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Many employers who strive to retain all required information related to an employee’s employment for an appropriate time period may need guidance in the face of a myriad of regulations in this area. To help employers determine which documents must be maintained and for how long, attorneys should counsel them on complying with federal and state laws regulating the retention of employment records, and also advise regarding the importance of retaining documents in the event of a lawsuit. SHOULD EVERYTHING BE PRESERVED? Facing numerous regulations, cautious employers might consider retaining all documents for an indefinite period of time. However, with e-mail taking the place of oral conversations in the workplace, documentation of every communication may result in voluminous amounts of paper occupying personnel files. Without policies specifying when documents may be discarded, employers may devote time and space to the storage and maintenance of employment records at the cost of running the business itself. Thus, it is important for employers to determine which documents may be discarded and when. The tangle of federal and state statutes and regulations requiring the retention of various employment-related documents for differing time periods makes this determination difficult, however. For example, federal regulations require an employer to preserve any personnel or employment records for one year from the making of the record or the personnel action involved. See 29 C.F.R. � 1602.14 (Title VII and ADA); 29 C.F.R. � 1627.3 (ADEA). But, if the record may be relevant to the explanation of a wage differential between employees of different sexes, it must be maintained for two years. See 29 C.F.R. � 1620.32. Employment contracts (both collective bargaining agreements and individual employment contracts) must be maintained for a period of three years following the last effective date. 29 C.F.R. � 516.5. Payroll records, for example, are subject to a variety of different requirements, depending on the jurisdiction. Federal law requires that payroll records be maintained for a period of two or three years, depending on the type of record. 29 C.F.R. �� 516.5, 516.6. New York Law requires that they be maintained for four or six years, depending on the industry. N.Y. Workers’ Comp. Law 131; 12 N.Y.C.R.R. �� 137-142. Apart from regulations requiring that certain records be maintained for a certain period of time, there are also regulations that require an employer faced with litigation by an employee (or applicant) to preserve all relevant personnel records until the litigation is over. Under common law, the spoliation doctrine requires employers to preserve documents for another’s use as evidence in pending or reasonably foreseeable litigation. An employer’s failure to preserve required personnel records may result in serious consequences, including an adverse inference that the discarded documents contained information favorable to the employee. What then must be preserved? Consider the following. Is an e-mail advising a superior of the need to leave early an “employment record”? How about the same e-mail addressed to a co-worker? Or an e-mail from a superior to an employee stating “Thanks for your help with the holiday party”? How about an employee-plaintiff’s work product itself? Unfortunately, there is little consistent guidance from the courts specifying which documents, beyond the most obvious, must be preserved by employers for the purposes of litigation. Examining when the duty to maintain documents arises is a first step to identifying those documents that must be retained. WHEN DOES THE DUTY TO MAINTAIN DOCUMENTS ARISE? If the record at issue is subject to one of the many regulations mandating retention for a certain period of time, the duty to maintain the document generally arises upon the document’s creation. If litigation is threatened or commenced during the period that an employer is required to maintain the document (or thereafter if the employer voluntarily maintained the document for a longer period), and the document is “relevant” to the litigation, the employer must continue to maintain the document. Being served with notice of a lawsuit or an administrative charge of discrimination also triggers an employer’s duty to retain documents that may be relevant to the litigation. However, an employer can be deemed to be on notice of a suit well before service of notice or an administrative charge, if the litigation was reasonably foreseeable. For example, an employer is on notice to maintain relevant personnel documents based on an employee’s oral statement of an intent to pursue legal action. See Capellupo v. FMC Corp, 126 F.R.D. 545 (D. Minn. 1989). WHAT TO PRESERVE? Regulations promulgated pursuant to Title VII and the Americans with Disabilities Act require that “[a]ny personnel or employment record made or kept by an employer” must be kept for one year.” 29 C.F.R. � 1602.14. This broadly worded regulation offers a non-exclusive list of the types of records that must be maintained, “requests for reasonable accommodation, application forms submitted by applicants and other records having to do with hiring, promotion, demotion, transfer, lay-off or termination, rates of pay other terms of compensation, and selection for training or apprenticeship.” Id. At least one court has rejected an attempt to excuse the destruction of certain records based on an argument that the documents were not specifically enumerated in the regulation. See Morgan v. Houston’s Restaurants, Inc., 2000 U.S. Dist. LEXIS 19242, *24-26 (S.D. Fla. 2000). There, the employer destroyed (pursuant to its normal business practices) documents that ranked employees for the purpose of making work assignments. The court relied on an adverse inference of pretext based on the destroyed documents in denying summary judgment. An employer need not preserve all “personnel records” after the expiration of a year (or whatever period is required by the statute or regulation at issue). However, an employer must retain documents relating to a lawsuit or administrative charge of discrimination (or a threatened suit or charge) beyond the regulatory period. Under the common law, a putative litigant is under a duty to preserve what it knows, or reasonably should know, will likely be deemed “relevant” in a reasonably foreseeable litigation. In the employment context, federal regulations provide that when a charge of discrimination has been filed against an employer, the employer shall preserve ” all personnel records relevant to the charge.” 