By Amy Robinson
As another year comes to an end, those pesky corporate housekeeping matters we tend to put on the back burner all year start to burn a little hotter. One of the common questions we hear from our clients this time of year, sounds something like this: "Okay, so tell me again, what I am supposed to keep in these personnel files and how long do I have to make room for all this stuff?"
Rather than waiting for the inevitable e-mails or phone calls, we thought we would just address those questions now:
What are we supposed to keep in the personnel file?
Records and retention schedules of government employers are typically proscribed by detailed statutes, regulations, and policies with little opportunity for modification. Private employers in Washington and Oregon, with few exceptions, are not subject to the same level of regulatory guidance and therefore often consider the personnel file the place to tuck away anything and everything related to an employee. Some items are probably required to be included, but some likely are not. Some, however, may be strictly forbidden from being housed in the same physical file as the rest of an employee's information. The confusion is understandable, given that state statutes may define "personnel file"(at least for purposes of an employee's right to inspect or obtain a copy during or after employment) to include items that other laws prohibit the employer from including in the same physical file.
To alleviate some of that confusion and avoid legally prohibited overinclusion, here's a list of what should not be included in the same physical file as what we will refer to as the "primary personnel file,"but must still be maintained in a separate file during employment and made available for inspection, audit, or production when required:
- Certain Medical Information. A virtual quilt of state and federal laws mandate special treatment for employee medical information. The Americans with Disabilities Act ("ADA") requires an employer to keep disability-related information in a separate file to ensure that information related to an employee's disability or specific requests for accommodation do not taint other personnel decisions. This may also include certain insurance-related documentation if it includes disclosure of a disability or protected genetic information which may not be considered in employment decisions as a result of the enactment of the Genetic Information Nondiscrimination Act ("GINA") in 2008. The federal Health Insurance Portability and Accountability Act ("HIPAA") may also apply, and likewise requires that private medical information be kept confidential and separate from the primary personnel file. This may extend to medically related leave request forms, medical certification or medical release forms completed by a physician, accident reports, or worker's compensation documentation, lab test results, and OSHA injury and illness reports.
- Certain Preemployment Screening Information. Drug test results and background check reports, including credit reports (if an exception applies and you are permitted to use them in the hiring process), arrest records, and conviction records should likewise not be included so as not to impermissibly taint employment decisions, or invite the perception that they factored into a decision in the event of a dispute.
- Retirement Plan Information. This includes 401k plan and other retirement plan (qualified and nonqualified) notices, participation forms, and other records related to the employee's participation and contributions.
- I-9 Employment Eligibility Forms. These absolutely must be kept separate from the primary personnel file, and federal law imposes a $1,000 fine for each form not maintained in a separate file.
- Internal Investigation Records. Internal memoranda and notes related to harassment or discrimination complaints and investigations must also be kept separate. While the resulting disciplinary information (letters of warning, termination, etc.) should be retained in the individual employee file, the rest of the documentation derived during the investigation should be maintained entirely separate from the primary personnel file.
- Child Support Orders and Wage Garnishment Records. This information, with some exception, cannot be the reason an employee was terminated so should be kept separate from the primary personnel file, with access limited to those with payroll administration responsibilities and not the day-to-day supervisors and decision-makers.
- Job applications, resumes, licenses and accreditations, reference letters or notes, Fair Credit Reporting Act (FCRA) notices and disclosures (unless retained with the credit/criminal background check maintained separately as indicated above), and other documentation considered in the hiring process.1
- Annual/periodic performance reviews or evaluations and disciplinary records and any other records that are used to determine the employee's qualification for employment, promotion, additional compensation, or termination or other disciplinary action (e.g., reviews and evaluations, disciplinary records, etc.), and any accolades or awards.
- W-4 and withholdings-related information, other than child support orders or garnishments as outlined above.
- Training and continuing education records.
- Benefit enrollment forms, as long as they do not disclose private health information, a potential disability, or protected genetic information as discussed above.
What about supervisor's notes?
It is perfectly acceptable, and even recommended, that individual supervisors keep their own notes relating to events and conversations that occur in the workplace. This might be a spiral notebook of the day-to-day activities kept in "journal"format, or an electronic file organized by individual employee. Whatever the method, we recommend these records be kept strictly confidential and ideally stored in a way that documents the date(s) on which they were made. This will help to bolster the credibility of the information in the event of a later dispute.
While supervisors' notes should be kept secure for obvious reasons, they probably do not need to be located in the primary personnel file. However, if there are notes that reflect the basis for a termination, disciplinary action, promotion decision, or bonus or wage increase award, the information should also be incorporated into the primary personnel file. This might be a copy of the individual record or a summary of key portions compiled or summarized by the supervisor and placed in the personnel file.
How long should these and other personnel records be retained?
Most employment-related claims that can arise after an employee has been terminated have a 3-year statute of limitations, although some may be longer or shorter depending on the specific claim at issue. That means that as a general rule and unless a statute expressly requires they be maintained longer, we generally recommend that all employee-related records be retained for at least three 3 years after the employee's separation from employment. This includes:
- The full employee personnel file, including all the separate components listed above, which may be merged into a single location after termination, and include:
- The primary personnel file listed above.
- The required payroll information listed above.
- Any child support or garnishment court orders and records of court-ordered withholdings.
- The separate medical information file and any other FMLA-related documents including the dates and increments of FMLA leave, the notices given the employee and employer, and records of any leave denials or disputes with an employee over FMLA or other required leaves. This should also include disability accommodation requests and related correspondence.
- The preemployment screening information. Note also that FCRA has strict rules about destruction of consumer-related reports, including credit histories and criminal background checks, to guard against identity theft.
- Documentation related to the company's hiring activities, including:
- Job advertisements.
- Job applicant information, including application materials for all those not hired.
- I-9 Forms.
- EEO-1/VETS- 100 Surveys.
- Employment contracts, restrictive covenants (e.g., non-competition and/or non-solicitation agreements), and handbook acknowledgements should be retained for at least 6 years following the employee's termination because of statute of limitation issues for contract claims in Oregon.
- Records of on-the-job injuries or illnesses, including the details of each incident (for employers with 10 or more employees) should be retained for 5 years after the occurrence, or 30 years if exposure to toxins involved.
- 401k and retirement plans (qualified and nonqualified), election forms, documentation regarding eligibility and vesting determinations, and records of contributions typically should be retained for at least 7 years, and some, like the plan documents and tax filings associated therewith, might need to be retained for the life of the business, depending on the particular circumstances.
1. Recall, new FCRA forms go into effect on January 1, 2013. See Appendices K, M, and N to 12 CFR part 1022, available online.