Overview: Retaining accurate and consistent records in an organized fashion may be the best defense against: (i) an employee court claim; (ii) regulatory fines; and (iii) misperceptions/mischaracterizations of internal policies and procedures. Failing to keep adequate records renders an organization more susceptible to a court's award of damages.
Optimal recordkeeping practices require striking a balance between too many and too few documents. Employers need to avoid keeping duplicative documents, while taking care to maintain all relevant documentation for the recommended retention period. Identifying when too much documentation is too much, or when silence on a subject may pose greater liability to the employer, is simplified when an organization implements an effective document retention schedule.
Trends: Federal and state agencies have continued their focus on proactive enforcement activities. A number of agencies have added large numbers of investigators and auditors to their ranks, thereby increasing the likelihood and frequency of external audits or investigations for employers. For example, the IRS increasingly conducts audits on employer-mandated reporting requirements, and any applicable underlying documentation. In addition, the Department of Homeland Security's Immigration and Customs Enforcement (ICE) conducts strategic audits of employee I-9 forms. Appropriate recordkeeping habits may assist an employer in avoiding greater penalties for "knowing" violations of the laws by showing, at the very least, "good faith" attempts at compliance.
Author: Marta Moakley, JD, Legal Editor
Updated in light of the NLRB General Counsel memo 18-02 concerning employer rules and other significant workplace issues.
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Updated to remove December 1, 2016, overtime requirements that will not be implemented or enforced.
Updated to reflect Colorado law granting employees the right to inspect their personnel files, effective January 1, 2017.
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HR guidance on the legal risks and benefits of recordkeeping.