Lawful Terminations: A How-to Guide

When deciding whether or not to terminate an employee, and weighing the pros and cons, you need to assess the costs and benefits of keeping this employee versus firing him or her. Consider the following:

  • the nature of the behavior or performance issues involved
  • the seriousness of these issues
  • how this employee is affecting other employees or clients
  • how easily you can replace this employee
  • the costs of recruiting, hiring, training and retaining a new employee

If this employee is exposing your practice to significant legal or business risks, then the decision to terminate the employee will be different from one where, perhaps with coaching, the employee could potentially contribute to the company.

If the issues are increasing the workload and responsibility of other employees, then it is important to also consider the ripple effects that the behavior of one employee is having on the entire practice.

This article will review the key considerations when beginning the process of a lawful termination. Start with the question of why you are considering terminating this employee. It is important that you can determine the reason before moving forward with the rest of the process.

It may be tempting to terminate someone’s employment because he or she doesn’t fit well into the company culture, or isn’t especially likeable.  It’s easy to revert to the notion of at-will employment when that’s the case. The principle of at-will employment means that an employee can be fired at any time, for any reason, as long as there is not an illegal reason involved. Some people may conclude that there shouldn’t be a problem with this termination.

An issue can develop if you terminate an employee at will, and then that employee states that an illegal reason was involved. In this case, the employer must prove that this was not the situation.  Unfortunately, wrongful termination claims are not always easy to disprove. They can also harm your practice’s reputation, breed mistrust among other employees, and lead to lawsuits.

Next, we will review the following:

  • reasons for wrongful termination claims
  • the actual conversation about termination
  • information about high-risk terminations

Throughout this article, we will also share strategies to protect your practice.

Reasons for Wrongful Termination Claims

One reason for wrongful termination is employment discrimination. It can include discrimination based on race, color, religion, sex or national origin. An employer also cannot discriminate against an employee because of their disability, age or pregnancy. These are all illegal reasons to fire someone. You also can’t terminate an employee as a form of retaliation. 

An employer has the legal obligation to honor employment contracts, union or non-union, including termination clauses. Not doing so is considered breach of contract. There can also be an implied breach of contract, when a company implies, either in writing or verbally, that employment is protected.

This is not intended to be a complete list of potential wrongful termination claims. Instead, it can be used to show the flaws in simply firing someone, at will. There is a more graceful way to go through the process, and  when followed, it should prevent the employee from being surprised that he or she is getting fired. Therefore, the employer is better protected against claims of wrongful termination.

Poor Performance/Behavior Over Time

It’s important to create and carefully follow a disciplinary policy for your practice. It may consist of rules such as providing an employee who has demonstrated a substandard performance with a verbal warning the first time, a written warning the second, and probation or termination on the third. In order to have an effective disciplinary policy, though, you’ll also need to have clear and consistent policies about employee behavior and performance so that your employees clearly know the practice’s expectations. The policies must be consistently enforced, as well.

When a policy is broken, you should follow your progressive disciplinary procedures in a timely way, and in a way in which the severity of consequences increases if an employee doesn’t correct the behavior. In your disciplinary meetings with that employee, you can then share what policies were broken, why this is problematic, and the consequences.

Document every time that you speak to a particular employee about the issue (such as lateness or gossiping), doing so directly after the meeting and listing the following:

  • date of the meeting
  • specific behaviors discussed
  • policy broken
  • consequence for this behavior
  • consequences if this happens again
  • employee’s responses
  • date of follow-up meeting with the employee

It is recommended that you have another manager at disciplinary meetings. This allows one person from the practice to conduct the conversation with the employee, and the other to take notes and serve as a witness. Be sure to have the employee sign relevant disciplinary documents. Following this procedure gives your employee a chance to improve, while also protecting you, as an employer, from wrongful termination claims or lawsuits.

Keep in mind that each time a disciplinary procedure occurs with an employee, the documents that you create may ultimately end up in court. Be sure to professionally list all pertinent details. Avoid judging or interpreting an employee’s behavior; for example, do not comment that while George says he’s late because of traffic, the real issue is that he’s lazy. Stick to the facts.

