How Long Should I Retain Employee Records?

The accurate creation and careful maintenance of employee records can be crucial. Here are some things to keep in mind.

If your business has ever been sued for alleged violations of wage and hour laws, or if you’ve otherwise ever been a party to litigation involving discovery of any kind of employee records, then you know just how important it can be for most businesses to accurately create and maintain employee files.

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    In some circumstances, the kinds of records that should regularly be maintained in employee files can help employers establish or refute claims and/or defenses in the unfortunate event that they find themselves in a dispute with a state attorney general’s office, a federal regulator, or their current or former employees (or any combination of these parties). Such disputes can represent nightmare scenarios for the unprepared. If your business’s records retention practices and policies keep you awake at night, then read on.

    Many readers are probably already aware that federal and state laws require employers to keep a variety of records on both current and former employees and furthermore, that these different recordkeeping requirements can apply for varying lengths of time. See U.S. Equal Employment Opportunity Comm’n, Record Keeping Requirements, https://www.eeoc.gov/employers/recordkeeping.cfm (last visited Jan. 1, 2019) (explaining some examples of federal recordkeeping requirements); see also, e.g., R.C. 4111.08, available at http://codes.ohio.gov/orc/4111.08v1 (Effective Date: July 1, 2000; April 4, 2007) (providing an example of an Ohio recordkeeping requirement).

    Of course, depending on which statutes apply to the various records that an employer is required to keep, different recordkeeping requirements, including records retention periods, might apply. As a result, decisions on which records to keep, and how long to keep them, can frequently become sources of confusion. Employee recordkeeping requirements, and the potential consequences for failing to heed them, mean that effective and up-to-date records retention policies are a must for any business.

    Wage and hour litigation is one of the most common circumstance wherein employee records are directly relevant to the parties’ claims and defenses. Thus, wage and hour recordkeeping requirements will be our main source of examples for this article, but we will try to include other examples as well. Keep in mind, however, that records contained in employee files can frequently be relevant in other situations such as, for example, where discrimination and/or wrongful termination are alleged, or where claims arise from a former employee’s alleged breach of a confidentiality, non-compete, or non-solicitation agreement.

    The critical items to keep in mind when formulating a records retention policy are: which laws and regulations apply, the policy reasons given to justify the enactment of these laws and their underlying regulations, the identifiability of records to employees, and the formats in which records are generated and maintained.

    Which laws apply?

    Two federal statutes generally require employers to retain current and former employee records, including payroll records and biographical data. One statute is the Fair Labor Standards Act of 1938, 29 U.S.C. § 203, et seq. (“FLSA”). The FLSA provides, among other things, protections for workers’ rights to receive a minimum wage, as well as overtime pay for hours worked in excess of 40 hours in one workweek. The FLSA is administered by the United States Department of Labor (“DOL”).

    The other federal statute is the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq. (“ADEA”). One of the main, overarching purposes of the ADEA is to protect workers over the age of 40 from discrimination in hiring, firing, and compensation decisions. The ADEA is administered by the United States Equal Employment Opportunity Commission (“EEOC”).

    Both the FLSA and the ADEA generally require records of terminated employees to be maintained for at least three years following the date of termination. However, both statutes (in addition to other federal and/or state laws that may apply) might also permit or require different records retention periods for other portions of a former employee’s file. For example, the ADEA requires private employers to retain “all personnel and employment records” about former employees for one year after the employee’s departure. See U.S. Equal Employment Opportunity Comm’n, Summary of Selected Recordkeeping Obligations in 29 CFR Part 1602, https://www.eeoc.gov/employers/recordkeeping_obligations.cfm (last visited Jan. 1, 2019). Examples of “personnel and employment records” include (but are not limited to): “[R]equests for reasonable accommodation, application forms submitted by applicants, and records dealing with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay, compensation, tenure, selection for training or apprenticeship, or other terms of employment.” Id.

    Policy Justifications

    The policy justification most frequently given for requiring employers to maintain accurate employee records is for the protection of employees’ rights, including rights to fair compensation. Records may also be used for a variety of other reasons, including to ensure that employers follow child labor laws and regulations, for example. Furthermore, employers should also be prepared to respond to records requests from employees.

