related records separately from the other files we’ve discussed so far, often HR and payroll are different departments, or maybe there not departments, they’re just different people. The payroll person doesn’t necessarily need to see all the personnel stuff for any given person who’s overtime requests are filing or whatever it may be. And, likewise, we don’t need the HR people getting in and out of the payroll file. Granted, you might be filling both of those roles at your organization. In which case, I suppose you could blend this with the personnel file, it might just get really fat. The payroll file can get pretty hefty if you’re doing everything on paper. It’s going to include W-4’s, time sheets, pay increases and decreases, status change, it may include your time off and leave records as well as vacation and sick time records, as well as anything related to wage garnishment.

Kara Govro (06:59):

You’ll also want to have a file specific for workers’ compensation claims, and this file should contain the claim records and injury reports and any additional medical records on the injury, such as a doctors work release or details regarding late duty return to work, as well as any related insurance documentation. We would generally recommend maintaining a separate file for each injury. Hopefully you don’t have people getting injured repeatedly, but just for ease of organization, as well as your annual OSHA reporting, if that’s something you’re subject to, having separate files may be useful there. Not necessary, not absolutely necessary, just a suggestion.

Kara Govro (07:47):

And then finally you want to have a Form I-9 file. And we would recommend keeping this completely separate from all of the other files. So basically a three ring binder with every single employee’s Form I-9 file in there and whatever supporting documentation you may collect. So having a binder for current employees and a binder for terminated or previous employees is another way to organize those. These of course have specific retention requirements. The law requires that an employer make these available to the government within three days if they’re asked for them, that’s one of the primary reasons we would recommend storing these separately. Particularly if you have an electronic filing system, if you were trying to go through and pull an electronic, I-9 out of every single personnel, electronic personnel record for each employee, that could be a real pain. Whereas if you keep it all in one place, if you are subject to an audit, you have those handy.

Kara Govro (09:01):

All right, let’s talk about file retention periods. I know a lot of questions are coming in on that already. So let’s be clear here that we are talking about federal requirements. You may have state requirements that are lengthier or more specific than what I’m addressing right now, but I am talking federal requirements or best practices in the absence of any other laws. So before we jump into a record retention for current employees, I do want to point out that applications, resumes and other records related to the refusal to hire an applicant needs to be maintained for one year following the date of the decision, not the date of the applicant’s submission or the date the job was first posted. So from the time you decide who to hire, you need to keep the information related to your hiring decision for one year. I think a lot of employers don’t realize that they’re supposed to do this at all.

Kara Govro (10:05):

So, what we generally recommend is have a file for each open job posting that you advertise and fill. I know for some employers that’s going to sound really onerous if you’re continuously filling the exact same job over and over, you’re in a high turnover industry like a restaurant of some kind. So, that advice might not feel super practical to you, but in other settings it may be easier to pull off. But if you have a file on each job opening, then if you get any SAS from someone who wasn’t hired, you’ve got easy access to your business explanations for why you chose who you chose.

Kara Govro (10:55):

So when it comes to files for your current and former employees, the general best practice is to maintain these files for the length of employment, plus seven years after termination. And there are specific guidelines for each type of employment record, which we’ll go over. Know that these our minimum requirements. So if there’s a pending claim or litigation, the records in question need to be kept until the claim is done or the litigation is done. Just because something past its expiration date, you wouldn’t want to toss it out. If you were in the middle of litigation related to that employee, that would not go over well with the court. So seven years is not really an exact science. And I know it sounds like a long time, but we suggest it because for the most part, it’s going to satisfy all retention requirements.

Kara Govro (11:50):

Even at the state level, I don’t think we’ve seen any requirements to keep basic employee forums for more than seven years. There’s an exception for some OSHA related things. But seven years is just a safe catch-all there, and then also it meets most state statute of limitations on employment claims and contract claims. So if you go look at a chart of the statutes of limitations on contract claims, which an employee could try to bring, most of them are six years or less. There are a couple that may be more than six years, but for the most part seven is going to be pretty safe. So, that’s where we land on that.

