Recordkeeping: What you must keep – and for how long

The trouble with recordkeeping at a lot of companies: You don’t know how complete your records are until you get involved in litigation or an audit. But by then, it’s often too late to fill in any critical gaps.  

That’s why it’s essential to know — before you find yourself in some kind of legal dispute — what documents you need to hold onto and what you can trash without putting your company at risk.

To be on the safe side, many employment law attorneys recommend you keep everything for at least five to seven years after an employee has left.

That’s sound advice — if you’ve got the storage and personnel to keep track of all those docs for that long. But it may be overkill, and often isn’t necessary to comply with many employment law record retention requirements.

Here’s a rundown of document retention rules under laws such as the FMLA, COBRA, FLSA, ERISA, HIPAA, ADEA and Equal Pay Act, courtesy of the employment law experts at the law firm Lindquist & Vennum:

Employee leave

The FMLA requires employees to hold on to a slew of employee leave-related paperwork for at least three years, including:

  • Identifying data regarding the employee on leave, which includes name address, occupation, pay rate, terms of compensation, days worked, hours worked per day, and additions or deductions in pay
  • Dates and hours of FMLA leave
  • Copies of employer notices to employee(s)
  • Documents describing employee benefit and premium payment info
  • Docs describing any disputes over FMLA benefits, and
  • Copies of the company’s FMLA policy.

Benefits plans

A slew of laws (ERISA, COBRA, ADEA, HIPAA) layout what benefits plan-related documents companies must hang onto, and the length of time docs must be saved varies by the enforcing law. Here’s a summary of the essentials:

  • Employee benefit plan governing documents — keep indefinitely
  • Summary plan descriptions and notices — keep indefinitely
  • Records backing up the information reported on Form 5500, such as vesting and distribution info, coverage and nondiscrimination testing data, benefit claims info, enrollment materials, election and deferral data, and account balance and performance data — keep for six years after the Form 5500 filing date
  • Evidence of fiduciary actions — keep indefinitely
  • HIPAA privacy record documents — keep six years from the date it was created or the date it was last in effect, whichever is later, and
  • COBRA notices — no required retention period, but it’s recommended these documents be kept for at least six years from the date they were given.


Most compensation-related documents, with the exception of Certificates of Age (keep those until termination), do not need to be kept longer than three years, including:

  • Records containing employees’ names, addresses, dates of birth, occupations, pay rates and weekly compensation — keep for three years
  • Collective bargaining agreements and changes/amendments to those agreements — keep for three years
  • Individual contracts — keep for three years
  • Written agreements under the FLSA — keep for three years
  • Sales and purchase records — keep for three years, and
  • Basic employment and earnings records, like wage rate tables used to calculate wages; salary, wages and overtime pay info; work schedules; and additions to or deductions from wages — keep for two years.


There are a number of hiring and recruitment-related materials employers must hold on to, including:

  • Hiring documents, like job applications, resumes, job inquiries and records of hiring refusals — keep for one year from date of action
  • Job movement docs, such as promotion, demotion, transfer, layoff and training selection info — keep for one year from date of action
  • Test materials, including test papers and employee test results — keep for one year from date of action
  • Physical examination results — keep for one year from completion, and
  • I-9 forms — keep for three years after the date of hire or one year after the date of termination, whichever is later.

Litigation changes the equation

Once you’re on notice that any matter may become the subject of litigation or an audit, you must keep all documents related to that matter until the case has come to a conclusion — no exceptions.

In addition, you must anticipate litigation when you receive a notice that a lawsuit is being filed, notice of a DOL or EEOC charge, an attorney demand letter, or an internal complaint.

What you must keep in those instances includes:

  • the personnel file of the complainant
  • all documents related to his or her application, hiring, promotions, transfers, disciplinary actions, evaluations, training, pay and medical records
  • job postings
  • job descriptions
  • complaint records of other employees
  • investigation notes and documents
  • supervisor notes and records, and
  • anything related to an alleged harasser or wrongdoer.

