How Long Should You Keep HR Records?

November 30, 2015

A common question posed to us is “How long do we have to keep HR records?” Good question! Human Resources gets tons of paperwork. Tons and tons and tons. Granted, a lot of it is electronic these days, but the principle still remains. HR does record keeping. And, we need to keep those records, but for how long?

Here are basic guidelines I found for HR record keeping. Remember, though, that state laws may vary from these guidelines. If state laws and Federal laws are in conflict, always keep the records based on whichever requirement is longer.

Hiring Records: 1 Year

You need to save all of those resumes, interview notes, applications, and job postings, and even a record of your searches through your applicant tracking system for one year after the decision to make a job offer was made.

So, if you interview an applicant, and the whole process drags on for three months, it’s not until the selection process ends that the clock starts ticking.

Why do you have to do this? If anyone ever questions your hiring decision, you will need to show that you were discriminatory throughout the process. Various State & Federal laws require you to demonstrate you’re in compliance. Maintaining these records helps you do this.

Drug Test Records: 1 Year or 5 Years for Transportation Jobs

Some employers choose, and others are required, to conduct pre-employment drug tests. Just remember, it’s part of the hiring record and you should keep a copy of the results for one year. If you do additional drug testing, whether due to an incident at work or as part of a random check, you also need to maintain these records for one year.

However, if you are subject to department of transportation regulations, then the minimum time frame for drug test records is five years.

Payroll/Timecards, Etc.: 3 Years Minimum, 5 Years after Termination Recommended

The law requires you to maintain these records for three years, but recent lawsuits mean it would be smarter for you to keep them for longer.

You want to maintain a record of how much each employee was paid, and how many hours they worked for their entire tenure at your company. Keep your records for at least five years after the employee leaves, regardless of reason.

For exempt employees, of course, you don’t need to maintain time records, as their pay is the same regardless of the number of hours worked. However, if you ever misclassified an employee as exempt when she should have been non-exempt, these hours worked records can determine any monies owed.

Make sure that you include how the company calculated pay. For instance, you need to track whether it was straight salary, salary plus commission, any bonuses, overtime, piecework, or straight hourly pay.

You need to do this not only for pay and tax questions, but many other decisions rely on the number of hours worked. For instance, eligibility for FMLA is dependent on the number of hours worked in a year. If you have a part-time exempt employee, you might want to consider requiring time recording in order to determine FMLA eligibility. You also need to be able to prove that you paid your workers for all of the hours they worked.

Form I-9: 3 Years After Hire, 1 year After Termination, Whichever Is Later.

Maintain the employee I-9 Form, stored separately from your personnel records, for three years after you hire the employee and for one year following employment termination, whichever is later.

Health/Pension Benefits Information: 6 Years

You need to keep your records of your plans for all of your benefits for a minimum of six years. The courts have held that that if an employee sues you, saying that he or she deserves a higher pension, for instance, it’s the employer’s responsibility to prove that they don’t owe more, not the employee’s responsibility to prove that they do. Keep all of those Summary Plan Descriptions.

If you have former employees who qualify for COBRA, and elect to  extend their health benefits, you should also keep those records for six years just to be safe. The law doesn’t specify retention, but since this could apply under the Employee Retirement Income Security Act (ERISA) this law requires retention for six years. To be on the safe side, don’t throw those records out.

FMLA Records: 3 Years

When an employee is eligible, and requests a leave under the FMLA, you need to keep that paper trail, even if you deny the leave. Make sure that you keep track of each employee’s leave – when it began and how much time is used. If the employee has intermittent FMLA, make sure you track every leave and every day or hour used. Dates and the number of hours should be documented. Remember, intermittent leave can be used for a few hours in a day, or a few days in a week. Document it all and keep those records.

Remember, this is not a comprehensive list and applies only to Federal statutes. You may be subject to additional record retention laws if, for instance, you are a Federal contractor or your state has different standards. When in doubt, don’t throw it out.

Keep in mind, it is better to keep something for too long than not long enough!