    Notably, in some jurisdictions an employer’s failure to keep accurate records may in some circumstances give rise to an independent cause of action—including class and/or collective actions. For example, the Ohio Constitution requires employers to “maintain a record of the name, address, occupation, pay rate, hours worked for each day worked and each amount paid an employee for a period of not less than three years following the last date the employee was employed.” Ohio Const. art. II, § 34a, available at https://www.legislature.ohio.gov/laws/ohio-constitution/section?const=2.34a (adopted Nov. 7, 2006). Ohio employers are required to provide these records to employees or their representatives upon request. See id.

    Furthermore, employers can be sued by the attorney general, by an employee, or by a group of former employees “for any violation of this section [34a of the Ohio Constitution] or any law or regulation implementing its provisions within three years of the violation or of when the violation ceased if it was of a continuing nature, or within one year after notification to the employee of final disposition by the state of a complaint for the same violation, whichever is later.” Id.; see also, e.g., Clark v. Shop24 Global, LLC, No. 2:12-cv-00802, 2014 WL 60071, at *3, n.2 (S.D. Ohio, Jan. 7, 2014); Craig v. Bridges Bros. Trucking LLC, No. 2:12-cv-954, 2013 WL 4010316, at *4 (S.D. Ohio, Aug. 6, 2013). In other words, Ohio employers may be sued for a failure to respond to an employee’s records request, and/or for the failure to maintain accurate records.

    Identifiability of Records

    To be of any use, records obviously must be reasonably identifiable to the employees to whom they relate. In practice, this requires employers to track certain biographical data and ensure that it is all easily attributable to the relevant employees. The DOL presently requires all employers covered by the FLSA to keep certain records for all covered, nonexempt workers including, for example:

    •             Employee's full name and social security number;

    •             address, including zip code;

    •             birth date, if younger than 19;

    •             sex and occupation;

    •             time and day of the week when the employee’s workweek begins, including the hours worked each day and the total hours worked each workweek;

    •             bases on which the employee’s wages are paid;

    •             regular hourly pay rate;

    •             total daily or weekly straight-time earnings;

    •             total overtime earnings for the workweek;

    •             all additions to or deductions from the employee’s wages;

    •             total wages paid each pay period; and

    •             date of payment and the pay period covered by the payment.

    DOL, Recordkeeping & Reporting, https://www.dol.gov/general/topic/wages/wagesrecordkeeping (last visited Jan. 1, 2019); see also DOL, Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA), https://www.dol.gov/whd/regs/compliance/whdfs21.pdf (rev. Jul. 2008).

    Format

    While the DOL does not require records to be kept in any particular format, see id., employers should generally ensure that they have ready access to employee records, and they should also be mindful that current and former employees may have certain rights to request and/or view information contained in their employee files. Employers should also carefully consider keeping a redundant set of employee files backed-up in a central, secure location in order to mitigate any risk of tampering or theft of information maintained in employee files.

    Should I contact an attorney?

    If you have questions or concerns about state and/or federal recordkeeping requirements that may apply to your business, you should contact an attorney. If properly implemented, records retention policies may help reduce risks associated with wage and hour claims or other disputes. You should contact an attorney for additional information regarding this area of the law.

    This article is for informational purposes only, and it is merely intended to provide a very general overview of a limited set of examples of some recordkeeping requirements that may apply to some employers. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney. If you have questions about your particular legal situation, you should contact an attorney.

    Max Julian can be reached at mj@gertsburglaw.com or by phone at (440) 571-7541. Max and the attorneys of The Gertsburg Law Firm can help you avoid the pain of lawsuits with CoverMySix, a one-stop legal audit for your business led by award-winning litigators and in-house counsel. Visit covermysix.com to learn more about how to protect your business, and check out the new pricing for CoverMySix for Small Companies and Startups.

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    Next up: How to Implement an Effective Discipline Policy in 5 Easy Steps
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  • How to Implement an Effective Discipline Policy in 5 Easy Steps

    Be prepared to stop negative employee behavior in its tracks. Establish the right policies and procedures to handle employee discipline before it’s too late.

    If you have even one employee then you will have to deal with HR issues. Read on for some key tools, tips and secrets to addressing employee discipline and sleep better at night knowing your business isn’t being held hostage by a few bad apples.

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    In a recent COSE WebEd Series Webinar, Cheryl Perez, founder and president of BIG-HR, discussed steps to take when an issue needing employee discipline arises in your company.

    Have you ever been in a situation where:

    • You are worrying about a few poor performing employees?
    • You are being taken advantage of by employees who are always calling off, running late or performing poorly?
    • You are concerned that an employee might retaliate?
    • You are wondering if a disgruntled employee could negatively impact your business?