Bottom line: The best way to successfully fend off litigation or an audit is to be able to produce strong, comprehensive documentation.

Auto-termination policy was illegal, but employer’s actions weren’t: Court

Companies with automatic termination policies, policies that automatically terminate employees after they exceed a certain amount of leave time, have come under fire in recent years.  

Reason: Under the ADA, employers must engage in the “interactive process” to see if the employee on leave can still do his or her old job with some type of reasonable accommodation — and additional leave time may be considered a reasonable accommodation.

Salem v. Houston Methodist Hospital is a recent court case that centered around the idea of an automatic termination policy.

Here’s some background: Fatima Salem worked as a nurse and suffered from a number of medical and psychological conditions. Salem’s medical issues led to her requesting and getting approved for a 59-day leave of absence that was covered by the FMLA. Following her return from that leave, Salem took another leave of absence.

Then the problems occurred. According to Houston Methodist’s leave policy:

“[a]ll leaves of absence of any kind when combined cannot exceed six (6) months in any rolling twelve (12) month period, measured backward from the date the leave begins.”

Salem had asked her employer to make an exception to the auto-termination leave policy when she discovered she wouldn’t be able to return within the six-month time frame. However, Salem was unable to provide the company with any type of estimate as to when she’d be able to return to work. Because of the company policy and the fact no estimate of a return date was given, Houston Methodist denied the request and fired Salem.

EEOC takes over

Salem’s first move was to file a charge with the EEOC, claiming Houston violated the ADA by refusing to grant her leave request. The EEOC determined that Houston’s policy violated the ADA …

“… in that it deprives certain employees of a reasonable accommodation, dispenses with respondent’s obligation to engage in an appropriate interactive process and impermissibly relieves [the Hospital] of its burden to establish undue hardship as a defense to a request for a reasonable accommodation that would extend a leave beyond six months.”

Despite its stance on the leave policy, the EEOC was unable to conclude that Houston violated the ADA by terminating Salem. According to the agency, simply having a policy that violated the ADA wasn’t enough to prove that Salem’s ADA rights had actually been violated.

So then Salem took up her case against Houston with a district court. Her suit claimed that, among other things, Houston failed to accommodate her disability by not providing additional unpaid leave and retaliated against her request, which violated the ADA.

Houston Methodist fought to get the suit dismissed.

What the court said

In an unexpected turn of events, the court granted summary judgment for the company on all of Salem’s claims.

Although the court acknowledged that Houston only engaged in “minimal participation” of the interactive process with Salem, it didn’t change the end result: There was no evidence the reasonable accommodation Salem requested was a feasible reasonable accommodation for the company to make.

Without any evidence the extra leave time was a “feasible” accommodation for the company to make, the court was able to dismiss the failure-to-accommodate claim. And because Salem couldn’t prove that enforcing a six-month leave limit was a retaliatory action, that claim was dismissed as well.

Are auto-termination policies OK?

A pro-employer ruling in an ADA leave case is always welcome news for HR pros, but the company here actually was very lucky to end up in the position it did.

Reason: The EEOC found the hospital’s leave policy unlawful, and the court that ruled in the hospital’s favor did criticize its engagement in the interactive process.

What saved the company here was the fact that, by not providing an estimation of a return date, Salem was essentially asking for indefinite — not extended — leave as her accommodation. A number of courts have ruled that indefinite leave is not a reasonable accommodation under the ADA. Had she been able to provide a return date, this case could have turned out a lot differently.

To avoid leaving to anything to chance, employers should always fully engage in the interactive process whenever an employee requests additional leave as an ADA accommodation.

Another ADA checklist: The common interactive process pitfalls

The reasonable accommodation process “can be tricky,” she says in a masterpiece of understatement, and mistakes are easy to make. Some of the most common:

Not recognizing an accommodation request was made. Sounds outrageous, but think about it: Managers don’t always pick up on what employees say, and employees don’t always express themselves clearly. “A best practice is to have a policy that requires employees to consult with your human resources department – rather than supervisors – if they need an accommodation,” says Gemelli.  “By doing so, companies limit the amount of confidential information being reported to supervisors.”