If your employee isn’t breaking policies, but also isn’t meeting expectations, you can create a performance improvement plan (PIP). This allows you to share goals and checkpoints, while also offering concrete next steps and support. Be sure to have the employee sign the PIP. Keep this documentation, whether disciplinary or PIP, confidential and safely stored.

One-Time Incident

Although documenting behavior or performance issues over time is best, sometimes it isn’t possible. For example, if an employee steals money, becomes violent at work, or brings illegal drugs to the workplace, then the rule that is broken is so severe that the employee needs to be fired immediately. In that case, what’s important is that you respond to any future situations of this severity at a comparable level of discipline.

Conversation about Termination

If the decision to fire a particular employee has been made, then the next issue to consider is how to have the conversation with him or her. If you’ve provided that employee with verbal and written warnings according to your company’s disciplinary policy, then you have increased your protection. Another option is to consult with your practice attorney to make sure that the termination is solid. This will prepare you in case the employee decides to pursue action against the practice.

Once you’re ready to hold the meeting, be timely about making it happen. However, take into account if that employee has something significant happening that day that could make your timing inappropriate.

It can help to have a termination agenda to keep the meeting on track and provide topics to be covered. The agenda should also include items to be returned to the employee and a reminder to get a confirmation of the person’s current address so a final paycheck can be mailed. Having an agenda can also help to guide all parties involved through what’s likely to be an emotionally-charged and stressful meeting, and help to ensure that you cover all necessary items.

Be sure that the location of the meeting is somewhere private. Then, be direct and clear without being harsh. Explain to the employee that after meeting with that employee to discuss behaviors, including the issuance of verbal and written warnings, the decision was made to separate employment that day. Be transparent and make sure you state that the decision is not negotiable. If the employee tries to debate the decision, don’t engage or try to justify yourself, and avoid saying anything that could be construed as a threat.

Keep the meeting short, lasting no longer than 10 to 15 minutes. The greater the length of the meeting, the more potential that something could be said that could expose the practice to a lawsuit. Close the meeting by thanking the employee for contributions made and extend to him or her your best wishes for the future.

An important topic to discuss is the specifics about the physical separation from the workplace. Should the employee, for example, take his or her belongings now? Or do you plan to meet him or her after hours to take out belongings when other employees aren’t at work? In some cases, the employee may have missed too much work, which led to the termination; in that case, you may want to focus on avoiding a humiliating situation for the person. If the reason for termination is something such as embezzlement, then your main focus would be to have the employee leave the workplace as soon as possible. If the ex-employee has property of someone else’s at work, or vice versa, arrangements must be made to transfer belongings.

Be prepared to answer questions that might arise. You can’t predict what they will be, but a common question is whether you will provide references for that person. Regardless of your response, make sure to protect your company while also treating the terminated employee with respect.

Prepare to provide any relevant information about the employee such as benefits, unused vacation time, or any severance agreement. Summarize all relevant information in a termination letter. This dated letter should state that the employee has been terminated, along with a brief description of why and any other pertinent details.

Afterwards, let other employees know about the termination without discussing any confidential information or making negative comments about the former employee. Be straightforward, sharing information the other employees need to know, reassuring them that the company isn’t eliminating roles. Acknowledge that, in the short term, other employees may need to help to manage that person’s workload.

High-Risk Terminations

These are terminations where employees are likely to sue the employer in connection with the termination. Some situations in which this is more likely to happen include the following:

  • employee is a member of a legally protected class
  • employee is a difficult one
  • employee has a relative who is an attorney
  • employee is surprised by the termination

As far as the first example, federal law prohibits discrimination on the basis of age (over 40), race, color, religion, sex, national origin or disability. In addition, individual states may have laws that are more stringent. When terminating the employment of someone in a protected class, the employer may be vulnerable to anti-discrimination claims for any statements made prior to, during or even after the employee’s tenure. Examples of these statements are as follows:

  • I know it must be hard to balance your job responsibilities with the new baby.
  • Most 50-year-olds would have trouble meeting the physical demands of this job.

Comments such as those are commonly part of a casual conversation with no discriminatory intent, but could add credence to a wrongful termination claim.