29 C.R.R. � 1602.14. Conversely, an employer involved in litigation will not be penalized for the destruction of documents bearing no relationship to the allegations in a charge or complaint. See Kirk v. Thurston Motor Lines, Inc., 1977 U.S. Dist. LEXIS 13431, *16 (N.D. Ga. 1977) (in a wage disparity discrimination case, declining to sanction an employer for discarding time cards that contained no salary information). Beyond the obvious categories of documents (e.g., a plaintiff-employee’s application, performance reviews and termination notice), there is little specific guidance as to precisely what records employers must maintain once litigation has been threatened. It is not always clear (particularly to a non-lawyer) what a plaintiff will ultimately seek to discover in litigation. Indeed, during the course of litigation, an employee’s initial allegations often mushroom well beyond those set forth in an initial demand letter, administrative charge or complaint. Expanded and new allegations are often accompanied by additional document requests. Also, whether certain evidence is “discoverable” or “relevant” in a particular employment case is often itself the subject of litigation — litigation with outcomes that vary by jurisdiction, court and even judge. Not only does an employer have to predict the documents that an employee may seek to support her claims, it must also predict what a court may require the employer to produce in response to the employee’s requests. The potentially amorphous nature of this standard is illustrated by one court’s discussion of “relevant personnel records,” saying that these “might include records pertaining not only to the complaining employee, but also pertaining to the employee’s supervisor, underlings, peers, or any other employee, depending on the facts of the case.” Lombard v. MCI, 13 F. Supp. 2d 621, 628 (N.D. Oh. 1998). According to the regulations, personnel records relevant to a charge of discrimination include “personnel or employment records relating to the aggrieved person and all other employees holding positions similar to that held or sought by the aggrieved person and application forms or test papers completed by an unsuccessful applicant and by all other candidates for the same position as that for which the aggrieved person applied and was rejected.” 29 C.F.R. � 1602.14. In Zimmerman v. Assocs. First Capital Corp., the court observed that “[d]emonstrating disparate treatment by comparing one’s treatment to that of other similarly situated employees is one of the principal means of showing a Title VII violation.” 251 F.3d 376, 384 (2d Cir. 2001). Therefore, missing information of other people in the plaintiff’s job category — information that would have included memos, sales figures, and other evidence of productivity — was relevant to plaintiff’s claim of gender discrimination and warranted jury instructions permitting an adverse inference against the employer’s proffered legitimate reasons for its decision. Id. In addition to retaining records of similarly situated employees, employers should also retain relevant records relating to employees accused of harassing or retaliating against a plaintiff-employee, even if those employees are not similarly situated. See Lombard 13 F. Supp. 2d at 628 (permitting an adverse presumption against an employer in a retaliation case based on the loss of records relating to the plaintiff’s previously settled sexual harassment charge). By implication, an employer generally should not have to retain personnel records for persons in, or who sought, positions outside of plaintiff’s job category (except for those individuals accused of engaging in improper acts themselves). At least one court has rejected a plaintiff-employee’s assertion that employers are required to retain all personnel records of all employees in every job category during any period when a discrimination charge is pending against the employer. Instead, the court approved the scope of documents retained by the employer, those documents relating to the plaintiff and others who applied for the position at issue. See Martincic v. Urban Redevelopment Authority, 844 F. Supp. 1073, 1076 (W.D. Pa. 1994). HOW LONG MUST DOCUMENTS BE KEPT? Once litigation has been threatened or commenced, the employer has the duty to preserve relevant documents until either the running of the applicable statute(s) of limitation or the termination of the litigation. An extraordinary delay in filing suit following the filing of a charge may excuse an employer’s destruction of documents. For example, the 7th Circuit excused an employer’s destruction of documents based on the doctrine of laches because a plaintiff delayed the filing of a lawsuit for eight years after filing a charge of discrimination. See Jeffries v. Chicago Transit Authority, 770 F.2d 676, 681 (7th Cir. 1985); but see Rozen v. District of Columbia, 702 F.2d 1202, 1204 (D.C. Cir. 1983) (declining to excuse the destruction of documents based on a laches defense). STATE OF MIND In the case of an employer who has failed to preserve a document “relevant” to litigation, courts differ regarding the state of mind required to impose liability on that employer. Some courts require that the party act with bad faith — i.e. with the intent to deprive the adverse party of potentially relevant evidence. Other courts require that the party act with gross negligence or even negligence in destroying or failing to preserve evidence. For example, the 2nd U.S. Circuit Court of Appeals recently held that, absent a showing of inadvertent or accidental destruction, the destruction of evidence pursuant to an employer’s policy to expunge such evidence was sufficient to impose sanctions. Byrnie v. Town of Cromwell, 243 F.3d 93, 109 (2d Cir. 2001). SANCTIONS Sanctions for document destruction range from default and dismissal — a last resort if no alternative remedy is available — to the imposition of monetary sanctions. But the most common sanction for document destruction is permitting the fact-finder to draw an adverse inference against the destroying party — a presumption that the missing record contained, or might contain, evidence that supports the employee’s claims. In a discrimination case, under certain circumstances, the non-production of documents that were required to be maintained by the employer can be a factor relied on by a court in denying summary judgment to an employer on an employee’s claims. See 243 F.3d at 107-8. To obtain this adverse inference, a plaintiff must show that the employer had the requisite state of mind in destroying or discarding the documents at issue and that documents “relevant to substantiating his claim would have been included among the destroyed files.” Kronisch v. United States, 150 F.3d 112, 128 (2d Cir. 1998). CONCLUSION Employers must be mindful not only of the array of regulations requiring the maintenance of particular employment records for specified periods, but of the need to maintain any documents relevant to pending or threatened litigation. It appears that employers may determine when documents may be discarded based on whether a provision mandating a preservation period applies, or whether at the time the employer discarded the documents, it could reasonably foresee that the information would one day be deemed relevant in litigation. The hypothetical e-mails presented in the beginning of this article are not likely required to be kept under any statute or regulation that addresses the retention of specific records. However, in the event of a lawsuit, any of those communications may need to be maintained, depending on the allegations of the particular action. Due to the lack of specific and uniform guidance from the courts and because of the difficulty in predicting which documents will ultimately be deemed “relevant,” employers must exercise caution when deciding which employment records may be destroyed. Lloyd Chinn and Adam Lupion are associates at Proskauer Rosein New York.

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