From the Los Angeles
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
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
? 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
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
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
? RECORDS RELATED TO ADMINISTRATIVE PROCEEDING
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