"Keeping Paper--
Federal and state law requires law firms to keep personnel records for varying periods of time. Firms that do not comply can be subject to both civil and criminal penalties"
by Richard S. Rosenberg and Stephen M. MacPhail

Law firms are subject to an array of personnel record retention requirements under state and federal employment statutes and regulations. Compliance can be cumbersome because of overlap and inconsistencies among the various requirements. Law firms that do not comply with these requirements are subject to various civil and criminal penalties. Additionally, the destruction of records relevant to an administrative proceeding, investigation or a lawsuit involving the firm could give rise to sanctions or adverse evidentiary findings.

Below is a summary of common personnel record retention requirements under state and federal law. Notably, several of the laws address the same records, but require different retention periods. In such cases, it is recommended that the longer period be observed.

? HIRING RELATED RECORDS
Job applications must be maintained for at least two years after creation or receipt. Cal. Govt. Code ?12946. Under Title VII of the Civil Rights Act of 1964, 42 U.S.C. ??2000e-2000e-17 ("Title VII"), and the Americans With Disabilities Act of 1990, 42 U.S.C. ??12101-12213 (the "ADA"), personnel and employment records related to hiring must be retained for at least one year from the date of hiring or from the date of the relevant personnel action. 29 C.F.R. ??1602.12, 1602.14. Similarly, the federal Age Discrimination in Employment Act, 29 U.S.C. ??621-634 (the "ADEA") requires employers to maintain all records relating to hiring, job advertisements, job applications, job descriptions, and job orders regarding recruitment for at least one year from the date of the relevant personnel action. 29 C.F.R. ?1627.3(b). Immigration and Naturalization Service Form I-9s must be maintained for three years from the date of receipt or one year after the termination of employment, whichever is longer. 8 U.S.C. ?1324a(b)(3).

? PERSONNEL FILES
Personnel files must be maintained for at least two years after the employment is terminated. Cal. Govt. Code ?12946. Following the filing of a Complaint with the California Department of Fair Employment and Housing, these records must be kept until the case is closed.

? PAYROLL RECORDS
Under the federal Fair Labor Standards Act, 29 U.S.C. ??210-219, ("FLSA"), payroll records (which must include the employee's name, address, occupation, hours worked by day and week, wages paid each pay period, the date of wage payments, straight-time and overtime payments and deductions), must be maintained for three years. 29 C.F.R. ?516.5. California law requires that records showing the names and addresses of all employees, the ages of minor employees, daily hours worked and wages paid to all employees be maintained for two years. Cal. Lab. Code ?1174. California law also requires that records related to deductions made from an employee's wages, show month, day and year of the deduction (in an indelible format) and must be retained for three years. The ADEA requires that payroll records, which must include the employee's name, address, date of birth, occupation, rate of pay, days worked each week and weekly compensation, must be maintained for three years from the last such entry. 29 C.F.R. ?1627.3(a). Title VII requires documents concerning rates of pay and other terms of compensation to be maintained for one year. 29 C.F.R. ?1602.14. The federal Family and Medical Leave Act, 29 U.S.C. ??2601-2619, ("FMLA"), requires employers to maintain basic payroll related documents for three years. 29 C.F.R. ?825.500. Under the California Family Rights Act, Cal. Gov't Code ?12946, records must be kept for two years.

? TAX RELATED RECORDS
For federal income tax purposes, employers must maintain the following records for four years for each employee: the employee's name, address, account number, total payments made and date of each payment; the period of the employee's service; the total remuneration constituting wages which are subject to withholding; collected taxes; explanation(s) for any difference between remuneration and taxable income; the fair market value of any non-cash remuneration; an IRS Form W-4, documentation concerning the employee's tax status. Internal Revenue Code ?3402; Internal Revenue Reg ??31.6001-1, 31.6001-5. California has a six year statute of limitations for tax related records. Cal. Rev. and Taxation Code ?19704.

? RETIREMENT, PENSION AND INSURANCE PLAN RELATED INFORMATION
The federal Employee Retirement Income Security Act, 29 U.S.C. ??1001-1381 ("ERISA"), has a six year record retention rule for records from which a plan description, report, or certified information filed under ERISA can be verified, explained or checked for accuracy. These records must be retained for six years from the date the documents were filed or would have been filed except for an exemption. 29 U.S.C. ?1027. Records needed to determine plan benefits due or which may become due must be retained indefinitely. 29 U.S.C. ?1059. Under the ADEA, documents related to retirement, pension and insurance plans must be maintained for one year. 29 C.F.R. ?1627.3(b)(2). The FLSA requires that pension plan and trust documents be maintained for three years. 29 C.F.R. ?516.5.

