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FEATURE March 2016 • www.CPAPracticeAdvisor.com 13 Some states also have their own requirements for maintaining and destroy ing employee records. For ex a mple, Massachusetts requ ires companies to destroy records that include some personal information. O n t he o t he r h a nd , M i n n e s o t a requires companies to keep docu- ments for eight years afer employees h av e b e e n t e r m i n at e d . O n l y b y reviewing your state's requirements will you be certain of what records are covered and how long they must be retained. Keeping Employee Files, Not a Single File In order to comply with regulations a nd be able to f i nd i n for m at ion quickly when necessary, employers should actually keep several diferent files for all their employee records. Typically, those fles should be: • THE PERSONNEL FILE Tis fle should only contain infor - mation that relates to an employee's j o b a n d j o b - r e l a t e d d e c i s i o n s , such as applications, performance reviews, promotions, and any disci- plinar y measures. T is f le should not contain any information about an employee's age, medical disabili- ties, race, national origin, or back- ground checks. • THE I-9 FILE Under federal law, ever y employer mu s t c omple t e a n I - 9 f or m , t he Employment Eligibility Verifcation, for each employee. Tis form helps to confrm an employee's identity and authorization to work in the United States. Each employee must have an I-9 form on record as long as he or she works for the company, and it must be kept in its ow n folder. Once an employee has been terminated or lef the company, the form must be kept for t h ree yea r s f rom t he d ate a n employee was hired or one year afer t he worker's employ ment ended, whichever is longer. A fer that, the I-9 can be destroyed. • THE MEDICAL INFORMATION FILE Companies are required to maintain employee medical information in its ow n f i le. T his f i le shou ld conta in information about medical history, medical evaluations, Americans with Disabilities Act accommodations, workers' compensation claims, Family and Medical Leave Act requests, and a ny ot her i n for mat ion t hat cou ld relate to health and medical history. • THE INVESTIGATIVE FILE Investigative notes for serious issues, such as sex ual harassment, allega- tions of theft, and similar conduct maters should not be included in the ofcial personnel fle. Instead, these f i les shou ld be kept sepa rate a nd access should be limited to only key personnel and HR staf. • THE SUPERVISOR'S WORKING FILE T he compa ny a nd H R person nel should remember that super visors ofen keep fles on personnel, which are most of ten separate and apar t from the ofcial personnel fle. Tese f i les shou ld be subm it ted to H R whenever an employee transfers or le ave s a de pa r t ment , for proper inclusion or destruction. • PAYROLL AND RELATED RECORDS Companies generally maintain pay- rol l a nd a l l re l at e d i n for m at ion within the separate payroll depart- ment records. How to Stay in Compliance With so many diferent laws to abide by and factors to consider, employers need to think caref ully about how they can maintain the records they need to fnd those records when they need them, and destroy the fles at the appropriate time. • WHY PROPER RECORD KEEPING IS IMPORTANT First and foremost, it is important to remember why record keeping is so c r it ic a l . I n add it ion to t he le ga l requirements that certain records be maintained for a certain period of time, there are practical consider- ations as well. Most employ ment- related lawsuits hinge on company records. If the company does not have t i me r e c ord s , d i s c i pl i ne f or m s , a p p l i c a t i o n s , i nter v iew notes, pay records, OSH A 300 logs, or other documents, it is almost impossible to defend aga i n s t a w age a nd hou r lawsuit, discrimination claim, hiring claim, or other employment-related lawsuit. For example, wage and hour lawsuits under the Fair Labor Stan- dards Act are now the most common employment-related claims. Without proper time records, most employers have virtually no defense. • CONDUCT AN AUDIT In today's digital world, even identi- fying a "record" is not as simple as it u s e d to b e . C ompa n ie s ne e d to understand how all their records can be created and in what format they may be stored. Employers should periodically audit their own practices and procedures in order to ensure that records are properly being kept, s tored , a nd a re ac c e s sible w hen needed. Similarly, records that are no longer required to be maintained should be destroyed. If available, they may become ev idence against the company. With 2016 just beginning, now is a good time conduct an internal aud it of you r c ompa ny 's re c ord retention policies and practices. • IF NECESSARY, UPDATE RECORDS RETENTION POLICIES Following the company-wide audit, the company should analyze whether its policies and procedures are com- pliant with state and federal law, as well as whether its policies sufciently e n s u r e do c u me nt s a r e prop e r l y retained and accessible. If a company h a s a ne ed to upd ate it s rec ord s retention policies, the company should immediately begin that process. • WORK WITH ALL THE COMPANY'S STAKEHOLDERS Employee records retention touches on ma ny d i f ferent depa r t ment s, including records management, IT, H R , a nd lega l . E ach depa r t ment s hou ld h ave t he op por t u n it y to p r o v i d e i n p u t i n t o t h e r e c o r d s retention policies, and those policies should refect each group's concerns and priorities. E x per t s such a s H R , i n-hou se atorneys, and outside counsel can a l so help employer s u nder st a nd where their specifc vulnerabilities lie. For example, if companies handle hazardous materials or do business with the government it can impact the types of records that need to be kept and for how long. • PROVIDE TRAINING W hile the HR department may have a great deal of responsibility around handling employ ment records, all super v isors and managers need to understand the company's records retention policies and what they need to do in order to abide by the proper procedures for creating, retaining, archiving, and destroying fles. Tose who oversee employ ment records need s pec i a l t ra i n i ng on how to handle and classify records. Completing and fling paperwork can be a tedious task. But failing to do it properly can open companies up to legal and regulatory liability. Tat's why it is important for compa- nies to understand their obligations regarding employee record keeping, develop policies that will keep them in compliance, and make sure the rules are followed. Richard D. Alaniz is senior partner at Alaniz Schraeder Linker Farris Mayes, L.L.P., a national labor and employment frm based in Houston. He has been at the forefont of labor and employment law for over thirty years, including stints with the U.S. Depart- ment of Labor and the National Labor Relations Board. Rick is a prolifc writer on labor and employment law and conducts fequent seminars to client companies and trade associations across the country. Questions about this article, or requests to subscribe to receive Rick's monthly articles, can be addressed to Rick at (281) 833-2200 or ralaniz@alaniz-schraeder.com .