Other employees are difficult: argumentative and/or obstinate. They may refuse to take responsibility for their behavior or performance, becoming defensive and blaming others. Employers may be reluctant to fire this type of employee, fearing confrontation or retaliation. The practice can effectively be held hostage to this type of employee and, when fired, the employee may respond with a lawsuit.

When employees have relatives who are attorneys, it may make it easier for them to sue. The relative may even make the suggestion, and if legal services are offered to the disgruntled employee at a reduced fee, or even for free, there are fewer barriers to suing. Finally, surprised employees may be so devastated that they legally challenge the termination. These situations highlight the importance of carefully creating and following policies as described.

Conclusion

The termination process is almost always uncomfortable, carrying with it a varying degree of legal risk for your practice. Your goal is to make the process as amicable as possible while continuing to minimize risk along the way. The recommendations in this article won’t cover every situation but should provide broad guidelines that you can tailor to your unique circumstances. It is recommended to consult with an employment attorney experienced in the laws for your state.

Read more on the WMPB website here!

State-Law Savvy: How to Find and Follow State Employment Laws

Employment laws have been created to protect workers from wrongdoing in the workplace, addressing issues such as the following:

  • minimum wage requirements
  • protection from discrimination
  • workplace safety
  • child labor laws
  • workers’ compensation

These laws have been constructed to protect both the employee and the employer. In the United States, the relationship between employer and employee is known as a “master-servant” situation because the employee is expected to perform specified duties under the auspices of the employer. Labor laws have been created to prevent employers from abusing their power. These laws continue to be created and modified with the changing times.

Two good examples of employment laws created to balance the master-servant relationship include the following:

  • Fair Labor Standards Act (FLSA)
  • Age Discrimination in Employment Act

They aren’t the only laws providing this balance, but are good examples of the kinds of laws created to help ensure that employers cannot discriminate against their employees or otherwise abuse their position. The goal is not to create laws that simply favor the employee over the employers, but to create a more balanced and equal relationship. For example, employers are protected in that if they don’t believe a person is capable of doing a particular job, they are not required to hire the person. They also do not have  to keep someone indefinitely who isn’t performing to a reasonably-established standard.

There are federal laws addressing each of these topics, and states also make their own laws, as well. States cannot create laws that contradict existing federal laws, and if no relevant state law exists, then the corresponding federal rule applies.

Next, we will address state laws in two different but equally important ways:

  • how to discover what the laws are in your state
  • how to best follow those state-specific laws

Finding State-Specific Employment Law Information

You can find answers to questions about employment law, in general, through the United States Department of Labor. There are also links to state-specific law information. Ways to contact this federal agency include:

U.S. Department of Labor
AGENCY NAME
OFFICE NUMBER

200 Constitution Ave NW
Washington, DC 20210

The U.S. Department of Labor may direct you to an agency in your own state to get the state-specific answers you need, so you will often find answers more quickly by going directly to your State Labor Office; you can find a comprehensive contact list here: https://www.dol.gov/whd/contacts/state_of.htm

Another way to find this information is to talk to an attorney well versed in your state’s employment laws. This is often the best way to understand how a particular law applies to your specific situation.

Following State-Specific Employment Laws

Step one to following any law, of course, is to thoroughly understand that law and its implications. You will also need to investigate how your specific situation fits into applicable laws.

Here’s just one example of an employment law that differs from state to state: final paycheck laws. Because the FLSA does not address this issue at all, you need to look to state laws to find out how and when you must issue a final paycheck to an employee leaving your practice. Does it matter, for example, whether the employee was fired or if he or she quit? Sometimes, yes. Sometimes, no. It depends upon the law in your state.

Regarding finally paychecks, four states currently have varying laws on this topic: Alabama, Florida, Georgia and Mississippi. In Missouri, no law exists about when you must give a final paycheck to an employee who quits, but a fired one must receive it immediately. In Ohio, no state law dictates when a fired employee gets his or her last paycheck, but one who quits must receive it by the first day of the month for wages earned in the first half of the prior month, or on the fifteenth of the month if wages were earned in the second half of the previous month.

