Recordkeeping Critical to Avoiding Legal Liability

                If you get sued by one of your employees, the first thing your defense lawyer will want to see is the employee’s personnel file. Many employers don’t know what to keep in their personnel files or don’t retain the records long enough.

               The most important records if you get sued will be those concerning your employee’s performance. Formal evaluations are helpful, but regular notes of day-to-day problems with your employees are even better.

               You need to get into the habit of writing a note to the file every time your employees perform well or poorly. The notes do not have to be pretty; they can even be on scratch paper. Just be sure to date each note.

               Other than performance notes, many other records should be readily available on each employee. The simple checklist at the end of this article should help you decide what employment records to create, file and retain so that you can defend yourself adequately against any employee claims.

               Keep all of these employment records throughout the employee’s employment

and then for at least 3 years after termination of employment.  Generally this will meet all

records retention requirements.  Only the last two records (concerning OSHA and on the

job injuries) need to be kept for longer than 3 years – keep them for 5 years after any

incident reported.

               When you are ready to dispose of employee records, the Fair and Accurate Transactions Act (FACTA), passed by Congress in December 2003, requires that you shred or burn all paper containing reference checks, credit reports, criminal histories or other background information derived from a consumer report (third-party information gathering report) on an employee. If the data is kept electronically, it has to be smashed or wiped clean before disposal.

               To keep things simple and legal, when you decide it’s time to destroy employee records, use the shredder or a computer hard-drive wiping service and keep a record of when and how you took these steps to protect your employees’ identities and confidential information.


_____              Employment applications.


_____              Any reference check, credit history, criminal history, or background investigation of an employee (including the fact that you tried but could not obtain a reference, criminal history, etc.)


_____              Signed disclaimers and acknowledgments by employee of at will employment and agreement to follow personnel policies.


_____              Completed I-9 immigration forms.


_____              Disciplinary warnings, reports, suspensions and other disciplinary records.


_____              Post-employment communications about employee, such as with health plan benefits administrators, and Texas Workforce Commission regarding unemployment compensation.


_____              Record of any personnel action taken (hiring, evaluation, layoff, promotion, pay raise, termination), including offer letters and resignation letters.


_____              Time records filled out by employee showing all hours worked in each workweek (even if input into a computer later, keep the employee’s signed hard copy for at least 2 years).


_____              Records of each payroll showing employee’s regular rate of pay, overtime pay, total wages paid each pay period, date of payment and pay period covered.


_____              Records of payroll taxes, benefits, unemployment and other payments made on behalf of employees.


_____              Written permission of employee for any payroll deduction other than taxes and all written court orders for child support or alimony payment deductions.


_____              If you have at least 50 employees: Family and Medical Leave Act information for any employee taking leave, including notice of employee of need for leave, date leave began, hours of leave taken, records of employee benefits regarding paid and unpaid leave, records of any dispute regarding FMLA leave, all medical records of leave, such as physician’s certification of serious health condition.


_____              COBRA announcement to each employee in a health insurance plan at time employee becomes eligible to participate in plan.


_____              COBRA notice to health plan administrator sent within 30 days of qualifying event (divorce, termination, reduction in hours, etc.) for each employee who experiences qualifying event.


_____              If you have at least 100 employees: most recently filed EEO-1 Report.


_____              Employee requests and employer responses to such requests for reasonable accommodation under the Americans with Disabilities Act.


_____              Medical examinations, drug tests, and medical inquiries (post-offer); MUST BE KEPT IN SEPARATE, LOCKED FILES AWAY FROM REGULAR EMPLOYMENT FILES.


_____              Annual log of injuries resulting in lost workdays or fatality.


_____              Incident reports of each injury resulting in lost workday or fatality, made not more than 6 days after employer learns of injury.


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