Record Retention

Record Retention

Angela McCorkle Buckler

Wyatt, Tarrant & Combs, LLP

Duty to Retain Records

• An employer’s duty to retain records can arise from:– Federal or state

statutes or regulations– Filing of a charge of

discrimination or lawsuit

– Subpoena

Risks of Noncompliance

• Court-imposed penalties– Fines– Adverse inference– Sanctions

• Obstruction of justice

Precautionary Measures• Record retention policies that comply with

applicable statutes and regulations• Train employees on compliance with policy• Preservation notices (including litigation hold

letters)• Consult with attorney about potentially

relevant documents if a charge or lawsuit is received

Confidentiality• Ensure the security and

privacy of any records that are confidential or private, including medical records and personnel files.

• Limit access to privileged documents to preserve their confidentiality.

Benefits

• Compliance with statutory requirements

• Storage of records– Applications

• How long applications are considered active• Should cover electronically submitted

applications and paper applications• Unsolicited resumes?

Personnel Files• Regular personnel

files should contain applications, W-2s and tax withholding information, resumes, aptitude testing data, performance appraisals or evaluations, and pay adjustments.

Personnel Files• Medical information should be kept in a

separate, confidential file.– Drug testing results and substance abuse

rehabilitation records– Medical insurance claim forms and workers’

compensation accident reports– Requests for accommodation or medical

leave, disability leave information, and fitness for duty/return to work forms

Personnel Files• An employee’s private information should

be placed in a confidential file.– Financial and credit information and results

of background checks– Confidential complaints – I-9 forms

• Sealed envelope in the personnel file, a confidential file, or a centralized file containing all I-9 forms

ADEA• Keep payroll records for 3 years.• Keep personnel records for 1 year from the date

of the personnel action to which the record relates.

• Keep employee benefit plans and seniority systems for the entire time the plan is in effect plus 1 year.

• If an enforcement action is commenced, keep records until the action is resolved.

ADA and Title VII• Keep personnel records, including requests for reasonable

accommodation, for 1 year from the date of the personnel action to which the record relates “or from the date the record was made, whichever occurs later. In the case of involuntary termination, keep one year from date of termination.”

• Keep records relating to apprenticeship programs for 2 years or the apprenticeship period, whichever is longer.

• Keep other records necessary for the completion of an EEO-2 report for 1 year from the due date of the report.

• Employers with 100 or more employees must maintain a copy of their most recent EEO-1 report.

• If a discrimination charge or an enforcement action is filed, keep all relevant records until the matter is resolved and the statutory period for filing a federal court action expires.

Employee Polygraph Protection Act

• For 3 years from the date a test is conducted or requested, an employer must keep:– Written statement advising the employee or applicant of the time and

place of examination and the right to consult with counsel;– Notice to the examiner identifying the persons to be examined;– Statement given to employees specifying the incident under

investigation (if the employer is investigating an incident involving economic loss);

– Records identifying the loss and nature of the employee’s access to the person or property being investigated (if the employer is investigating criminal or other misconduct involving loss to the manufacture, distribution, or dispensing of controlled substances); and

– Examiner’s opinions, reports, and other records.

Employee Retirement Income Security Act

• Maintain records providing the basis for required plan descriptions or reports for the 6 years after the documents to which they pertain are filed.

• Maintain records necessary to determine benefits due to participants for as long as they are relevant.

Equal Pay Act and Fair Labor Standards Act

• Keep payroll records, collective bargaining agreements, applicable certificates, and sales and purchase records for 3 years.

• Keep time cards, wage rate tables, order, shipping and billing records, and records of additions to or deductions from pay for 2 years.

• Keep certificates of age for minors until termination of employment.• Employers subject to the Equal Pay Act must also preserve:

– Records relating to wage payments, wage rates, job evaluations, job descriptions, merit or seniority systems, and collective bargaining agreements; and

– Descriptions or explanations of wage differentials for employees of the opposite sex in the same establishment must be kept for 2 years.