So, by examining just one state employment law in six different states, it’s easy to see the wide variety inherent in today’s laws. When someone leaves your practice, how vacation time payout is handled is also subject to varying state laws. Some states have no laws whatsoever on the subject. Others say accrued vacation time must be paid out, while others state that it must be paid out if the employee agrees to certain conditions—and, for example, in Maryland, employers can create a written policy that states they don’t pay out for accrued vacation at all. If employees are notified of this policy when first hired, this policy can stand.

Here’s an example of one type of employment law that is covered by federal law, in which a state is allowed to offer more to employees, but not less: minimum wage laws. You can find information about each state’s laws at the U.S. Department of Labor’s site (https://www.dol.gov/whd/minwage/america.htm) via a color-coded map that indicates how that state’s laws compare to the federal standard. Hover your mouse over your state to see the current rate for you and click on your state to find more detailed information about applicable laws.

For example, in 2018, the federal wage law is $7.25. Click on Nevada in the map described above, and you can see that they have established a two-tiered system. If an employer doesn’t offer health insurance benefits, the minimum wage is $8.25, with premium pay required on days that exceed eight hours or weeks that exceed 40. However, if the employer does offer health insurance benefits and the employee accepts them, then the minimum wage is the same as the federal rate of $7.25.

Meanwhile in Missouri, they have established a minimum wage rate of $7.85, with no daily premium pay requirements, and premium pay is only required if an employee works more than 40 hours per week. Employees who work for a retail or service business with gross annual sales of less than half a million dollars per year, though, are not required to receive more than the federal minimum wage rate. And, if an employee works in a “seasonal amusement or recreation” business, premium pay is not required until “after 52 hours.”

In Arizona, the minimum wage is $10.50 per hour. In Oregon, it is $10.75, with premium pay after 40 hours – and, if someone works in “nonfarm canneries, driers, or packing plants and in mills, factories or manufacturing establishments (excluding sawmills, planning mills, shingle mills, and logging camps)”, premium pay is required after ten hours in a day.

Not all examples apply to veterinary practices, of course, and the point of these examples is to show how widely state laws can vary. So, it’s wise to fully use the resources available to you through government offices and websites and, when needed, through advice of employment attorneys. Laws can change, so make sure that your practice is state-savvy for this year’s laws.

Following State Laws: Vital for Practice Success

Because employment laws are created to help maintain a healthy balance between employer and employee, carefully following them helps you to create and/or maintain a healthy work environment for everyone in the practice. Conversely, by not following these laws, you’ll open your practice up to a significant risk for lawsuits.

 

Employee Personnel Files and Records

What types of employee records do you have to maintain?  How long do you have to retain copies of various employee records?  Are there certain documents you need to save longer than others?  Can you keep all employee records in one file?  Should medical doctor notes or I-9 employment eligibility documents be kept in the employee’s “personnel file”?  What about payroll and tax records?  How about correspondence and records generated during an internal investigation?  At what point can you start destroying records?   When and how must documents be destroyed?  Are there specific laws pertaining to document shredding?

The simple answers to all these questions are….. there are no simple answers.  These are some of the difficult questions facing Practice Owners and Practice Managers responsible for interpreting and ensuring proper compliance with the dozens of federal and state laws governing employee records retention.  Most of us realize it would be impossible to retain every employee record forever.  One would need to devote a separate building just to store these records.  While there is considerable debate about how long various employee records should be kept, employers should err on the side of retaining any employee records they think might be needed in future.  It is also advisable to establish a schedule for auditing your Practice’s record keeping, including employee files, as well as a consistent program for records destruction. However, be cautious that even with such a schedule in place, if a discrimination charge or lawsuit is filed against your practice, all records relevant to the charge must be kept until “final disposition” of the charge or lawsuit.  Examples of individual employee documents that may be needed in a lawsuit include:

  • Official Employee Folders
  • Application & hiring records
  • Promotion documents
  • Disciplinary records
  • Performance reviews
  • Training records
  • Payroll records
  • Medical records
  • Polices & procedures
  • Job descriptions
  • Employee grievance & complaint records
  • Job postings/advertisements
  • Supervisor’s notes & records

There are other records and documents pertaining to all employees in the practice that should also be retained, including:

  • Policies prohibiting discrimination & harassment
  • Employee Handbooks
  • Acknowledgements/Receipt of employee handbooks and policies
  • Training records (for all)
  • Decision-making documents

