What to Keep and What to Toss: Compliance with Record-keeping Requirements for Utah Employers
The average Utah employer, large or small, is literally inundated with paperwork relevant to its employees. Record keeping begins before an individual is hired, continues for the duration of the employment relationship, and often extends beyond separation. Adding complexity to the issue is the virtual alphabet soup of ever-expanding federal and state laws and regulations mandating the creation and retention of a myriad of documents and information all with separate, and sometimes conflicting, retention requirements.
The ACA, ADA, ADEA, EPA, ERISA, FLSA, FMLA, FICA, OSHA, Utah Antidiscrimination Act, Title VII and the Workers’ Compensation Act are but a few of the relevant statutes employers should be aware of. While an exhaustive examination of all recordkeeping obligations is beyond the scope of this article, we intend to provide an overview of record retention requirements for Utah employers.
Employment records can be divided into three broad categories: pre-employment, employment and post-employment records.
The first category of documents, pre-employment records, includes applications, resumes, background reports and other similar documents. As a general rule, in the case of applicants who are not hired, the employer should retain pre-employment documentation for at least one year. To be safe, we recommend the retention of these records for the year in which the document was created or given to the employer plus one year. This one-year retention period is generally required by employment discrimination statutes.[i] On the other hand, an employer should retain pre-employment documents for any individual that is hired for the duration of that individual’s employment consistent with our recommendations below.
One important Utah statute applicable to some types of pre-employment documents is Utah’s Employment Selection Procedures Act. The Act applies to information collected about an applicant and obtained during an initial selection process.[ii] The Act limits when and for what purposes certain information may be collected such as social security numbers, dates of birth and driver license numbers.[iii] Utah law requires that an employer maintain a specific policy regarding the retention, disposition, access and confidentiality of this information. Except as otherwise required by law, if the employer does not hire the applicant, the employer may not retain the information more than two years.[iv]
The second category, employment records, includes personnel files, time cards, payroll records, benefit records, leaves of absence, training and many other items. We recommend retaining most of these records for the duration of an employee’s employment plus three years. The reason for this recommendation is due to the various recordkeeping requirements and statutes of limitations applicable to state and federal employment laws. While these requirements vary in duration, following this rule will preserve most records for the required minimum time.
Utah wage laws require employers to keep records of time worked and wages paid to employees for at least one year.[v] Utah employers in the construction industry must keep wage records for three years.[vi] Likewise, employers must retain wage records for employees covered by the Utah minimum wage for three years.[vii]
Similarly, federal wage and hour law requires that employers retain wage records for a minimum of three years.[viii] The law with arguably the greatest impact on the retention of compensation records is the Lilly Ledbetter Fair Pay Act. In 2009, Congress passed the Lilly Ledbetter Fair Pay Act for the express purpose of overturning a 2007 Supreme Court decision regarding the statute of limitation on discriminatory compensation claims.[ix] In essence, the Act provides that every pay check received after a discriminatory compensation practice or decision restarts the statute of limitations on that claim. This means that records regarding compensation and decisions on compensation and promotions during the entire employment history of an employee and beyond should be kept.
There are, however, exceptions to the rule of thumb of retaining employment records for the duration of employment plus three years. Federal and state safety laws may impose longer retention periods on certain types of records. The Occupational Safety and Health Administration requires employers to keep injury and illness reports, OSHA 300 Logs, for five years following the end of the calendar year the record covers.[x] In addition, employee exposure records and material safety data sheets must be kept for at least 30 years.[xi]
The third category, post-employment records, includes records regarding separation, COBRA notices, and continued eligibility for and benefits available under employee benefit plans. We recommend retaining these types of records for at least the duration of any post-employment benefits plus six years.[xii]
Litigation is the exception to these proposed guidelines or to any document-retention policy you may implement. Common law generally recognizes a duty to preserve potential evidence to litigation that has begun or is imminent. In the employment setting, this duty typically arises with the receipt of a demand letter, administrative charge or judicial complaint. In that case, any relevant evidence must be preserved for at least the duration of the litigation plus an additional period of time. Failure to retain and preserve evidence once the duty has attached may result in serious sanctions, like the entry of judgment against a party or other dispositive rulings. Courts within the District of Utah can and will impose ultimate sanctions when evidence of bad faith preservation is found.[xiii] Even without a showing of bad faith, there are a variety of other sanctions courts could impose for the failure to preserve evidence. The bottom line is you should always consult your attorney before destroying any document that could potentially be relevant to future litigation.
Put it in Writing
Given the stakes involved, we recommend that employers have a written document retention policy. The policy should set forth guidelines for the retention and eventual destruction of documents. The policy should take into account records stored onsite, off site and electronically. It is critical that this policy be followed. Any deviation from the policy should be at the direction of upper management and legal counsel only. Finally, the policy should be reviewed every two years for compliance with changes in law and updated as appropriate.
[i] Title VII and the Americans with Disabilities Act, 42 U.S.C. § 2000e-8c.
[ii] Utah Code 34-46-102(5).
[iii] Id. at § 202.
[iv] Id. at § 203.
[v] Utah Code § 34-28-10.
[vi] Id. at §10(2).
[vii] Utah Code § 34-40-201.
[viii] Equal Pay Act, 29 C.F.R. §1620.32(a); and Fair Labor Standards Act, 29 C.F.R. §§ 516.2, 516.28 and 516.5.
[ix] Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007).
[x] 29 C.F.R. §§ 1904.33 and 1904.44.
[xi] 29 C.F.R. §§ 1910.1020(d).
[xii] Employee Retirement Income Security Act, § 1027.
[xiii] See Philips Elecs. N. Am. Corp. v. BC Tech., 773 F. Supp. 2d 1149, 1206 (D. Utah 2011)(striking answer, dismissing counterclaims, and entry of default judgment against party for failing to timely issue a litigation hold, failing to follow up on that litigation hold once issued, failing to request discovery documents from key employees, and spoliation of evidence).