Exec. Order 11246, Rehabilitation Act of 1973, and VEVRAA

• Keep personnel and employment records for 2 years from the date the record was made or the personnel action occurred “whichever occurs later” except that contractors with fewer than 150 employees or with contracts of less than $150,000 must keep records for only 1 year.

• If a discrimination complaint is filed or a compliance evaluation or enforcement action is initiated, keep all relevant records until the matter is resolved.

• Keep affirmative action plans prepared under Executive Order 11246 for the current and immediately preceding years.

Family and Medical Leave Act• Preserve for 3 years:

– Basic payroll and identifying employee data; rate of pay and terms of compensation; daily and weekly hours worked per pay period; additions to and deductions from wages; and total compensation paid;

– Dates of FMLA leave;– Hours of leave, if FMLA leave is taken in increments of less than

one day;– Copies of employee notices of leave and required notices given

by employer;– Documents describing employee benefits or employer policies

regarding paid and unpaid leave;– Premium payments of employee benefits; and– Records of disputes about the designation of FMLA leave.

Occupational Safety and Health Act

• Keep a log of work-related injuries and illnesses, annual summaries of injuries and illnesses in the log, and injury and illness incident reports for 5 years.

• Keep employee medical records for the duration of employment plus 30 years, unless a specific OSHA standard provides a different time.

• Keep records of employee exposure to potentially toxic substances and harmful physical agents that are required to be monitored for 30 years.

Kentucky Civil Rights Act• For 1 year from the date of the making of the record or

the date of the personnel action, “whichever occurs later, or in the case of involuntary termination, one year from the date of termination,” employers must preserve:– Personnel or employment records relating to the complainant

and employees holding similar positions to that held or sought by the complainant; and

– Application forms or test papers completed by the complainant and other applicants for the same position.

• But keep in mind that Kentucky’s statute of limitations for claims under the Civil Rights Act is 5 years – so caution against throwing out personnel files/documentation before that time.

The WARN Act

WARN Act

• Don’t forget the WARN Act

• Worker Adjustment and Retraining Notification Act

• Applies to all employers of 100 or more employees

WARN Triggers

• Plant closing – results in employment loss for 50 or more employees in a 30 day period

• Mass layoff – employment loss of 500 or more in 30 day period or 50-499 if they total 33% of workforce

• “Employment loss”:– termination (not for cause, quit, retirement)– layoff exceeding 6 months in duration– reduction in hours 50% or more during each month of

a 6-month period

WARN Duty

• Provide 60 days notice of plant closing or mass layoff to affected employees

• Or their union reps

• Plus unit of local government

• And State dislocated worker unit

WARN Trap

• The 90-day look-back rule

• Layoff in dribs and drabs

• None equals 50, but over 90 days they do

• Required to give notice as of first layoff in that 90 day period which led to 50 layoffs

Sale of a Business

• Seller has WARN duty to date of sale• Buyer assumes duty as of date of sale• Lawyers usually address this in language

of contract for sale• Beware – if significantly reduce employees• Or if significantly reduce pay/benefits• May be WARN trigger

Remedies/Penalties

• Civil damages = pay/benefits for 60 days

• Attorney’s fees

• Civil penalty $500/day

• Enforceable in US District Court

• Pay-in-lieu-of-notice (not really allowed by statute, but some do to try and cut off damages)

Work Furloughs

Work Furloughs

• Alternative to layoff

• Some employers with existing furloughs are expanding them while others are implementing furloughs for the first time

Traps for Exempt Employees• Reducing pay and work schedule (such as one day a week) works

well for non-exempt employees who are paid on an hourly basis• Exempt employees could lose their overtime exemption under the

FLSA under such a plan• Exempt employees must be paid the same minimum salary

($455/week) for each pay period in which they perform any work• Employer also cannot deduct compensation from an exempt

employee’s paycheck during a current pay period based on a reduction in work time

• If exempt employee performs any work during a work week, generally must receive their entire salary for that week or risk losing overtime exemption

Solutions• Consider implementing furloughs or shut downs on a

work week basis• A furlough of exempt employees for an entire work week

does not jeopardize the exemption status because the employee is not entitled to a weekly salary for any week in which no work is performed