Holiday Pay: Are You in Compliance?

November 23, 2015

The holidays are fast approaching and in the past we have received calls asking us to clarify holiday pay. As a reminder, here are 8 things you should know about holiday pay for your employees. All of these guidelines assume that your company lacks a collective bargaining agreement.

  1. Do you have to pay for holidays? You are not required to pay non-exempt employees for holidays. Paid holidays is a discretionary benefit left entirely up to you. Exempt employees present a different challenge. The Fair Labor Standards Act does not permit employers to dock the salary of an exempt employee for holidays. You can make a holiday unpaid for exempt employees, but it will jeopardize their exempt status, at least for that week.
  2. What happens if holiday falls on an employee’s regularly scheduled day off, or when the business is closed? While not required, many employers give an employee the option of taking off another day if a holiday falls on an employee’s regular day off. This often happens when employees work compressed schedules (four 10-hour days as compared to five 8-hour days). Similarly, many employers observe a holiday on the preceding Friday or the following Monday when a holiday falls on a Saturday or Sunday when the employer is not ordinarily open.
  3. If you choose to pay non-exempt employees for holidays, can you require that they serve some introductory period to qualify? It is entirely up to your company’s policy whether non-exempt employees qualify for holiday pay immediately upon hire, or after serving some introductory period. Similarly, an employer can choose only to provide holiday pay to full-time employees, but not part-time or temporary employees.
  4. Can we require employees to work on holidays? Because holiday closings are a discretionary benefit, you can require that employees work on a holiday. In fact, the operational needs of some businesses will require that some employees work on holidays (hospitals, for example).
  5. Can we place conditions on the receipt of holiday pay? Yes. For example, some employers are concerned that employees will combine a paid holiday with other paid time off to create extended vacations. To guard again this situation, some companies require employees to work the day before and after a paid holiday to be eligible to receive holiday pay.
  6. How do paid holidays interact with the overtime rules for non-exempt employees? If an employer provides paid holidays, it does not have to count the paid hours as hours worked for purposes of determining whether an employee is entitled to overtime compensation. Also, an employer does not have to pay any overtime or other premium rates for holidays (although some choose to do so).
  7. Do you have to provide holiday pay for employees on FMLA leave? You have to treat FMLA leaves of absence the same as other non-FMLA leaves. Thus, you only have to pay an employee for holidays during an unpaid FMLA leave if you have a policy of providing holiday pay for employees on other types of unpaid leaves. Similarly, if an employee reduces his or her work schedule for intermittent FMLA leave, you may proportionately reduce any holiday pay (as long as you treat other non-FMLA leaves the same).
  8. If an employee takes a day off as a religious accommodation, does it have to be paid? An employer must reasonably accommodate an employee whose sincerely held religious belief, practice, or observance conflicts with a work requirement, unless doing so would pose an undue hardship. One example of a reasonable accommodation is unpaid time off for a religious holiday or observance. Another is allowing an employee to use a vacation day for the observance.

Here comes the disclaimer. My Blog reaches out nationally and internationally. The laws of your state or country might be different. If you are considering adopting or changing a holiday pay policy in your organization, or have questions about how your employees are being paid for holidays and other days off, it is wise to consult with counsel.


Exempt Employees: New Minimum Wage & Overtime Compensation!

November 16, 2015

You may recall from a previous post that the Department of Labor (DOL) was “proposing” to raise the minimum weekly salary for exempt employees from the current $455 to a likely $970 in 2016. Well it has now become official. The DOL estimates that 4.6 million U.S. workers who are currently exempt will be entitled to minimum wage and overtime compensation under the new salary level requirements. 

Salary Level Would Automatically Adjust on an Annual Basis

Under its proposed rules, the DOL sets the salary threshold for the white collar exemptions at the 40th percentile of weekly earnings for full-time salaried workers nationwide. For 2013, using data from the Bureau of Labor Statistics, that figure was $921 per week, or $47,892 per year. The DOL anticipates that when its Final Rule goes into effect in 2016, the salary level will be $970 per week, or $50,440 per year.

