Employment Record-Keeping Best Practices
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Employment Record-Keeping Best Practices

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Recordkeeping plays an essential role in the management of any company. An extensive range of information about employees must be preserved for numerous reasons. This includes the ability to ...

Recordkeeping plays an essential role in the management of any company. An extensive range of information about employees must be preserved for numerous reasons. This includes the ability to facilitate the efficient and effective management of human resources, to defend employment decisions when the need arises, and to comply with numerous federal and state laws. The following is a detailed analysis of the various record categories requiring preservation.

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Employment Record-Keeping Best Practices Employment Record-Keeping Best Practices Document Transcript

  • 9000 Sunset Blvd, Suite 900, West Hollywood, CA 90069 www.cpehr.com | info@cpehr.com | 800-850-7133 Employment Record-Keeping Best Practices Recordkeeping plays an essential role in the management of any company. An extensive range of information about employees must be preserved for numerous reasons. This includes the ability to facilitate the efficient and effective management of human resources, to defend employment decisions when the need arises, and to comply with numerous federal and state laws. All records must be maintained for a mandatory minimum number of years. The time various from document to document, but in all cases, employers should ensure that records are stowed in a secure and safe place that is only accessible to authorized personnel. Once permitted to be discarded, care should be taken that they are destroyed in an appropriate manner, whether by shredding, completely erasing from digital storage, or otherwise. The following is a detailed analysis of the various record categories requiring preservation: Hiring Records Hiring records include external ads and internal postings for open positions, job requests submitted to employment agencies, resumes, applications, interview evaluations, pre- employment tests and reference checks. Records for an individual one does decide to hire should be filed in their personnel file. If an employer does not hire the individual, they should store the records in an applicant file. Documents pertaining to hiring records should be kept for a minimum of 2 years after the employment relationship has concluded, as driven by Title VII, FEHA, ADA and ADEA. Employee Personnel Files Employee personnel files should include the employee’s job title, classification and description. The file should also contain the job offer letter, performance observations and evaluations, promotions, demotions, attendance records, leave of absence notices, disciplinary notices, transfers, lay-offs and recalls, training, testing (including certificates), requests for reasonable accommodations and acknowledgements of company policy and handbook receipt.
  • 9000 Sunset Blvd, Suite 900, West Hollywood, CA 90069 www.cpehr.com | info@cpehr.com | 800-850-7133 The personnel files should be preserved in an exceptionally secure location for a duration of 3 years following termination of the employment relationship. Employee Wage Records Employee wage records include wage rate calculation tables, piece rates, individual employee’s hours and days, time cards, shift schedules, and any records clarifying wage differential between sexes. Employers should preserve employee wage records for at least 4 years, in accordance with the California Labor Code, EPA (Equal Pay Act) and the FLSA (Fair Labor and Standards Act). Payroll Records Payroll records consist of name, date of birth, address, SSN, job definition, terms and conditions of employment, rates of pay, union and employee contracts, child labor certificates and notices, the start and end of each work week, total daily and pay period hours, total wages paid each payroll, net wages and deductions, meal periods and split-shift schedules. Payroll records should be retained for at least 4 years following termination of the employment relationship. Employee Polygraph Test Though the Employee Polygraph Protection Act (EPPA) generally restricts the routine use of lie detector tests, they are used now and then such as in an employee theft investigation. The law requires employers to save a copy of the statement delivered to employees stating the reason for testing, the incident under investigation, the loss endured by the employer, the notice delivered to a polygraph examiner naming the person or persons to be examined, the nature of the employee’s access to the person or property under investigation and all documentation relating to the actual testing. A statement asserting that an exam was requested may be placed in the personnel files, but the remaining related documentation should be stored in a confidential and separate filing system for a minimum of 3 years.