• Absolutely no work can be permitted by the employee during such furlough (Blackberries, remote access – creates obligation to pay exempt employee’s full salary)– Employer should inform exempt employees in writing that no

work is authorized during the furlough period without express advanced written approval and such approval should be limited to 1 or 2 high-level management individuals

Solutions• Mandatory use of vacation

– Problem where employees do not have sufficient vacation accrued to cover furlough

• Allow employees to elect whether to use vacation or PTO during a furlough

• Advanced notice– Should be provided to employees in writing

• Employment contracts– Check to make sure doesn’t require consideration for

modification to terms of employment – ` may restrict employer’s ability to furlough employees or may

require employer to bargain before implementing furlough• Furloughs for longer periods or significant cuts in work hours may

trigger WARN clause

Regulatory Legal Update

RESPECT Act (Re-empowerment of Skilled and

Professional Employees and Construction Tradeworkers)

RESPECT Act• Referred to House Subcommittee on Health,

Employment, Labor and Pensions on 5/14/09.• Increases the number of employees who have the right

to organize under a union by redefining “supervisor” under the National Labor Relations Act (NLRA).– Currently, supervisors are not considered “employees” under the

NLRA. Supervisors are individuals responsible for assigning tasks and directing other’s work.

– The RESPECT Act removes the terms “assign” and “responsibility to direct” from the supervisor definition, and instead requires that individuals perform supervisory functions during the majority of their working time.

Lilly Ledbetter Fair Pay Act of 2007

Ledbetter v. Goodyear Tire

• Supervisors gave bad evaluations because she was a woman

• Made less than male colleagues• Supremes held that a pay-setting act, such as a

merit increase• Is a discrete act which tolls time to file an EEOC

complaint• 180/300 days• Even if employee not aware of discrimination

• President-elect Obama is a sponsor of the bill• To amend Title VII, ADEA, ADA, Rehab Act• Each decision a discrete act, but so is each

paycheck• So each time you pay less, due to discriminatory

evaluation (for example)• The time to file a charge starts again

Ledbetter Act

Status of Ledbetter

• The bill passed the House on 1/9/09 by a vote of 247-171 and passed the Senate

Ledbetter Act• President Obama signed into law on January 29, 2009.• Amends the Civil Rights Act of 1964 by allowing the 180-

day statute of limitations for an equal-pay lawsuit involving pay discrimination to reset with each new discriminatory paycheck.

• Direct answer to the U.S. Supreme Court decision, Ledbetter v. Goodyear Tire & Rubber Company, 550 U.S. 618 (2007). Case held that statute of limitations for bringing an equal-pay lawsuit began to run at the date pay was agreed upon, not date of most recent check.

OSHA(Occupational Safety and Health

Administration)

OSHA Reform – Protecting America’s Workers Act

• Referred to the House Subcommittee on Health, Employment, Labor, and Pensions on 5/21/2009.

• Extends OSHA coverage to include all federal, state, and local employees.• Increases the maximum penalty for willful OSHA citations from $70,000 to

$120,000.• Increases the minimum penalty for willful OSHA citations from $5,000 to

$8,000. • Establishes a $20,000 minimum penalty if an OSHA violation causes an

employee’s death. • Requires OSHA to investigate all employment situations causing death or

hospitalization of two or more employees. • Gives workers the right to refuse hazardous work.• Prohibits discrimination against employees for reporting injuries, illness, or

unsafe working conditions.

Paycheck Fairness Act

Paycheck Fairness Act

• House passed bill on 1/9/09 by a vote of 256-163. • Updates and strengthens the Equal Pay Act of 1963.• Deters wage discrimination by prohibiting retaliation

against employees who disclose their personal wages or inquire into employers’ wage practice.

• Strengthens penalties for equal pay violations by providing women the option to proceed in an “opt-out class action suit” and receive punitive and compensatory damages for pay discrimination.

• Authorizes additional training for EEOC so staff can better handle wage disputes.

Employee Free Choice Act

Employee Free Choice Act

• Referred to the House Subcommittee on Health, Employment, Labor, and Pensions on April 29, 2009.

