From the Labor & Employment Practice.
Whether you call it document retention policy, records management, or even document destruction policy, every employer should have one.
The first step in formulating any record retention policy is understanding the maze of federal and Maryland laws that underlie a compliant policy. In particular, employers must consider requirements pertaining to the federal and Maryland wage/hour laws, affirmative action, EEOC, Immigration, COBRA, The Family and Medical Leave Act, workers´ compensation, The Occupational Safety and Health Act, tax withholding, and New Hire Reports.
The Fair Labor Standards Act of 1938, as amended, (“FLSA”) 29 U.S.C. §201, et.seq., which regulates payment of the federal minimum wage and overtime pay for workers engaging in interstate commerce, requires all covered employers to maintain basic payroll and other wage/hour records for each employee [29 C.F.R. §§516.1, et. seq.] In general, FLSA requires employers to retain – for at least three years – payroll records containing: personal identifying information (name, home address, birth date for employees under age 19, gender), regular pay rate for weeks including overtime, hours worked per work day and per work week, time and weekday of start of work week, total daily or weekly straight time earnings, total overtime compensation per work week, and net additions to or deductions from wages for each pay period [29 C.F.R. §§516.2, 516.5].
If an employer fails to keep proper records of work hours, the Department of Labor may rely on employee testimony to establish the number of hours worked. With respect to minimum wage and overtime provisions, Maryland´s wage/hour statute (Md. Code Ann. Lab.& Empl. §§3-401 et seq.) closely tracks the FLSA.
AFFIRMATIVE ACTION OBLIGATIONS Executive Order 11246 (“EO11246”)
Under EO11246, which is still the principal source of affirmative action obligation, federal contractors having at least 50 employees and a covered federal contract or subcontract in excess of $50,000 must maintain a written affirmative action plan (“AAP”). Covered employers must retain the current and prior year´s plan along with all documentation. Along with its accompanying regulations, EO11246 aims to provide for a policy of nondiscrimination in employment by federal government contractors and subcontractors.
The Vietnam Era Veterans´ Readjustment Assistance Act: (“VEVRAA”) [38 U.S.C. §§4212, et. seq.]
The Vietnam Era Veterans´ Readjustment Assistance Act requires employers who provide goods or services to the federal government worth $25,000 or more to maintain, for one year, employment records regarding applicants and employees who are qualified disabled veterans, veterans of the Vietnam era, or veterans who have served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized. Employers must retain of these individuals the most recent annual copy of the VETS-100, a form that is intended to elicit data on the number of covered veterans hired by any given contractor [41 C.F.R. §61-250]. In addition, employers with federal contracts of at least $50,000 and 50 or more employees must maintain written affirmative action programs regarding the utilization of these veterans [41 C.F.R. §§60-250.40 and 60-250.43]. Covered employers must retain both the current and prior year´s plan, and documentation of good faith compliance efforts.
The Rehabilitation Act: [20 U.S.C. §793]
Under this act, employers with Federal contracts of $50,000 or more and 50 or more employees must maintain written affirmative action plans regarding the utilization of disabled individuals [41 C.F.R. §60-741.5]. Covered employers must retain the current and the prior year´s plan, as well as documentation of good faith compliance efforts.
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC)
The federal laws enforced by the EEOC (Title VII, the Equal Pay Act, the ADEA, the ADA), which apply to employers with 15 or more employees, generally require that employers retain records for one year from their date of entry or personnel action involved, whichever is later. Records required to be so retained include those pertaining to job applications, hiring, promotion, demotion, transfer, layoff, compensation, training programs, and termination [29 C.F.R. §1602.14(a)]. Once a charge of discrimination is filed or a judicial complaint initiated, all affected records must be maintained until final disposition of the matter.
Documents likely to be required to be maintained under the ADA such as medical records should be kept confidential and separate from general personnel files. Consequently, the ADEA requires retention of written employee benefit plans and seniority or merit system records during their effective period, plus one year after termination of the plan or system [29 C.F.R. §1627.3(b)(2)]. The Equal Pay Act has a general retention period of three years for all records regarding payment of wages, wage rates, job evaluations and descriptions, merit and seniority systems, collective bargaining agreements, pay practices, or other records that describe the basis for wage differentials to employees of the opposite sex within the same business establishment [29 C.F.R. §1620.32].
THE IMMIGRATION REFORM AND CONTROL ACT OF 1986 (“IRCA”) [8 U.S.C. §§1101, et. seq.]
IRCA, which applies to all employers regardless of size, prohibits employers from hiring or continuing to employ aliens who are not authorized to work in the United States. The Act requires that each employee´s form I-9 – which verifies employment eligibility – be retained for three years from the date of hire or one year from the employee´s termination, whichever is later [8 C.F.R. §274a. 2(b)(2)(i)(B)].
THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT
Under The Consolidated Omnibus Budget Reconciliation Act [100 Stat. 82 (1986)] (“COBRA”), employers who have 20 or more employees and maintain health insurance coverage must ensure that group insurance plans provide continuous coverage at group rates for stipulated periods to terminated employees and to employees who experience a “qualifying event.” Employers are advised but not required to retain all COBRA related documents for six years [29 U.S.C. §1027].