    Make sure you act fast enough to correct the negative behavior; give yourself the confidence of knowing you’re handling everything right and in the best interest of your business. Follow these five steps.

    Step. 1. Set up your workplace rules of conduct. This should be an important feature inside your employee manual. Employees must know they have fair and reasonable notice of expectations. The number one mistake of small to mid-size businesses is they don’t have an effective manual in place or they don’t provide employees with it except on the first day of orientation. And often times it’s not kept up to date. Company rules should be clearly communicated in writing to all employees, must be compliant with state and federal laws, and must be consistently enforced.

    Rules of conduct within the manual should include day-to-day matters—such as tardiness, attendance and dress code—and more serious matters—such as violence, theft and harassment.

    Perez provided the following tips for your employee manual:

    • Customize it so you communicate exactly what you’re looking for.
    • Communicate your policies clearly and through a formalized training process, preferably on a yearly basis. Review the manual with your entire staff at the beginning of the year. Walk your team through the rules, making sure they have a clear understanding and sign off on it.
    • Meet with your managers separately to communicate the rules so you know they are enforcing your expectations.

    And she recommended that it includes information on the following basic policies:

    • Employment-at-will
    • Family medical leave
    • Discrimination
    • Drug-free workplace
    • Social media
    • Political neutrality
    • Disciplinary

    Step 2. Establish an investigation procedure. This lets people know you are fair and you are looking into any issues that arise at your company. This is especially good for more serious allegations such as harassment, being under the influence, theft, etc.

    If an allegation is brought up against an employee, it should be promptly, fairly and thoroughly investigated. Once the investigation is conducted and you have all information, you then need to make an independent determination of facts and circumstances.

    Before you find yourself in a position where you need to conduct an investigation, it is important that you establish protocol. Determine who will conduct the investigation, what process will be used and within what timeframe. Communicate this in advance to everybody on your staff.

    Step 3. Understand what an effective progressive action policy looks like. Here is a rundown of the order in which Cheryl recommends taking action.

    • Counseling: “You’ve been late, don’t let it happen again.”
    • Verbal warning: Sit down and give them a formal verbal warning. Let them know what will happen next. Document it, but informally.
    • Written warning #1: Write it up and have another manager or witness sign off on it.
    • Written warning #2: Do everything in the first written warning, but also include a performance improvement plan.
    • Next courses of action

    As mentioned in the fourth bullet above, a performance improvement plan can be an important part in taking disciplinary action. Let the employee know that if they don’t follow these expectations then you will move to the next step in the disciplinary process. Spell out the expectations and be sure to give them the opportunity to fix the behavior.

    Step 4. Provide employees with the opportunity to appeal. Your policies and procedures regarding employee discipline should include having in place a grievance and appeal process. Doing so makes it clear that your business practices fair discipline and that employees are given the opportunity to appeal decisions. Showing your due diligence and giving them the chance to say why they don’t agree helps to clearly communicates fairness.

    Step 5. Determine the next course of action and how to implement it. When you hand out a punishment for a crime, make sure it’s appropriate. Consider the following options:

    • Transfer the employee to a different department or office to get them out of whatever the situation is that is impeding their performance.
    • Demote the employee.
    • Tell them they don’t get pay increases, bonuses, etc.
    • Suspend them with or without pay.
    • Terminate the employee.

    The key is to always apply discipline in a fair and consistent manner. Your managers and supervisors must follow the same guidelines. You can’t be fair and consistent as a business owner but then have a supervisor who is showing favoritism. And, be sure that discipline procedures comply with federal and state laws.

    Put it in writing

    One of the best things you can do during an employee disciplinary process is to document everything. BIG-HR provides its clients with templates and forms for everything they need for proper record keeping.

    What happens if you don’t document? You won’t have a leg to stand on. If you do end up with an accusation against an employee you won’t be able to defend yourself. If you’ve done a good job protecting yourself, communicating and documenting, then there is much less of a chance that you and your company will have to settle with the employee no matter what type of situation arises.

    To watch a full replay of this webinar, check out the video below. And Be sure to register for the next COSE WebEd Series Webinar on February 20, Using Video to Amplify Your Marketing and Drive Results



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  • Important Update from Ohio BWC!

    The deadline for your company’s payroll true-up reports was originally Aug. 15. However, because this is a new process, the Ohio BWC has extended a grace period until Sept. 29 to ensure all employers are able to complete this requirement.

