10 Recordkeeping Do’s and Don’ts
Accurate and complete records can demonstrate compliance with federal, state and local laws and can also help to administer your company’s human resource policies with greater efficiency. The following are 10 recordkeeping do’s and don’ts:
• Identify records required by law. A variety of employment laws impact your recordkeeping practices. Title VII of the Civil Rights Act, for example, requires employers to keep resumes, interview notes and other pre-employment records for a period of one year. The Fair Labor Standards Act requires employers to retain payroll records for at least three years and the Immigration Reform and Control Act requires employers to verify the employment eligibility of new hires by completing Form I-9. Other laws may affect your recordkeeping responsibilities, including the Occupational Safety and Health Act, the Employee Retirement Income Security Act, the Health Insurance Portability and Accountability Act, the Federal Unemployment Tax Act and the Federal Insurance Contributions Act. It’s important to review each of these laws to ensure compliance.
• Consider best practices. Best practices also play a part in dictating the types of records to retain. For instance, maintaining a history of performance and conduct for each employee (including performance reviews, disciplinary actions and recognition forms) is important for supporting employment decisions, even though these records may not necessarily be required by law.
• Restrict access. Access to employee records should be restricted to those who have a need to know the information. For example, managers should only be given access to job-related information, such as attendance records and employee performance reviews. Managers should never have access to medical records or other sensitive information.
• Follow electronic recordkeeping guidelines. If your company chooses to maintain electronic records, be sure that they are password protected. Passwords should be at least seven characters long, include a combination of letters, numbers and symbols, and should not contain any identifying information, such as the company’s name. Employee records should never be transmitted electronically unless it is over a secure network and the records are encrypted. Additionally, if employee records are stored electronically, your business should be able to control and log when records are accessed and by whom.
• Keep records for full retention period. Each law will dictate how long records must be retained. For instance, payroll records must be kept for a minimum of three years, retirement and pension records must be kept for six years, and resumes, application forms and interview notes must be kept for at least one year. Check your applicable law to ensure compliance.
• Dispose of records properly. Disposal of employment records must be done in a manner that ensures the records cannot be read or reconstructed, such as burning or shredding documents. If your company retains records electronically, it must properly erase the files from your hard drive.
• Keep protected information in personnel files. The Americans with Disabilities Act requires that all information obtained from employee medical tests be kept on separate forms, in separate medical files and treated as confidential. In addition, other information indicating an employee is a member of a protected class (such as his or her age, religion or national origin) should be kept separate from his or her personnel file. For example, because I-9 forms contain protected information about an employee’s age and citizenship status, it is recommended that they be retained in a locked file apart from other personnel records. In general, retain at least two distinct files for each employee: a personnel file that includes performance-related data and a medical file that includes sensitive information that is only accessed by those with a need to know.
• Specify required I-9 documentation. Federal law requires employers to complete and retain an I-9 Form for each newly hired employee. The I-9 Form has three Lists of Acceptable Documents that may be used by the employee to establish identity and employment eligibility. Employees must provide either: one document from List A (establishes both identity and employment eligibility); or one document from List B (establishes identity); and one document from List C (establishes employment eligibility). Employers are not permitted to specify which document(s) from List A or List B and C, they will accept.
• Prevent employees from accessing personnel file. While there is no federal requirement to grant employees access to their own personnel file, there are several states that permit employees to access their records. Most states that have adopted this requirement permit employees to view their records within a “reasonable period of time,” typically two to three business days following a written request. Be sure to check your state law on the issue and to maintain records of employee requests. If your state does not have a requirement, your company can determine whether or not it wishes to grant employees access to their personnel records. However, the practice must be applied consistently–that is, if your business permits one employee to view his or her records, it must allow access under the same conditions for all employees who request it.
• Assume files can be disposed of because employee is terminated. Many recordkeeping laws require that records be retained following an employee’s separation from the company. For example, the I-9 Form must be retained for three years following an employee’s date of hire or one year following his or her termination, whichever is later. There may also be some cases in which the retention period extends long after an employee leaves. For example, the Occupational Safety and Health Act requires employers to keep records related to employee exposure to toxic or hazardous agents for a period of 30 years. Furthermore, the Equal Employment Opportunity Commission generally requires employers to keep all relevant personnel or employment records until final disposition of an EEOC complaint or lawsuit.
Properly maintaining employee records requires an assessment of what records must be kept and for how long, as well as how to maintain records securely. Employers should check applicable recordkeeping laws to ensure compliance.