Why Retain Employee Documents

Several statues & regulations require employers to create and/or retain various types of employment records for varying periods of time.  It is interesting, and confusing, to note that requirements for retaining the same or similar records are often required under more than one law.  Unfortunately, the periods of time required to retain this information may vary from federal to state law or between one law and another.  This paradox merely adds to the confusion over how long to retain employee records.  Here is a listing of some of the laws that require employers to retain various employee records:

  • Equal Pay Act (EPA)
  • Fair Labor Standards Act (FLSA)
  • Title VII of the Equal Rights Act
  • Age Discrimination in Employment Act (ADEA)
  • Family Medical Leave Act (FMLA)
  • Employee Retirement & Securities Act (ERISA)
  • Occupational Safety & Health Act (OSHA)
  • Lilly Ledbetter Fair Pay Act (LLFPA)
  • Uniform Guidelines on Employee Selection Procedures (UGESP)
    Immigration
    Reform & Control Act (IRCA)
  • Federal Insurance Contribution Act (FICA)
  • Federal Unemployment Tax Act (FUTA)

Lilly Ledbetter Fair Pay Act

One piece of recent legislation has thrown a “monkey wrench” into figuring out how long to retain employee records.  The Lilly Ledbetter Fair Pay Act, passed by President Obama during his first few days in office, extends the window of opportunity for a current or former employee to bring suit against an employer for perceived discriminatory pay practices.  Lilly Ledbetter, a former Goodyear Tire & Rubber Company employee, filed a discrimination suit against her former employer based on her gender.  Specifically, Ms. Ledbetter claimed Goodyear lowered her performance reviews which resulted in smaller merit increases for years.  This case made it all the way to the US Supreme Court which upheld her claim, but limited the judgment award to discriminatory practices that occurred within the previous 180/300 days.  However, in light of the passage of the Act, employees are now allowed to file suit for discriminatory pay practices that were instituted years prior.  Thus, an employer may now need to produce employee records that go back for many, many years to refute the charge.  If no documentation is available, the practice may not be able to rebut claims or provide an adequate defense for its actions.  This will most likely result in the practice losing the claim and also having to be responsible for attorney’s fees & costs.  Further, some evidence may be excluded without the proper and legal supporting documentation.  Finally juries may think records that are not available would have only supported the claim made by the plaintiff.

What to Do

What does this new law mean for practices and their recordkeeping requirements?  In light of recent legislation, there is no longer a universal answer for how long to keep records.  Each practice should develop its own records retention strategy based upon its own culture, risk tolerance, and available resources.  Since the retention requirements of various laws overlap, employers should err on the side of retaining any employee records they think might be needed in future.  As a minimum, each practice should take the following steps:

  • Develop, examine &/or revise its record retention policies and stick to them; decide how long each piece of documentation should be kept, how it will be stored, and, ultimately, how it will be destroyed.
  • Establish separate files for employee records, as follows:
    • Official Employee Folder-one file for each employee
    • Individual Employee Medical Folder- one file for each employee
    • I-9 Folder-one file for current employees and one for terminated employees by year
    • Health & Safety Training Folder (OSHA)-one file for each employee
  • Review &/or update pay and performance management policies to ensure there are no indications of discrimination or unfair labor practices ensure electronic records policy is consistent w/hard copy records policy.
  • If you retain records electronically, ensure your electronic records policy is consistent with your hard copy records policy since electronic signatures can represent enforceable agreements if they clearly & explicitly deliver terms of agreement.
  • Train managers and supervisors on the new risks of unfair pay practices.
  • Conduct an annual audit of all employee records

Developing a Records Retention Schedule

A records retention schedule will help a practice ensure that it keeps the records it needs, for as long as they may be needed, and then destroys them when they’re no longer useful.  However, you have to know what you have and how long to keep it—legally and for your own business purposes—before you can establish an efficient records management system. That’s why it’s important to inventory your records and develop a schedule.  Here are some guidelines for establishing your own records retention schedule:

Records                                                                                                        # Yrs

Recom: all HR-related records                                                                       6

Any record to support pay diff: men vs women                                          3

Payroll records, incl comp p/week                                                               3

IRS tax-related payroll info                                                                              4