    The deadline for your company’s payroll true-up reports was originally Aug. 15. However, because this is a new process, the Ohio BWC has extended a grace period until Sept. 29 to ensure all employers are able to complete this requirement.

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    With the transition to prospective billing, Ohio BWC now requires employers to reconcile their actual payroll for the prior policy year and reconcile any differences in premium paid. The payroll true-up allows Ohio BWC to calculate your premium accurately. Even if your payroll for the year matches the estimate, Ohio BWC provided, or you had zero payroll, you must complete a true-up report.

    The quickest and easiest way to true-up is online with a BWC e-account. If you do not have a BWC e-account, you can create one at www.bwc.ohio.gov/. Online true-up and payment will also save you money. Eligible employers will qualify for a 1-percent premium rebate, up to a $2,000 maximum rebate. While you can complete the true-up through the BWC call center, wait times may be extremely high. Therefore, Ohio BWC suggests you file your payroll true-up with a BWC e-account.

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  • Tips for Your Business: Increase Productivity by Reducing Stress

    Stress in the workforce has become one of the biggest problems in business today. It has been called a global epidemic, with numerous studies encouraging businesses to be more proactive in helping their employees manage stress. “Every day, people deal with stress at work or in their personal lives — or probably both,” says Cindy Ballog, manager of Health Promotion, Wellness and Disease Management for Medical Mutual. “That’s why it’s important for organizations to understand the effect it can have on the health of their employees, and what that means for the future of their business.”

    Stress in the workforce has become one of the biggest problems in business today. It has been called a global epidemic, with numerous studies encouraging businesses to be more proactive in helping their employees manage stress. 

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    “Every day, people deal with stress at work or in their personal lives — or probably both,” says Cindy Ballog, manager of Health Promotion, Wellness and Disease Management for Medical Mutual. “That’s why it’s important for organizations to understand the effect it can have on the health of their employees, and what that means for the future of their business.”


    With the high demand and fast pace of today’s work environment, employees at practically every level of an organization are dealing with some level of stress. By providing stress management resources, organizations can help employees be healthier and control healthcare costs. “Healthy employees are often happier and more productive employees,” says Ballog. “In many cases, turnover and absenteeism can also go down.”


    Stress is hard on the body. There are the obvious and immediate effects, such as headaches, upset stomach and loss of sleep. But there are more long-term consequences. Chronic stress can weaken the immune system, which makes it tougher to fight off illness, causing people to get sick more often. It’s also linked to high blood pressure, abnormal heartbeat, heart attacks, anxiety and depression. These conditions and others can worsen as a result of continuous stress. 


    According to Ballog, diet and exercise go a long way. “When your body feels good, your mind often does, too,” she explains. “People often adopt poor eating and lifestyle habits as a form of stress relief, but those habits just make the symptoms worse.” Exercise is another important factor. Just 30 minutes of exercise a day can have a significant impact on stress. Even at work, when feasible, Ballog says employees should be encouraged to do things like go for a walk at lunch or use the stairs instead of the elevator. 


    Of course, each employee is different when it comes to stress, with different sources and different effects on their health. Some employers offer classes on relaxation techniques and managing time more effectively. Employees should also feel comfortable discussing challenges and asking for help, which can help reduce stress for those employees and ensure projects are completed on time. 


    “It can be difficult to eliminate all the stress factors in life, but everyone can find ways to understand their stressors and respond to them a little better,” says Ballog. “Helping your employees along in the process could help your business be healthier—both physically and financially.”

    This article originally appeared in the July 20, 2015, edition of Small Business Matters.


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  • Internship Help for Your Business

    The Greater Cleveland Partnership’s Internship Central program is collaborating with Tri-C to offer GCP members the opportunity to participate as an internship host employer for Tri-C’s Summer Internship Program. There are 50 internships available and employers can host more than one intern. The program is five to 10 weeks (maximum of 100 hours to be worked) from May 30 to August 11, 2017.

    Internship Help for Your Business

    The Greater Cleveland Partnership’s Internship Central program is collaborating with Tri-C to offer GCP members the opportunity to participate as an internship host employer for Tri-C’s Summer Internship Program. There are 50 internships available and employers can host more than one intern. The program is five to 10 weeks (maximum of 100 hours to be worked) from May 30 to August 11, 2017.

