HR Departments and Records Retention Policies

Doug HolthusBy Doug Holthus / dholthus@mrrlaw.com / 614.324.1040

Various state and federal statutes, rules and regulations, as well as particular industry standards, govern the retention periods for certain types of employment records [e.g.: Employment Applications (3 years), Safety Records (6 years), Time Cards and Daily Reports (7 years), Training Manuals (permanently), Union Agreements (permanently), Insurance Records (permanently), Legal Correspondence (permanently) and Employee Payroll Records (permanently)].

Given the myriad records retention obligations, every prudent employer will have in place a solid Records Retention Policy (and Program) which will be (a) written, (b) disseminated to all department leads, (c) routinely revisited by members of an internal Records Retention Committee, and most importantly … (d) followed!

Particularly in the event of litigation—or threatened litigation—it is very important that the employer be able to establish compliance with its own Documents Retention (and “litigation hold”) Policy. This, then, dictates the necessity of a corresponding “Purge Policy.” Like the Retention Policy, the Purge Policy will be written, disseminated, revisited (from time-to-time) … and followed. Confronted with the prospect or reality of suit, every employer should be able to demonstrate not only how and when records were purged, but also show that all purging of documents was consistent with the organization’s Purge Policy.

These considerations need to be balanced against another reality; sometimes, records are kept, even unintentionally, for excessive periods of time. This also needs to be avoided, as non-compliance with a Purge Policy can be possibly inferred if records are kept too long. Keeping excessive amounts of records—or keeping records for inordinate amounts of time—can create difficulties and raise the possibility of further error. Among other issues, these situations often confound the retrieval of correct information and increase the likelihood that employment (or other corporate) records may slip into some third-person’s (or unintended recipient’s) hands.

Why are these things important? Consider that in the context of litigation, the state and federal courts in Ohio have held as follows:

  • “An adverse inference may arise where a party who has control of a piece of evidence fails to provide the evidence without satisfactory explanation. Under those circumstances, the jury may draw an inference that would be unfavorable to the party who has failed to produce the evidence in question. Ohio courts normally would require a strong showing of malfeasance — or at least gross neglect — before approving such a charge.”

Schwaller v. Maguire, M.D., 2003-Ohio-6917 at ¶ 24. See also Brokamp v. Mercy Hosp. Anderson (1999), 132 Ohio App.3d 850, 870, 726 N.E.2d 594.

  • “To establish entitlement to an adverse inference, plaintiff must show that: (1) defendant had an obligation to preserve evidence at the time it was destroyed; (2) the evidence was destroyed with a culpable state of mind; and (3) the destroyed evidence was relevant to Plaintiff’s claims such that a reasonable trier of fact could find that it would support that claim. (Citation omitted.) Nevertheless, courts generally will not impose an adverse inference unless the party destroyed the evidence in bad faith. (Citation omitted.)

Henry v. Abbott Labs., No. 2:12-cv-841 (E.D. Ohio September 30, 2015).

The propriety of such Policies also applies to employers in Kentucky. The Kentucky Supreme Court has specifically rejected any enhanced requirement to show malfeasance where a party fails to produce a relevant document. See, e.g. University Medical Center v. Beglin, 375 S.W.3d 783, 789 (Ky. 2011) adopted Judge Breyer’s reasoning in a 1st Cir. case:

Under Kentucky law, the failure or refusal to produce a relevant document, or the destruction of it, is evidence from which alone its contents may be inferred to be unfavorable to the possessor, provided the opponent, when the identity of the document is disputed, first introduces some evidence tending to show that the document actually destroyed or withheld is the one as to whose contents it is desired to draw an inference.

Kentucky does require a showing that the party which/who fails to produce the document acted in bad faith, which means something more than mere negligence. The party seeking to impose the adverse inference must at least show that the party failing to produce was aware of the duty to preserve the evidence. But, the trial court my use inferences, suppositions, and circumstantial evidence in making the initial decision whether to give an adverse inference instruction.

One additional important document to retain is proof that the records retention policy was disseminated to all employees who have the potential for destroying documents.  Employees should sign an acknowledgment indicating that they received the policy and had an opportunity to have all questions regarding the policy addressed by management.  Ideally, employers should have employees sign new acknowledgments every year, regardless of whether the records retention policy is updated.  After all, a policy rarely exists unless those who are responsible for complying with it know about it, right?

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