FMLA/USERRA                                                                                                  3 after term

I-9                                                                                                                          3 after DOH

Pension & welfare plan documents                                                               6

OSHA logs & summary of recordable injuries                                              5

Employee exposure to toxic substances, incl MSDS                                  30

Employee workers compensation claims                                                      duration of employment + 30

Resumes & applications                                                                                    1-2

Polygraph test results                                                                                        3

Remember, retaining employee records is something every employer is required to do.  What, how and for how long you save is dictated by law.  While developing and adhering to your records retention policies may be cumbersome, think of it as insurance for your practice.  Without having the proper records, you may become vulnerable to unfounded claims by former employees that could cost you considerable time and money.  That’s why a little effort along the way can save you lots of headaches in the future.

Employee Guidelines for Social Media Usage

As of October 2015, says Pew Research Center, 76% of adults in the United States who have access to the Internet use Facebook – and, with the abundance of smartphones, people are connected to the Internet with just a finger tap. This trend is unlikely to decrease – mobile phone usage OR social media participation – so it just makes good sense for veterinary practices to establish social media policies for their employees.

Important note: It also makes sense to consult with an attorney when creating your policy. This is an ever-changing social phenomenon and issues are not always clear-cut.

Social Media Policies

First, how do you define social media? You’re almost certainly considering platforms such as Facebook, Twitter, LinkedIn, Google Plus and the like to be social media. But, what about an employee’s personal blog? Comments he or she makes on someone else’s blog?

It’s important that your policy clearly outlines what’s permissible and what isn’t, but you should first share the following context:

Policies should state that the practice respects the rights of its employees to use social media as a method of self-expression and public conversation. State that the practice does not discriminate against employees who use social media to communicate personal interests and affiliations, or any other lawful purposes.

A 2012 memorandum by the Office of the General Counsel (OM 12-59) uses phrases like this in their sample policy:

  • “Ultimately, you are solely responsible for what you post online. Before creating online content, consider some of the risks and rewards that are involved.”
  • “Keep in mind that any of your conduct that adversely affects your job performance, the performance of fellow associates or otherwise adversely affects members, customers, suppliers, people who work on behalf of [Employer] or [Employer’s] legitimate business interests may result in disciplinary action up to and including termination.”

Other sections in OM 12-59 encourage being honest, accurate and respectful. There is a focus on specifically prohibiting posts that include discriminating or harassing statements and, as far as prohibiting specific forms of content, types include:

  • Employer trade secrets/private and/or confidential information
  • Internal reports, processes and policies
  • Content where someone falsely claims to represent his or her employer

You will likely want to prohibit non-work-related social media posting while an employee is on the clock.

An Entrepreneur.com article by Arkady Bukh, a New York federal defense attorney, sums up social media policies this way: “Ultimately they [social media policies] should be about educating workers to use common sense when they use social media.”

Pros and Cons

As you craft your policy, keep in mind both the benefits and challenges associated with social media. On the plus side, social media can be used as a powerful marketing and branding tool. So, if your employees are perceived as likeable, friendly and trustworthy people on social media, then this can only benefit your practice when people are looking for a new veterinarian.

Spread the Word

It’s not enough to simply create a social media policy. You need to share this policy with all employees regularly, perhaps at an annual meeting where you review all company policies. Allow time for your staff to ask questions and gain clarity.

Recordkeeping: Employee Personnel Files and Records ©

Veterinary Business Advisors, Inc.

www.veterinarybusinessadvisors.com

The legal requirements for employer recordkeeping and the retention of employee files are not as straightforward as your average business owner would hope. In fact, sorting through the complex and varied requirements can be a daunting task. Here’s why: recordkeeping obligations stem from a number of federal and state laws that vary based on the industry, location, and number of employees. To confuse things even further, similar records are often required by more than one law with varying retention requirements.

To simplify the recordkeeping process, one must consider the four basic elements of legal requirements: create, maintain, protect, and destroy. Once these elements are understood in the context of recordkeeping, it will be easier to approach the process methodically.

Create:

Employers should begin by establishing policies and procedures for recordkeeping in their operations manual, ensuring that they comply with all state and federal employee privacy laws. The manual should define what files are created, how long they should be stored, and who has access to them.