Kara Govro (12:37):

I-9’s need to be retained for very specific amount of time, as you’re probably aware. First of all, if the employee is working for you, so if they’re still there, you still have their I-9 file. And then also for three years after the date of hire, or one year after the date of termination, whichever is later. So you may have to do a little math on this. I provided an example. If you hire somebody on February 14th and fire them a week later, they just weren’t working out, then the three year rule puts you at February 14th, 2024, and the one-year rule puts you at February 21st, 2022. We need to select the longer date.

Kara Govro (13:30):

Somebody just asked about state versus federal rules. If your state law says that you have to keep something longer than federal law, then you need to follow the state law. You need to follow whichever law is broader and potentially more employee friendly, it would be employee friendly because it would help them bring a lawsuit against you. So, whichever requirement is longer is the one you need to follow. All right. There are some other files, of course, payroll records such as pay rates, dates of payments, regular and overtime hours worked, pay and benefits deductions, there’s a long list of pay records you need to keep, and these should all be kept for three years post-employment. That is a good bet on those. If you’re subject to a wage and hour investigation or claim through the DOL, the wage and hour division, they can look at wages going all the way back three years.

Kara Govro (14:35):

So, that’s when we reasonably want to keep that as long as we do. As for tax records, those should be retained for four years from the date the tax is due or paid. And this includes the amount of wages to withholding agreements with employees, to withhold additional taxes, actual taxes withheld, et cetera. So you could just say, “You know what? We’re putting this in the seven year bucket. We’re just going to keep everything for seven years.” Particularly if you’ve got an electronic filing system, it doesn’t really take up any extra space in the office to keep things for longer. So if you’d rather just think seven, then go ahead and just think seven.

Kara Govro (15:25):

For benefits information like insurance plan documents, summary plan descriptions, those should be kept for six years. And then FMLA documentation should be kept for three years from the date of the last entry, which is probably basically when an employee’s leave finished, completed, they came back, that would be the end of that. So you’d want to keep it for three years from that time. Again, is there a requirement that you burn these things after three years? No. If you just want to think seven, go ahead and think seven.

Kara Govro (16:05):

So, there is one exception, significant exception, to the seven years is safe rule, which is for OSHA-mandated documentation, basically. So safety and injury information generally needs to be kept for five years after the record is created if it’s related to an exposure to something that’s not toxic or simply an injury like somebody falls off of something. Injury information that is related to toxic substances needs to be kept for 30 years. And then medical records that you collect, including vaccination status, needs to be kept for 30 years post-employment. So, this one gets a little sticky and nobody really wants to come out and say what the rule is on this, because nobody likes the idea of having to keep vaccination records for 30 years. But it’s pretty much right in the rags that if you collect this record, you need to keep it for that long.

Kara Govro (17:06):

The one exception may be that if you just have an employee a test that they’re vaccinated, they just promise that they’re vaccinated or unvaccinated or whatever, that’s not necessarily a medical record, they’re just saying yes or no, maybe you’re noting it in Excel spreadsheet or something, that may not need to be kept for 30 years. But if you’re asking for a copy of their vaccination card or their vaccination records through their doctor, then it really looks like that needs to be held onto for 30 years. I wouldn’t lose sleep over it. I know 30 years sounds ridiculous, but if it’s, again, an electronic file, just make sure that however you’re storing that file that you check every year or two to make sure it can still be opened, that there are programs that can still open it. If you get to the point where you don’t want to update a program anymore, or the program is about to go away, then you could print it out on paper and store it somewhere else.

Kara Govro (18:09):

I really resisted the whole keep these thing for 30 years, but it’s pretty clear that if you’re collecting this, particularly a picture of the vaccination card, that is something you should keep for a good long while. And really if the business closes, I would probably give that record to whoever is getting all of the other records. So somebody needs to be keeping payroll records, even if the business closes, because it could still potentially be on the hook for wage and hour claims, or the CEO could be sued individually, potentially, pierce the corporate veil, yada yada. So I would say whoever you’re putting in charge of all the other employee personnel files that need to be kept around should also be put in charge of the OSHA files or the vaccination records.