In order to maintain the salary levels at a fixed percentile of earnings, the DOL proposes that the salary threshold automatically update annually. The automatic adjustment is intended to prevent the salary level from diminishing through inflation and to potentially make additional rulemaking adjusting the salary basis unnecessary. The DOL believes that this will provide more certainty to employers with a meaningful, bright-line test while improving government efficiency.

Highly Compensated Employee Exemption: $122,148 Salary

The current exemption for highly compensated employees requires an annual salary of $100,000. The DOL proposes to raise that salary threshold also based on an annualized value of a percentile of weekly earnings for full-time salaried workers. This proposal sets the salary level of highly-compensated employees at the 90th percentile, which was $122,148 per year for 2013. That number will likely be higher by the time the Final Rule is implemented. This salary requirement would also adjust automatically to the level equal to the 90th percentile of earnings for full-time salaried workers.

No Proposed Changes to Duties Requirements

Since 2004, the duties tests for the white collar exemptions have not included a limit on the amount of time that an employee can spend on nonexempt duties before the exemption is lost. Believing that a rise in the salary level will provide an initial bright-line test for the exemptions, the DOL refrained from proposing changes to the duties tests but will consider requests for changes during the comment period.

Nondiscretionary Bonuses May Be Included in Salary Level Requirement

In the past, the DOL has not included nondiscretionary bonus payments when determining whether an employee’s salary meets the white collar exemption threshold; it looked only at actual salary or fee payments made to employees. In its proposed rules, the DOL seeks input on whether it should permit some amount of nondiscretionary bonuses and incentive payments to count toward a portion of the salary level requirement for the executive, administrative and professional exemptions. The DOL states that for these bonuses or incentive payments to count toward the weekly salary requirement, the bonuses and incentive payments would need to be paid monthly or more frequently, not as a yearly “catch-up” payment.

Next Steps

If you want to submit any comments on the DOL’s proposed changes to the overtime rules, you have 60 days in which to submit your input either electronically or by mail to the U.S. Department of Labor. After considering comments from interested parties, the DOL will decide whether to make any revisions to its proposed overtime rules and will issue its Final Rule sometime thereafter. Although the final version of the rules may change slightly, you should begin preparing for the changes now. 

Examine your payroll records to determine which employees are currently treated as exempt under the various white collar exemptions. Determine which, if any, would or would not meet the new salary thresholds: $50,440 per year for executive, administrative and professional exemptions and $122,148 for highly compensated employees. Review the duties tests to make sure your exempt employees are performing exempt tasks.

After this review, consider how your organization is going to handle those employees who may not qualify as exempt under the new rules. Do you want to increase their salary to meet the new threshold? Change their status to nonexempt and pay them minimum wage and overtime? Do you need to change their duties to make sure they meet the duties tests? Have these internal conversations now so that you are not caught off guard when the Final Rule goes into effect in the coming months.

A Legally Compliant Off-duty Access Policy Issued by the Feds!

November 9, 2015

A consistent inquiry from clients is whether or not an employer can lawfully limit non-employees’ access to its facility? On its face, such a question might seem silly. After all, an employer should be able to control its property, right? What about access by union organizers? Does this wrinkle change the answer?

In a recent case of national impact (Marina Del Rey Hospital and California Nurses Association…) the National Labor Relations Board considered the following access policy:

“Off-duty employees may access the Hospital only as expressly authorized by this policy. An off-duty employee is any employee who has completed or not yet commenced his/her shift.

An off-duty employee is not allowed to enter or re-enter the interior of the Hospital or any Hospital work area, except to visit a patient, receive medical treatment, or conduct hospital-related business. “Hospital related-business” is defined as the pursuit of an employee’s normal duties or duties as specifically directed by management.

An off-duty employee may have access to non-working, exterior areas of the Hospital, including exterior building entry and exit areas and parking lots.

Any employee who violates this Policy will be subject to disciplinary action up to and including termination.”

The issue was whether the employer’s policy was proper under the National Labor Relations Act.