FAMILY AND MEDICAL LEAVE ACT
The Family and Medical Leave Act (“FMLA”) [29 U.S.C. §§2601, et. seq.] requires employers with at least 50 or more employees and all public agencies and schools to grant up to 12 work weeks of unpaid leave of absence to eligible employees during any 12-month period and to post a notice that explains employees´ rights and the employer´s obligations under the FMLA. This notice must include information regarding: when leave may be taken under the FMLA, employees that are eligible for leave, requirements for advance notice and medical certification of the need for FMLA leave, benefits during leave, reinstatement rights, prohibited employer action, and information concerning procedures for filing complaints of violations with the Department of Labor, Wage and Hour Division [29 C.F.R. §825.300].
Employers covered by the FMLA must retain FMLA related records for at least three years. These records include: dates of utilized FMLA leave, hours of FMLA leave (if leave taken is less than a full day), copies of employee notification to the employer of the need for the leave, copies of employer notices regarding employee´s rights and obligations when taking FMLA leave, copies of employer policies and practices describing benefits and leave, premium payments for employee benefits, and records related to disputes about the designation of leave as FMLA leave. All medical information must be maintained in separate confidential medical files [29 C.F.R. §825.500].
Maryland´s Workers´ Compensation Act, Md. Code Ann. Lab. & Empl. §§9-10, et. seq. does not contain a specific document retention provision. However, in all cases filed with the Workers´ Compensation Commission, all materials of any kind or descriptions which relate in any way to the pending case must be retained until the case, including any appeal, is finally adjudicated.
OCCUPATIONAL SAFETY AND HEALTH ACT
The Occupational Safety and Health Act (“OSHA”) [29 U.S.C. §§651, et. seq.], enacted by congress in 1970, provides federal standards to identify and eliminate health and safety hazards in the workplace.
The Maryland Occupational Safety and Health Act (“MOSH”) [Md. Code Ann. Lab. & Empl. §§5-101, et. seq.] requires employers with one or more employees to post a notice which states that the employer has an obligation to provide a workplace free from recognized hazards that are likely to cause death or serious injury to employees, and to comply with all applicable safety and health standards under OSHA. In addition, employers must complete OSHA form 200, the log and summary of occupational injuries and illnesses, and should post a copy of the form between February 1 and March 1 of each year. The OSHA notice and a copy of the OSHA form 200 must be posted in a conspicuous place at all workplaces [29 C.F.R. §1904.2].
OSHA´s new form 300 “Log of Work-Related Injuries and Illnesses” is used to classify work-related injuries and illnesses and to note the extent and severity of each case. Form 300 is not to be posted. New OSHA form 300A, titled “Summary of Work-Related Injuries and Illnesses,” is a summary of all items entered on form 300. Form 300A must be posted for a three month period from February 1 to April 30 of each year beginning in 2003. Both OSHA form 300 and 300A must be retained at least five years [29 C.F.R. 1904.2; 29 C.F.R. 1904.4; 40 C.F.R. 717.15].
OSHA protects employees who may be occupationally exposed to blood or other infectious materials. Employers who are likely to be subject to this standard will likely have a written exposure control plan already in place. No retention period is specified for such a plan except that it must be kept current and available to your workers. Medical records concerning this area must be maintained for the term of employment of the affected individuals plus 30 additional years. All training records must be retained for at least a three year period [See 29 C.F.R. 1910.1030].
OSHA also controls the communication of toxic or hazardous substances. Records retained in this regard (usually referred to as Hazardous Materials Exposure Records) include records of any personal or environmental monitoring of exposure to hazardous materials and other health related records. OSHA requires that records of significant adverse reactions to an employee´s health, and records of employee health-related allegations arising from any employment related exposure be retained for 30 years; records of all other allegations, including environmental charges, must be retained for five years [29 C.F.R. 1910.1200].
Internal Revenue Service (“IRS”) regulations [Treas. Reg. §31.6001-1] provide that employers who are required to deduct and withhold income tax on wages paid to employees must retain copies of such records, and any returns, schedules, statements or other documents, and W-4 forms as part of their records. These records must be retained for a period of four years after the due date of such for the return period to which the records and statements relate, or the date such tax is paid, whichever is later.
NEW HIRE REPORTS
All employers must provide information on their new employees to the state of Maryland “New Hire Director.” Under this New Hire Reporting Requirement, employers must provide the following information to the state of Maryland: (1) the new employee´s name, address, and social security number; and (2) the employers´ name, address and Federal Employer Identification Number (“EIN”) [42 U.S.C. §653a(b)(1)]. Although each state is responsible for establishing the time limit for reporting the information, a state´s time limit must require reporting (1) no later than 20 days after the employee is hired, if the employee is filing a paper report, and (2) twice a month, no less than 12 and not more than 16 days apart if the employer is reporting electronically [42 U.S.C. §653a(b)].
The New Hire Reporting requirement aims to facilitate child support provisions implemented by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 [P.L. 104-193]. P.L. 104-193 provides for substantial reforms to the Welfare System and establishes a “Parent Locator Service” whose function is to help enforce child support obligations and child custody and visitation orders [42 U.S.C. §653(a)].