Kara Govro (19:08):

All right. So we’ve got a poll question now. I’m curious as to how many separate files employers are keeping or how many would you keep if you had reason to keep files on each of these things? So would you really have all five separate files that I discussed or would you maybe combine some of them to one or two together? This is totally anonymous. No one can see your answers. So if you have one fat file, I’m not turning you in, nobody else will know. I’m just very curious, because to me having five or more files sounds like a lot of work. I have never personally been in charge of the maintenance of every single file or the creation of every single file. Certainly I’ve been in and out of HR files plenty but I’m curious to see where most of you land on that. And a lot of you have voted. Cool. Thank you.

Kara Govro (20:12):

It looks like… Okay, I’ll let this go for like five more seconds then I’ll show you guys the results. This is almost a perfect… It’s not a bell curve, it’s just a little triangle there. All right. I’ll end the polling and share the results here. So most of you… Well, not most of you, but more of you than the others are at three. And I’m guessing that you probably have maybe an I-9 file, a super secret medical information file and a personnel file. I didn’t want to make the question so complicated that you had to explain which files you had, but if you said three it looks like you’re in pretty good company. Two and four, I got quite a few answers. Not a whole lot of you doing the five or more files. Can’t say that I blame you, even if it’s a best practice. And then probably thankfully not too many of you are at the one file setting. If you are at one file, hopefully this presentation will get you thinking about maybe introducing a few more.

Kara Govro (21:17):

All right, thanks everybody for participating in that. That was interesting. All right. Let’s talk now about storage. When thinking about where and how to store your employee files, you need to do some due diligence to determine how to best protect those files and keep them confidential. Regardless of how they’re stored, confidentiality and security are really important since our employees are trusting us with their private confidential information, including their social security number and their medical information that we have an obligation to keep private. I mean, really, if somebody got into your personnel files, they could have a heyday with identity theft. So we need to be taking it really seriously that we do maintain all of this information.

Kara Govro (22:10):

So if you’re using a paper filing system, we want to be thinking about security of course. So preference would be locked cabinet or cabinets in a locked office. That’s ideal. We also want to be thinking about whether those cabinets are actually secure from disasters, waterproof, fireproof. Fireproof is good everywhere, if you’re in a wet place or I suppose the plumbing could break anywhere, we want those files to be as indestructible as possible. I know that costs more, but you’re not going to be let off the hook just because your files were destroyed in a fire. You’ll still be technically responsible for having that information.

Kara Govro (22:57):

We also want to think about file access, in particular, with respect to former employee files. I’m assuming most employers are going to keep current employee files onsite somewhere, in the HR office, let’s say, where they can get to them or on somebody’s computer, but we’re talking paper right now. However, if you immediately ship former employee files off to storage, that could cause problems. You probably have a sense of how often you are asked for a former employees’ file or something in it, so you can just make your own decision about how reasonable that is. But I would probably keep former employee files around the office for, I don’t know, a year or at least 180 days, just to make easier if you do hear from them again.

Kara Govro (23:51):

You also want to think about how you’re organizing those paper files. Of course, if you have paper files, you have already been thinking about these things, but newest on top is probably going to work best for more people. Also, of course, there are files with tabs in them. And some of you who said you only had one, two or three files, you might just be using these divided file folders that have tabs in them so you can flip between, which is handy as well. Whatever works for you works for you. Electronic storage is a great option and can have a lot of benefits, largely saving space, but also probably making things easier to find. I mean, depending on how large your organization is, you could have some pretty massive file cabinetry going on if you weren’t making anything into an electronic file. So some important considerations for electronic storage, think about any obligation that you may have to produce an employees’ personnel record if they ask for it, or if you’re audited.

Kara Govro (25:04):

So how are you going to let the auditor or the employee see that file? Can you print it out and hand it to them? If so, great, and that’s fine. Just make sure that somebody knows how to do that and it’s not too difficult to translate that. Or perhaps you can put the whole file into a little zip folder and direct it to them that way, just make sure you know how that works. Of course, we still need to follow confidentiality rules, so that data needs to be kept in a secure place, certainly behind some kind of password, or only on a certain person’s computer that is password locked, but we also need to back it up. Just like with our fireproof filing cabinet, we need to make sure that if something bad happens, like the server goes down or the laptop drowns in a pool, that we still have this information somewhere.

