Immigration Reform and Control Act (IRCA): Applicable to all businesses, the IRCA requires employers to retain completed Form I-9s for as long as the individual works for the employer. If terminated, the employer must keep the Form I-9s the longer of three years after the date of hire, or one year after the date employment is terminated.
Texas Workers’ Compensation Act: The Act does not specify the information to be retained, but does require employers to retain a “record of injuries to employees” for an unspecified period of time. It is recommended that employers retain all filings with the Texas Department of Insurance regarding worker’s compensation claims, all documents received from the employer’s worker compensation carrier (if a subscriber), and received from the injured employee for a period of four years after the claim is concluded regardless of whether the employee returns to work.
Lilly Ledbetter Fair Pay Act: The Ledbetter Act, passed in 2009, wreaked havoc with employers’ document retention policies. In a nutshell, the Act extends the period of time an employee can make a claim that they were unfairly paid less because of a protected characteristic: race, color, religion, national origin, sex, pregnancy, age, military status, or genetic information. Employees in Texas used to be able to include instances of wage discrimination that occurred up to 300 days before they filed the claim. Of course, this cut out an employee’s ability to make a claim for discrimination that may have gone on for years. The Ledbetter Act provides that when an employee is affected by a discriminatory pay decision or practice, each paycheck issued based on that decision or practice constitutes an individual discriminatory act. This means that each paycheck effectively resets the employee’s time limit to file a claim.
The problem for employers is that prudence then dictates that employers should retain payroll records, employee evaluations, and other information that informs on pay decisions all the way back to the time the employee making the claim was hired to show patterns of fairness to employees having various protected characteristics. This may extend beyond the retention periods required under other laws.
What should I do:
With two editions covering document retention requirements, I am sure you are all ready for some simplified guidelines. Pundits are all over the place with suggestions on this point that vary extraordinarily. These are my thoughts:
Payroll\Payroll Taxes: 4 years after creation;
Medical and FMLA leave records: 4 years after creation;
Benefits\Plan records: 7 years after creation;
Form I-9: 3 years after termination;
Hiring and Applicant records: 4 years following hiring decision;
Injury records: 6 years after occurrence; and
Personnel files and personnel actions: 4 years (but possibly longer at your discretion considering the risk of a fair wage claim under the Ledbetter Act).