An employee’s personnel file should contain a clear record of his or her employment history. It should provide insight into the individual’s work history, benefits history, prior work performance, training, career development, and other documented employment-related facts. The specific layout of these files is up to the employer as long as it fulfills applicable laws. The following records should be stored in each personnel file:

  • Employment application, offer letter, and resume
  • Job description, and handbook acknowledgements
  • Hiring, plus records of promotion/transfers, rates of pay, and other forms of compensation
  • Training/education documentation
  • Letters of recognition
  • Performance evaluations
  • Disciplinary and demotion notices
  • College transcripts, and background screening
  • Test documents used to make employment decision
  • Termination records, and exit interviews

As already mentioned, it is important to determine who has access to employee files. Some people will have access to the entire file, while others may only have limited access; some auditors, for example, may have access to some portions of each file but not to others. It is therefore recommended that you keep sub-files within employee files to distinguish what is permitted for certain people to review and what is not. The following records should be included in the sub-file:

  • Medical files; the Americans with Disabilities Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA) require employers to keep all medical records separate and many states also have privacy laws to protect employees
  • Payroll files to maintain time keeping records, garnishments, and wage deductions
  • Equal Employment Opportunity information and investigations to minimize claims of discrimination
  • Immigration (I-9) forms to reduce the opportunity for an auditor to pursue and investigate information unrelated to the audit at hand
  • Safety training records from the Occupational Safety and Health Administration (OSHA) to protect the employer from an auditor pursuing and investigating information unrelated to the audit at hand

Maintain:

Records retention encompasses three components: what, how long, and how. These are dictated by federal and state laws. Nevertheless, there is considerable debate on record retention, so it is recommended that management err on the side of caution and base record retention upon risk tolerance and available resources. In other words, do as much as you can to minimize risk (without proper records, employers may be vulnerable to unfounded claims by former employees) with the resources available. The following list is the recommended retention period for each type of record:

Records                                                                                  Retention Period (Years)

  • All HR-related records 6
  • Any record to support gender pay difference 3
  • Payroll records 3
  • IRS tax-related payroll info             4
  • FMLA/USERRA 3 (after termination)
  • I-9             3 (after hire) OR

1 (after termination)

  • Pension & welfare plan documents             6
  • OSHA logs & summary of recordable injuries 5
  • Employee exposure to toxic substances, including MSDS 30
  • Employee workers compensation claims 30+
  • Resumes & applications 1-2
  • Polygraph test results             3

It is important to take the time to double check that personnel files and records are up to date and stored accurately as practice liability issues can result from improper employment record maintenance procedures. Fortunately, technological advances have greatly facilitated the maintenance of record keeping and personnel files, and records can now be stored on paper or in digital format. No matter which method you choose, the records must be maintained in a reasonable order, in a safe and accessible place. Digital recordkeeping systems must have controls in place to ensure the integrity, accuracy, authenticity, and reliability of the records. They also must be able to be converted into a readable paper copy, if necessary.

Protect:

Employment records are confidential. Security procedures should therefore be in compliance with all relevant current federal and state laws. Access must be limited to the human resource department and other personnel with a need to know. This will apply to personnel files, payroll, and medical records. Auditors and investigating agencies may also be allowed access to data, but only limited to the scope of the audit; employers should be aware that many states have laws regulating employees’ access to their personnel files.

Destroy:

Any time that records containing personal information need to be destroyed, acceptable methods include the following: shredding, erasing, or otherwise modifying personal information to make it unreadable or indecipherable. Employers should obtain a lawyer’s advice on establishing a destruction schedule to limit liability.

Conclusion

Recordkeeping of employee records may seem like a daunting task at first, but it can be managed by taking a systematic approach. Employers should begin by establishing a set of procedures that indicates the necessary documents and timeframe on storage. If there is a question about whether or not to retain a document, always err on the side of caution. The documents should be periodically audited to make sure they are up to date and stored accurately. Finally, the documents must be destroyed in an appropriate manner to ensure confidentiality.

Society for Human Resource Management (SHRM), 2013 SHRM Learning System, Module 2: Workforce Planning and Employment, Section 2-12, 2:282-292, 2013.