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    As an external host employer, the company would be placed with an intern that best matches your needs. Tri-C manages the HR functions of the internship such as hiring, placement and internship compensation. Students will be compensated by the college at $10 per hour and will also receive financial support for one course during the Summer Term (up to 4 credits) and one book (up to $125).  

    The host employer is responsible for:

    • Providing supervision, coaching, feedback, and support to the intern.
    • Providing meaningful work and learning experiences for the intern.
    • Developing and sharing a work plan for the intern, outlining objectives and deliverables throughout the five- or 10-week internship.
    • Providing a workspace and other resources (e.g., access to computer, reference materials, and telephone).
    • Attending the Host Information Session and an Onboarding Session during Spring Term.
    • Attending the Internship Fairs. This is essential because this is where you will meet and interview potential interns and make your top three intern selections.
      • Metropolitan Campus (downtown Cleveland) - Monday, March 13, 2017, 9 a.m. to 12 p.m.
      • Western Campus (Parma) - Wednesday, March 15, 2017, 10 a.m. to 12 p.m.

    Internship host opportunities are limited and will be filled on a first-come, first-serve basis. If you are interested in hosting a student during summer 2017, please complete the Summer Internship Job Description and return to Angela Finding at afinding@gcpartnership.com by November 18, 2016. For questions regarding the program, call Angela at 216-592-2385.

    Please click on the links below to access additional information about the program.


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    Next up: Internship Program Resources for Employers
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  • Internship Program Resources for Employers

    Cultivating talent early on in the IT industry was a focus of one of the sessions at the 4th annual GET IT Here! Summit hosted by RITE on April 15 during the 2016 chapter of OHTec’s annual Tech Week.

    Cultivating talent early on in the IT industry was a focus of one of the sessions at the 4th annual GET IT Here! Summit hosted by RITE on April 15 during the 2016 chapter of OHTec’s annual Tech Week.

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    The attraction, development and retention of employees in the industry begins at the internship level. During the first afternoon session titled “Resources for Employers” the Ohio Department of Education’s Linda O’Connor and Brenda Davis Smith with the Northeast Ohio Council on Higher Education presented resources employers can use as it relates to developing their internship programs.

    Those resources are listed below:

    RITE Resources: A list of resources compiled by RITE that assist employers with developing and managing a quality internship program and additional information for educators.

    Contact:

    • Courtney DeOreo, Board Administrator
    • cdeoreo@lorainccc.edu
    • Lorain County Community College
    • 440-366-4214

    Northeast Ohio Council on Higher Education (NOCHE): Brings together business and higher education for regional economic & workforce development. Their Northeast Ohio Talent Exchange program offers individual consulting to assess your needs and design a custom program that supplements your talent acquisition and development strategies. Through their extensive network of colleges and universities, they can help you gain exposure and establish relationships with career services professionals and faculty members in a variety of disciplines. 

    Contact:

    Ohio Department of Education (ODE): Oversees the state’s public education system, which includes public school districts, joint vocational school districts and charter schools. The department also monitors educational service centers, other regional education providers, early learning and childcare programs, and private schools.

    Contact:

    Apprenticeships and Internship: Descriptions and qualifications of the different types of apprenticeships and internships employers offer.

    Ohio Career Exploration Internship Program: Grants for businesses that employ up to three high school students in career exploration internships/year, 50% of the wages paid to the student up to a $5,000. Eligible to attend school in Ohio (ages 16-18) or enrolled in grade 11 or 12 and must employ them for 200 hours (20 weeks)

    Contact:

    Ohio Manufacturing Extension Partnership (OHMEP): OHMEP supports Ohio’s small and medium-sized manufacturers by providing the products, services and assistance that are dedicated to the productivity, growth and global competitiveness of Ohio manufacturers.

    Contact:

    US Department of Labor Apprenticeship USA Toolkit: Includes tools on building apprenticeship partnerships, business outreach materials and a guide for Business Service staff, guides for funding apprenticeship and counting outcomes under WIOA and models of successful workforce system/apprenticeship partnerships

    For additional information, visit Ohio Department of Education and search keywords “apprenticeships” and “internships” for helpful forms, templates and contacts for program models.

    View the full Get IT Here! Summit Afternoon Presentation

    Looking for more IT-related resources? Keep an eye out for the June Mind Your Business Resource Guide that will feature a resource directory related to the IT industry. Contact Sara Adams at sadams@gcpartnership.com for more details.

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