Well, according to the National Labor Relations Board (NLRB), “an employer’s rule barring off-duty employee access to its facility is lawful only if it is limited to the interior of the facility, is clearly disseminated to all employees, and applies to off-duty access for all purposes, not just for union activity.” Because this policy checked each of these boxes, it was found to be proper under the National Labor Relations Act.

Of course, having a lawful policy, and lawfully applying that policy, are completely different.

The problem encountered by this employer is that they applied the policy unlawfully in a manner that discriminated on the basis of union activity. The record reveals that the employer permitted off-duty employees to enter the Hospital for a variety of reasons unrelated to union activity (such as picking up paystubs, submit-ting scheduling requests, applying for a transfer, and attending social events such as retirement parties and wedding or baby showers).  But on at least two occasions, the employer applied its off-duty access policy to prevent or curtail off-duty employees from meeting with union representatives in the hospital cafeteria. This evidence supports a finding that the employer applied its off-duty access rule in a discriminatory manner.

What lessons can employers take away from this?

  1. If you’re looking to draft an employee off-duty access policy, you could do a whole lot worse than one the NLRB has already blessed.
  2. Once you implement that policy, make sure you do so fairly, consistently, and non-discriminatorily. Otherwise, your lawful policy might still draw some backfire.

Please people, use some common sense! Be fair, firm and consistent with your policies!

Note: This week on the Podcast Jim discusses the “Marriage Penalty” as applied to the FMLA. Just go to iTunes and search for “Listen Up with Jim Potts” or go to and simply click on the Podcast.

Dealing With “Fake” Doctor’s Notes!

November 2, 2015

Even though an employer might have every reason to believe that a doctor’s note is fake, an employer runs the risk of an FMLA violation by summarily denying time off without following the FMLA’s procedures for authenticating a medical certification.


  • The FMLA permits an employer to contact the medical provider who purported to provide the certification to authenticate the document.
  • Authentication means providing the health care provider with a copy of the certification and requesting verification that the health care provider who signed the document completed or authorized it.
  • An employer may not request any additional medical information.
  • An employer must first provide the employee with the opportunity to authenticate the note.
  • If, however, the employee fails or refuses, the employer, through a health care provider, human resources professional, leave administrator, or management official—but not the employee’s immediate supervisor—may contact the employee’s health care provider directly for purposes of authentication.

Second and Third Opinions

An employer who has reason to doubt the validity of a medical certification may require the employee to obtain a second (and possibly third) opinion:

  • The second opinion must be at the employer’s expense.
  • Pending receipt of the second opinion, the employee is provisionally entitled to all of the benefits of the FMLA, including intermittent leave. If the certifications do not ultimately establish the employee’s entitlement to FMLA leave, the employer then has the right to retroactively designate the leave as non-FMLA.
  • An employer is permitted to designate the health care provider to furnish the second opinion, but the selected health care provider must be one that it does not regularly contract with otherwise regularly use the services of.
  • If the opinions of the employee’s and the employer’s designated health care providers differ, the employer may require the employee to obtain certification from a third health care provider, again at the employer’s expense. This third opinion is final and binding.
  • Upon request by the employee, an employer is required to provide the employee with a copy of the second and third medical opinions within five business days of such request.

Look, initially your gut instinct might say fire the employee, but following that instinct could get you in trouble under the FMLA if the note turns out to be authentic. Then what? Following the FMLA’s rules for authentication, and second and third opinions, will give you the legal ammo to possibly fire the offending employee. In the meantime, place the employee on conditional FMLA leave, which is unpaid. A few weeks down the road, once you confirm that the note is bogus, you can arguably fire the employee but do not do so without first talking to your legal consul or HR consultant. FMLA, keep in mind is federal. There are some states, such as California, that have stricter guidelines in which case you will probably be directed not to fire the employee but nothing prevents you from taking some other form of disciplinary action.

NOTE: The Podcast this week discusses “Wearing Tattoos to Work”. Look for “Listen Up with Jim Potts” on iTunes or go to our website at