Eric S. Hayes
Brown & Carlson, P.A.
ehayes@brownandcarlson.com

• Identify why all employers want to conduct a self-audit;
• Discuss what laws mandate that certain records be maintained by all employers;
• Identify where employment-related records need to be maintained;
• Identify some Minnesota-specific issues;
• Identify common pitfalls in maintaining employment records.

• In human resources, self-auditing is not routine;
• There are no laws or regulations requiring employers to engage an independent auditor to audit company policies and practices;
• Because of the complexity of state and federal labor laws and regulations, it is wise to do periodic check-ups;
• Proper record keeping essential to avoid liability and save your company money.

• Employers face serious consequences for failing to maintain proper employment records;
• Both civil and criminal penalties for failure to maintain proper records;
• Also consequences if employer sued for:
• Discrimination;
• Harassment;
• Breach of Contract;
• Wage, hour and pension laws.

• Good records provide good written history;
• If employer sued or questioned about its decisions, records can be used to show:
• Decision making process;
• Consistent use of company policy among all employees;
• Show a jury that the employer properly disciplined an employee;
Even outside of a lawsuit, good records can help a company identify efficiencies, identify areas for improvement, etc.

• Both State and Federal statutes and regulations impose fines on employers for not keeping accurate records.
• Under OSHA, employers can be fined up to $7000 for each violation;
• Under Minnesota law, an employer can be fined $1000 for each failure to maintain proper payroll records;
• Courts can impose sanctions for failure to produce appropriate records in response to a lawsuit.

• In Combs v. King, 764 F.2d 818 (11 th Cir, 1985), trustees of several retirement trusts sued an employer because the contributions did not comply with the union contract.
• The Court held that the employer had a duty under ERISA to keep accurate records of the hours each employee worked so it could verify the accuracy of the contributions to the fund.
• The employer did not have accurate records, so the court held it was the employers burden to disprove the damages asked for by the trustees.

• Green v. Blitz, 2011 WL 806011 (E.D. Tex. Mar. 1, 2011);
During discovery, Defendant had one employee collect documents relevant to the litigation.
• The employee did not do a complete jog or even communicate with various departments within the organization to see where relevant information may be stored.
• The Court ordered Defendant to pay $250,000 in civil contempt sanction to Plaintiff.

• Federal and State laws apply to record keeping;
• Generally, they fall into 4 categories:
• Fair Employment Practices;
• Compensation, Leave and Benefits;
• Occupational Health and Safety; and
• Tax Law.

• A personnel file should be created on the date of hire. Each file may contain the following 5 subfolders:
• Employment Subfolder:
• Application for employment;
• Education verification;
• Background check results;
• Employment references;
• Employment offer letter;
• Emergency contact information;
• Employee handbook acknowledgment;
• Check list from new employee orientation;
• Job description;
• Wage information.
• *See Minn. Stat. 181.960, Subd. 4 for definition of personnel record

• Payroll/Benefits Subfolder:
• W-4 Form
• Forms authorizing various payroll deductions
• Leave records
• Attendance records
• Time sheets
• Benefits enrollment forms

• Performance Subfolder:
• Performance reviews;
• Discipline, warning and termination notices;
• Documents on promotions, demotions, transfers;
• Performance Improvement Plans;
• Notes to file regarding performance issues.

• Medical Subfolder
• Medical information;
• FMLA forms;
• Disability or Workers’ Compensation forms;
• Accommodation requests;
• Information regarding impairments or restrictions
• Fitness for Duty certifications;
• Results of any employer sponsored medical examinations or tests;

• Investigation/Litigation Subfolder
• Information relating to a charge, investigation, lawsuit or complaints:
• Should include investigation notes;
• Statements;
• Other information collected as part of investigation:
• Must be kept confidential to avoid exposure to defamation or retaliation claims.
• Attorney client privilege must be maintained.

• I-9 forms – employer should have 1 folder for entire office where all I-9’s are keep in a secure location;
• Medical information/records;
• Investigation notes and reports.
• Supervisors should not have access to the personnel file in making employment decisions

• Employers with 20 or more employees must provide written notice upon hire of Minnesota’s Personnel Record Review and
Access Statute. Minn. Stat. §§181.960 – 181.965 (2007)
• Employee has right to review file every 6 months and obtain a copy of records at no charge;
• Former employee can review personnel record once every year, obtain copy at no charge as long as employer maintains the personnel record;
• Written notice must include:
• The right to review personnel records;
• The right to dispute records;
• A statement that employer cannot retaliate;
• The remedies available to the employee for violation.

• Minnesota regulates employer use of employee social security numbers (Minn. Stat. §325E.59):
• Cannot be publicly posted;
• Should not be part of accessing work material/website;
• Cannot use social security numbers as primary account identifier.
Only people with “need to know” should have access to employee social security numbers.

• Protected genetic information (Minn. Stat. §181.974);
• Employee assistance provider records (Minn. Stat. §181.980);
• Employee references (Minn. Stat. 181.967).

• Implement consistent and systematic policy for retaining and discarding records.
• Intentional destruction of records to avoid liability is unlawful.
• Timeframe for destruction will depend on business needs and complying with legal requirements.
• Statutes identify minimum retention periods;
• Consider statute of limitations for guidance.

• Contact legal counsel if you have specific questions on legal requirements of document management and retention.