Save it for a Rainy Day

Employers are obligated by a variety of state and federal laws and regulations to keep numerous records and documents relating to employment relationships. Most of these laws carry little or no penalties for noncompliance. So why bother using your precious storage space to keep the documents? If you do not maintain the documents required by law, you may, among other problems, get caught in the "rain" of negative inferences when defending an employment-related lawsuit.

The Equal Employment Opportunity Commission (EEOC) has issued regulations that require employers to maintain all records relating to employment decisions for a period of two years. While there is no statutory penalty for failing to comply with this regulation, a job applicant or employee who has sued the employer may be able to use the failure to maintain records to his or her benefit in the litigation. In one case, the employer was sued for sex and age discrimination by a 62-year old male applicant after it hired a 42-year old female whose credentials were not as good as the male applicant's. The district court decided the plaintiff produced insufficient evidence of discriminatory intent, and dismissed the case. The plaintiff appealed. The appellate court stated that it was perfectly fine to select the less qualified applicant based upon subjective impressions formed during the interview process. The plaintiff convinced the appellate court, however, that because the employer had intentionally destroyed documents, including applications, notes made by the interviewers, and ballots and tally sheets completed during meetings of the selection committee - all of which the EEOC regulations require employers to retain - the jury must be instructed to assume that the destroyed materials would have shown unlawful discrimination on the part of the employer. The appellate court reversed the dismissal, and sent the case back to the district court for trial.

The appellate court in the case described above thought that a plaintiff need only show that the employer intentionally destroyed the documents. Other courts employ a more stringent standard – namely, a showing that the destruction of documents was done intentionally and in bad faith (that is, in order to hide adverse information). Regardless, the specter of an adverse inference from missing or destroyed evidence must not be discounted. It can mean that discrimination is assumed where documents, now discarded, would have shown that employment decisions were made for valid, nondiscriminatory reasons. It can mean that discrimination is assumed where it never occurred.

Another reason to save those documents is that well-documented employment decisions are much easier to defend in court. Employers can lose employment-related cases because of non-existent or poor documentation. Employers must remember, however, that it is not enough to write it down; it must be written down correctly.

For guidance regarding record keeping requirements and documenting employment decisions, contact Germaine Willett or one of Ice Miller LLP's other labor and employment law attorneys.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.