• Eliminates current requirement that a majority of employees must vote by private ballot in favor of unionization in an organizing election prior to the union’s certification by the National Labor Relations Board (NLRB).

• Instead, workers would be able to decide whether to – [1]hold a secret ballot vote on union formation after a majority of

employees signed union authorization cards; or – [2] have the union certified based on the signed union

authorization cards alone.

Employee Free Choice Act

• Designates a timeline for first contracts to be drawn up between unions and employees, stipulating that if no deal is reached within 120 days, a decision reached by the arbitration panel will be binding for two years.

• Increases the fines employers must pay if found guilty for unfair labor practices.– If employer discriminates against an employee for union-related

activity before an initial collective bargaining agreement is signed, employee is entitled to treble damages (amount of back pay multiplied by three).

– Employers subject to maximum $20,000 civil penalty for each “willfully or repeatedly” committed unfair labor practice.

Healthy Families Act

Healthy Families Act• Referred to House Administration, House Committee on

Education and Labor, and House Committee on Oversight and Reform on 5/18/2009.

• Requires employers with 15 or more employees to provide one hour of paid sick leave for every 30 hours worked, up to 56 hours of paid sick leave a year (7 days for 8 hour work day).

• Sick leave includes time off for an employee’s own illness, preventive care, care for a family member, and medical or legal assistance related to stalking, sexual assault, or stalking.

Public Safety Employer-Employee Cooperation Act

Public Safety Employer-Employee Cooperation Act

• Referred to House Committee on Education and Labor on 1/9/09.• Requires all state and local governments to collectively bargain with

public safety employees (firefighters, police officers, emergency medical personnel) by forming a federalized collective bargaining system.– Requires states/localities to permit bargaining over wages,

hours, and all terms and conditions of employment.– Requires states/localities to provide dispute resolution

mechanisms.

• Allows the Federal Labor Relations Authority (FLRA) to decide whether a state’s collective bargaining procedure and structure

meets the standards defined in the Act.

Davis-Bacon Act

Davis-Bacon Act• President Hoover signed into law on March 3, 1931. • Establishes requirements for paying prevailing wages on

public works projects. • Federal government construction projects and most federally-

assisted construction projects over $2,000 must include wage provisions in their contracts for paying on-site workers no less than local prevailing wages and benefits paid on similar projects.

• Wage determinations will be modified 6/19/09.• Rep. Connie Mack sponsored an amendment to remove all

Davis-Bacon prevailing wage provisions from the Water Quality Investment Act of 2009, but the amendment failed with a 140-284 House vote.

COBRA Subsidy Revisited

COBRA Provisions in ARRA• COBRA subsidy effective February 17,

2009• 65% subsidy for “Assistance Eligible

Individuals”• Maximum period of 9 months• Can date back to employees terminated

after 9/1/08• Election is made on prospective basis

“Assistance Eligible Individual”

• Qualified beneficiary that loses coverage– employee, spouse*, dependents

• Involuntary termination– must be independent exercise of employer’s unilateral

authority

• Between September 1, 2008 – December 31, 2009

• Elects COBRA coverage

Exclusions

• Income exceeds $145,000

• Phase out $125,000 - $145,000– Any phase out is recaptured on employee tax return

• If eligible for other health benefits– spouses health plan– Medicare

Effect on Employers

• Front subsidy money to employee

• Take credit against future payroll tax

• Report on Form 941 (line 12a, 12b)

• Must have provided notice to employees by 4/20/09.– Model notices published by DOL at

http://www.dol.gov/ebsa/cobra.html

Notice

• Must be sent to eligible individuals– can have separate subsidy notice or alter

existing COBRA notice

• Potential penalties for failure to satisfy notice requirements can be up to $110 per day per notice

Employer To-Do List

• ID eligible employees back to 9/1/08

• Cross check notice with model notice

• Provide notice if not already done.

• Coordinate w/ Payroll & IT to claim premium assistance payment credit

• Consider impact if increased COBRA costs on claims experience & plan rates