The Dos and Don’ts of employee retention

Many employers ask, how long must I keep certain employee records? Numerous federal and state laws require employers to create and retain various forms of employment records.

Your insurance carrier likely has its own checklist, too. And good records are your primary defense in any lawsuit.

Remember, the law places the full responsibility for keeping and maintaining certain records on the employer. Accordingly, because employee records have potential legal or tax consequences, many employment lawyers advise their clients to resist the “urge to purge.”

There generally are only two broad categories of employee records — personnel files and confidential records.

Personnel files are covered by state law and include such documents as employment applications, pay records, performance reviews, disciplinary records and other similar work related documents.

Such files often contain nondisclosure or noncompete agreements, as well as compensation records such as W-4s.

The second category is confidential records. The confidential file may include such items as medical records, leave documents, garnishment orders, I-9 documents, EEO documents, and background and other investigation records.

These files are legally required to be kept, and should be kept in a file separate from the personnel file.

But deciding which records to keep and how long can be confusing. Here are tips on what you should and should not be doing.

Your policy should state that all files are deemed confidential and limit access to them. Special guidelines also apply to medical information. For example, the Americans with Disabilities Act poses very strict rules for handling information obtained through post-offer medical examinations and reasonable accommodation inquiries.

Covered employers must keep those medical records confidential and separate from other personnel records.

The information may be revealed only to safety and First Aid workers, if necessary to treat the employee, to the employee’s supervisor only if the disability requires restricted duties or reasonable accommodation, to government officials as required by law and to insurance companies that require a medical exam.

The Family and Medical Leave Act also requires employers to segregate these records, which must be maintained by the designated FMLA coordinator.

The Health Insurance Portability and Accountability Act, or HIPAA, also imposes privacy obligations on covered employers that provide group health plans.

The period of time that personnel records must be retained depends on the specific record.

For example, basic employee information, payroll records and tax records have longer retention periods. But get rid of unnecessary or least used files according to your retention schedule.

The bottom line: Have record maintenance, retention and destruction policies. There are number of resources online that can assist an employer in doing so.

The Society for Human Resource Management is an excellent resource for information on this and other human resource topics. Check out SHRM’s sample policy online — https://bit.ly/3vVhIKS.

Wilford H. Stone is a lawyer with Lynch Dallas in Cedar Rapids.