Kara Govro (26:08):

So we’ve talked about file access and electronic and paper file viewing and how that should be limited to people with a need to know, what they need to know. You’ll also want to ensure that you’re protecting applicants and employees from identity theft, breach of privacy and HIPAA violations. All of that is good, we’ve talked about that, but let’s switch gears and talk about when an employee has access to their personnel file and your company policies around that. I’ll try to zip through this. We don’t have too many slides left here. So, there is no federal law that requires you to let an employee see their personnel file. However, there are a number of states, maybe a dozen, it might be more than that, that require if an employee asks to see their personnel file that you let them do so.

Kara Govro (26:59):

And some of those have a within a certain number of days requirement. So you want to be aware of those. You want to know if employees do in fact have a right to access their file. Even if they don’t have a right to access their file, we think it’s probably a good idea to go ahead and let them do it anyway. If you’re going to do that, you’ll want to create a policy around it. And that policy should include a number of things. So, this is really a general personnel records policy that would include information about how they can access their file and if they can access their file. So within our personnel records policy, we want to tell employees how to update their personal information. Do they talk to someone in payroll or HR? Do they do it online? We want to state that we’re going to take reasonable precautions to protect their info.

Kara Govro (27:54):

The files do have restricted access, how they can request access and that if we’re letting them review their file, that will take place in the presence of a supervisor, manager or HR. That’s, of course, if you’re letting them just sit down with an actual paper file. You don’t want to let the paper file go walking around the building. If they take it home with them, they could alter it, they could remove things, they could add things. So if what you’ve got is a paper file that you’re just going to let them flip through then they should do that in the presence of one of your HR people. On the other hand, if you just want to print out their file and hand it to them, that’s fine. They don’t necessarily need to do that in your presence. Although I suppose you could require that if you wanted to. So when please ask for their files, just a couple of best practices here, don’t panic, you should however plan to keep good enough files that you’re not worried about an employee seeing their file and making that request rather suddenly and unexpectedly.

Kara Govro (28:59):

So there shouldn’t be anything in there that surprises them. If they’ve been in trouble, if they’re on the brink of termination, if they’ve got performance issues, they should know about all that, they shouldn’t be surprised by it when they open their personnel file. Conduct exit interviews is on here. Just a thought that if someone is on their way out the door and they ask for their file when they’re leaving, might not hurt to do an exit interview if they’re willing, you can’t make them of course. But if they’re willing, you may learn about some of their grievances, it might give you slight heads up as to what they’re thinking, like are they planning to file a wage and hour claim because they think they were underpaid or paid incorrectly, or they think there was harassment that wasn’t dealt with.

Kara Govro (29:42):

So if someone is asking for their file on the way out the door, you might want to consider doing an exit interview. That said, there are plenty of reasons to ask for that. They may want to have proof of how much they made in the past, they may want to have proof of their good performance reviews or anything else that’s in that file. So, again, don’t panic but do consider why they might be asking. And if you think there’s a problem, if you’re like, “Oh no, giving them the personnel file is going to get me in hot water,” then that’s a point where you may want to seek additional guidance. All right, last slide. I know we’re running over here. With respect to destroying records once that time is upon you, you want to be aware of the federal Fair and Accurate Credit Transactions Act, which does impose rules for the proper destruction of confidential consumer information. It feels like a mouthful.

Kara Govro (30:41):

So, that federal law applies to any employer with one or more employees, so really everybody and applies to paper as well as electronic information. And it requires that employers take reasonable measures to dispose of consumer information that’s obtained or derived from consumer reports. So basically I’d recommend shredding. If you’ve got paper files then get one of those secure shredding services, they bring you a bin, you put the stuff in there, they haul it off and they cut it up into teeny tiny pieces. That’ll do the job there. As for electronic files, you’re probably going to want to talk to your IT people or some other computer security expert about how to really truly get rid of those files. Because as we probably all know, from TV at least, things that we think have been deleted from a computer have not necessarily been deleted from a computer.

Kara Govro (31:39):

So if you are not a computer professional, that’s something you may want to talk to a computer professional about just to make sure it gets done correctly. All right. Thank you all so much for your time today. I know that was a ton of information. One more reminder that we will send that out. We’ll send out the slide deck and we’ll send out a recording of the webinar. So you’ll have access to that later. And we do have a very quick poll at the end here. We’d love for you to fill that out. Thank you all so much and have a wonderful rest of the week.

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