Asking for too much medical information. Federal and state law limit how deeply employers can dive into employees’ medical files. The guideline: Ask only for information that directly relates to the employee’s limitations in performing the essential duties of his/her job.

Denying an accommodation request because the employee did not provide a solution. Even if the employee can’t define what he or she is seeking, the employer is still required to go through the interactive process. It’s entirely possible a reasonable answer might be found during the process.

Ending the accommodation dialogue because you can’t find a reasonable accommodation that would allow the employee to perform the job’s essential functions. “If an employee cannot perform the essential functions of the job, the employer should see if other accommodations can be made such as reassigning the employee to an open position, allowing the employee to work part time or providing the employee with an unpaid leave of absence,” says Gemelli.

Invoking the “we’ve never done things that way before” defense. No way that flies in court. A reasonable accommodation is a reasonable accommodation, no matter what company history says.

Failing to document the process. You saw this one coming, right? As the saying goes, “No paperwork, no defense.”

Stretching the “undue hardship” parameters. It’s important to remember, Gemelli says, that cost alone rarely qualifies as an undue hardship on an employer.

Chronic tardiness covered under the ADA? Hey, it could happen

You know that one irritating guy who’s late for everything? He could be asking for an ADA accommodation soon.  

According to a story from London’s Daily Mail, a man who has been late for everything in his life — from funerals to first dates — recently had his chronic tardiness diagnosed as a medical condition.

His penchant for lateness was diagnosed as a symptom of his Attention-Deficit Hyperactivity Disorder (ADHD) at a hospital in Dundee, Scotland.

Doctors there said the part of Jim Dunbar’s brain that’s involved in his ADHD also makes it difficult for him to judge how long it takes to do things — like get ready to go to work, apparently.

Dunbar said he didn’t mind his story being made public: ‘The reason I want it out in the open is that there has got to be other folk out there with it and they don’t realize that it’s not their fault.

‘I blamed it on myself and thought ‘Why can’t I be on time?’ I lost a lot of jobs. I can understand people’s reaction and why they don’t believe me.”

According to the Daily Mail story, some psychologists believe that chronic lateness could be a symptom of an underlying mood disorder such as depression, and many ADHD sufferers complain they struggle to keep time.

Just a minute …

The Mail did note some skepticism of Dunbar’s diagnosis among the medical community.

Dr. Sheri Jacobson, psychotherapist and director of Harley Therapy Clinic in London, told the newspaper:

The condition isn’t in the DSM5 (the American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders) so I’m not sure you can really call it a condition …

Repeated lateness is usually a symptom of an underlying condition such as ADHD or depression but it can also just be habit.

I think making everyday human behavior into a medical condition is unwise.

We’d certainly agree with Dr. Jacobson. But ADHD can be a disability, correct? And getting to work on time could certainly fall into the category of major life activities.

So when will we see our first disability lawsuit from an employee who’s been axed for showing up late too many times?

EEOC finally issues wellness rules: 8 things employers will want to know

It took a while, but employers finally have some sold guidance on how to design their wellness program incentives so they don’t violate the ADA.

The EEOC has been promising for a while now to issue rules to clear up the confusion it’s created around what kinds of wellness incentives are legal — and when non-participation penalties become so steep as to render a program “involuntary” and, thus, illegal under the ADA.

Well, the EEOC has finally kept its promise, and its new proposed rules outline, in its words, “how Title I of the Americans with Disabilities Act (ADA) applies to employee wellness programs that are part of group health plans …” The regs will be published in the Federal Register on Monday.

But the EEOC did offer a sneak peek of the proposed rules on its website.
How we got in this mess

But before we get to them, here’s what got us to this point.

This past summer, the EEOC decided it was going to go after employer wellness programs it felt punished employees too harshly for not participating in wellness initiatives.