? RECORDS RELATED TO WORK-RELATED INJURIES AND ILLNESSES
All employers are required to complete and maintain a OSHA Log 200 - "Log and Summary of Occupational Injuries and Illnesses" and an annual summary of work-related illnesses and injuries. The log and annual summary must be retained for five years beyond the year for which such records relate. 8 Cal. Code Regs ?14307. This log must contain information about work-related injuries or illnesses that result in work restrictions, motion restrictions, lost workdays, a transfer or termination, the need for medical treatment, a diagnosed work-related illness, loss of consciousness, or death. 8 Cal. Code Regs ??14304, 14305, 14307, 14311. In the event the law firm acts as its own claim administrator, California law requires retention for five years of various workers' compensation forms, medical reports, orders, records of payments, estimates of future payments, notices to employees, and copies of applications of adjudication filed with the Workers' Compensation Appeals Board. This five year period runs from the latter of the date of injury or the last date benefits were provided. 8 Cal. Code Regs. ?10102. For closed files, the "paper" records must be retained for two years after the claim is closed, at which point the file can be microfilmed and retained for the remainder, if any of the aforementioned five year period.

? FAMILY MEDICAL LEAVE RELATED RECORDS
Firms subject to the FMLA (50 or more employees) must retain for three years records reflecting dates or hours of FMLA leave taken by eligible employees, copies of written notices of requests for such leave provided by the employee to the employer, descriptions of policies and practices concerning benefits provided during such leave, premium payments for employee benefits and disputes over the designation of a leave as FMLA leave. 29 C.F.R. ?825.500. Pursuant to California's Family Rights Act, Cal. Gov't Code ?12945.2, and pregnancy discrimination law, Cal. Gov't Code ?12945, employers are required to maintain records related to requests for a leave of absence under these laws for two years. Cal. Gov't Code ?12946.

? UNEMPLOYMENT INSURANCE RELATED RECORDS
For federal unemployment tax purposes, employers must maintain records for four years reflecting the following information for each employee: the total remuneration paid to the employee; the remuneration constituting wages subject to federal unemployment tax; contributions paid into the state unemployment system; and unemployment tax information required to be reflected on the law firm's tax return. The employer must also retain records regarding the extent to which the law firm is liable for the tax of the total payments made (including date of each payment); the period of the employee's service constituting wages which are subject to withholding; collected taxes; explanation(s) for any difference between remuneration and taxable income; the fair market value of any non-cash remuneration; and an IRS Form W-4, documentation concerning the employee's tax status for four years. This information must also include the employee's name, address and account number. Internal Revenue Code ?3402; Internal Revenue Reg ??31.6001-1, 31.6001-5.

For California state unemployment insurance tax purposes, employers must maintain for four years "after the date the contributions to which they relate become due, or the date the contributions are paid, whichever is later." These records shall reflect the following information for each employee: the employee's name, social security number, date hired, rehired or returned to work; the period covered by payroll; the wages paid to the employee, including a separate showing of cash wages, the cash value of non-cash wages, and special payments such as prizes and bonuses; and other information which would enable the law firm to determine the total wages earned by the employee on a weekly basis. 22 Cal.Code Regs. ?1085-2.

? RECORDS RELATED TO ADMINISTRATIVE PROCEEDING AND LAWSUITS
In addition to the aforementioned requirements, retention of records related to an administrative investigation or charge, or a lawsuit, may require maintaining records beyond the date(s) required by law. The failure to retain records which relate to an administrative proceeding or a lawsuit can have severe consequences. For example, the intentional destruction of documents relevant to a proceeding is a criminal offense. Cal. Pen. Code ?135. Further, although the California Supreme Court has recently held that there is no tort liability for a party to litigation or a third-party who destroys relevant information, persons who intentionally or negligently destroy relevant records can be subject to sanctions and the imposition of adverse evidentiary finding. Temple Community Hospital v. Superior Court, 20 Cal. 4th 464, 466, 84 Cal. Rptr.2d 852 (1999) ("no tort cause of action will lie for intentional third party spoliation of evidence"); Cedars-Sinai Medical Center v. Superior Court, 18 Cal. 4th 1, 74 Cal. Rptr.2d 248 (1998). ("we conclude that when the alleged intentional spoliation is committed by a party to the underlying cause of action to which the evidence is relevant and when the spoliation is or reasonably should have been discovered before the conclusion of the underlying litigation, it is preferable to rely on existing nontort remedies rather than creating a tort remedy.") For this reason, it is important to adopt a proper document destruction policy which will prevent the destruction of documents which are relevant to an administrative or judicial proceeding.

It is important for the firm to implement proper procedures and practices which will ensure compliance with these record retention obligations.