  • 9000 Sunset Blvd, Suite 900, West Hollywood, CA 90069 www.cpehr.com | info@cpehr.com | 800-850-7133 I-9 Forms The Immigration Reform and Control Act (IRCA) prohibits the hiring of illegal aliens. Employers are required to fill out an I-9 form, the Immigration and Naturalization Service’s Employment Eligibility Verification Form. They must include information concerning the identity and authorization to work of all employees. Failure to comply with these requirements can lead to civil or even criminal penalties. Although not mandatory according to the law, saving copies of corroborating identification and work authorization documents in addition to the I-9 forms is recommended. Records should be saved for 3 years after employment and/or one year after termination, whichever occurs later. The records should be stored together in a common file or collectively saved electronically for all employees rather than being placed in individual personnel files. Employee Benefits Data The Employee Retirement Income Security Act (ERISA) oversees retirement and other employee benefits. Employers must preserve records of Cobra notices, records supporting the data in summary plan descriptions (SPDs), records pertaining to eligibility for benefits under ERISA and annual reports for all benefit plans. Records should generally be saved for six years after employment termination, although records relating to eligibility determination for benefits should be retained for as long as relevant. FMLA/CFRA The FMLA (Family and Medical Leave Act) permits entitled employees to up to 12 weeks of unpaid leave within a 12-month period, depending on particular medical and family criteria. General records regarding requests should be stored in personnel files. The specifics of medical requirements and details of requests including diagnosis should be placed in employee medical or health files. Relevant documentation should be preserved for a period of 4 years, in accordance with the FMLA, ADA, and CFRA (California Family Rights Act).
  • 9000 Sunset Blvd, Suite 900, West Hollywood, CA 90069 www.cpehr.com | info@cpehr.com | 800-850-7133 Employee Health Records Employee health records include all documentation of drug and alcohol testing records, pre-employment physicals, job injuries or deaths (OSHA forms 300, 300A and 301), and specific medical records. Medical exam results are confidential and must be stored separately from other records. Records of any medical examination required by OSHA or resulting from exposure to toxic or hazardous substances should be retained for 30 years after the employment termination. Otherwise, employee health records should be saved for 5 years. Workers’ Compensation Each work-injury claim must be saved in a file that includes the worker’s name, the claim administrator’s claim number, the date of injury, an indication of whether the claim is an indemnity or medical-only claim, a Certificate of Consent to self-insure if appropriate and a note if there has been a denial. Documentation regarding workers’ compensation should be retained for 5 years from the date of injury or 1 year from the last time compensation was delivered to the employee. Who Must Retain Records? All employers are obligated to maintain records pertaining to the life cycle of an employee and to save documentation of compliance with state and federal regulations. Nevertheless, some exceptions exist based on the number of employees in the company. Employers should check with their Human Resources department for details. Fines and Penalties Violation of required recordkeeping practices can incur fines of up to $70,000, as well as prison terms that vary according to the specific violation. The sentences are often “per incident,” which generally includes all incidents occurring to each individual employee.
  • 9000 Sunset Blvd, Suite 900, West Hollywood, CA 90069 www.cpehr.com | info@cpehr.com | 800-850-7133 Summary Comprehending the state and federal employment laws that drive recordkeeping requirements is essential in order to comply with them. Proficient recordkeeping will also help defend employment decisions and actions and facilitate efficient and effective human resource management. Due to the complexity of these laws and guidelines, employers are advised to contact a human resources outsourcing firm or experienced HR expert to assist in maintaining compliant recordkeeping practices within the company. About CPEhr CPEhr has been a leader of human resources outsourcing and PEO services in California since 1982. Serving 600 clients representing over 75,000 employees, CPEhr is the largest privately- held PEO’s based in California. Services include:  Employment compliance  Human resources administration  Payroll and tax processing  Management training  Employee benefit packages  Workers’ compensation Insurance  Risk management consulting  Recruiting services For more information about CPEhr’s human resources outsourcing or consulting services, and to view the corporate video, visit us at www.cpehr.com.