Example: In the first of three lawsuits the agency filed, it claimed Orion Energy Systems’ wellness program non-participation penalty for failing to complete a health risk assessment was so steep it rendered the program “involuntary.”

The ADA says a program can’t submit employees to medical inquiries that aren’t job-related and consistent with business necessity, unless those inquiries are part of a “voluntary” wellness program.

Orion charged employees who didn’t complete a health risk assessment their entire health plan premium, plus a $50 dollar non-participation penalty.

In the third lawsuit the EEOC filed, the one that’s gained the most prominence, it went after Honeywell International for slapping employees who didn’t submit to health screenings with a penalty worth roughly $4,000 in some cases. The EEOC felt this rendered Honeywell’s wellness program illegally “involuntary.”
Why this is such a mess

Employers have been complaining that by filing these lawsuits, the EEOC has overstepped its bounds.

Their argument: The EEOC hasn’t released any specific guidance as to what kinds of penalties would be so steep as to render a wellness program involuntary.

Some members of the GOP have even blasted the agency’s actions.

In some cases, employers and members of the GOP have said the EEOC’s actions fly in the face of the wellness regulations enacted by the Affordable Care Act, which state employers can offer wellness incentives/penalties as long as they don’t exceed 30% of the value of an individual’s insurance premiums (50% if the incentives are tied to smoking cessation).

In response to these allegations, the EEOC promised to issue regulations clearing the air on what kinds of wellness program incentives are legal once and for all.

What the proposed rules say

Employers that feared the new rules would be a tangled mess of confusing rules and exemptions (what federal law isn’t?) will likely be pleasantly surprised.

The rules appear to be pretty straightforward.

Here’s a rundown of the key points:

The proposed rule clarifies that the ADA allows employers to offer incentives up to 30% of the cost of employee-only coverage to employees who participate in a wellness program and/or for achieving health outcomes.
The rule also allows employers to impose penalties on employees who do not participate or achieve certain health outcomes. The maximum allowable penalty an employer can impose on employees is 30% of the total cost of employee-only coverage.
The total cost of coverage is the amount the employer and employee pay, not just the employee’s share of the cost. Example: If a group health plan’s total annual premium for employee-only coverage (including both employer and employee contributions towards coverage) is $5,000, the maximum allowable incentive an employer could offer to an employee in connection with a wellness program that includes disability-related questions (such as questions on a health risk assessment) and/or medical examinations is $1,500 (30% of $5,000).
Asking employees to complete a health risk assessment or have a biometric screening for the purpose of alerting them to health risks (such as having high cholesterol or elevated blood pressure) is acceptable under an employee health program (a.k.a., a wellness program).
Collecting and using aggregate information from employee assessments to design and offer programs aimed at specific conditions prevalent in the workplace (such as diabetes or hypertension) is also acceptable under a wellness program.
Asking employees to provide medical information (like that obtained through a health risk assessment) without providing any feedback about risk factors or without using aggregate information to design programs or treat any specific conditions would not be acceptable under a wellness program.
For a wellness program to be voluntary, it must not: A) require employees to participate, B) deny access to health coverage or generally limit coverage under its health plans for non-participation; and C) take any other adverse action or retaliate against, interfere with, coerce, intimidate, or threaten employees (such as by threatening to discipline an employee who does not participate or who fails to achieve certain health outcomes).
If a health program is considered a wellness program that is part of a group health plan, an employer must provide a notice clearly explaining what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.

What’s next?

The public has until June 19, 2015 to comment on the proposed rules.

The EEOC will then evaluate all of the comments it receives and make revisions to the rules if deemed necessary. The agency will then vote on a final rule. After it’s approved, the final rule will be sent to the Office of Management and Budget and will be coordinated with other federal agencies before it is published in the Federal Register.

So it’ll likely be several months before the final rules are enacted.

It’s also unclear what effect, if any, the proposed rules will have on the wellness program lawsuits the agency’s filed against employers.