State and federal laws have different requirements for employers when it comes to displaying informational posters and retaining company records.  The following summary shows information for both federal and state (Florida) requirements.  The confusing part of these standards, is that they are based on the specific type of document, not the overall system used by employers to maintain records.  For instance, there is no generic standard on how long to maintain a former employee’s personnel file, but rules for each document in the file.  By looking at the rules for each specific document (i.e. employment application, discipline warning, benefit enrollment form etc…) you will know how long the document must be maintained.

Federal and State Recordkeeping Requirements (general – government contractors are different)

• Advertisements (jobs) – 1 year from date of action
• ADA Accommodation docs – 1 year from date of action
• Age Certificates for Minors – until termination of employment
• Applications, resumes – 1 year from date of action
• Applicant Testing – 1 year from date of action
• COBRA documents – follow ERISA rule for 6 years
• EEO-1 Form – current and past year
• Employee Beneficiary docs – as long as relevant (current version)
• Employee Benefit Plans – 1 year after termination of the plan
• Employee Exposure and Medical Records – 30 years (OSHA tests)
• Fair Credit Reporting Act – 2 years from date of action
• FICA, FUTA related – 4 years after tax due date, or tax paid (later of)
• FMLA related documents – 3 years
• HIPAA – 6 years
• I9 Forms – 3 years, or 1 year after termination (whichever is later)
• Safety Data Sheets (SDS) – Chemical lists kept current and for 30 years
• OSHA 300, 301, 300A – 5 years, and current year
• Payroll Records – at least 3 years
• Personnel Files – minimum 1 year after termination (but recommend at least 7 years)
• Polygraph Protection testing – 3 years from testing
• Time cards (FLSA) – at least 3 years
• W2 forms (and undeliverables) – 4 years
• Workplace Accident investigations and records – 3 years
• Discrimination claims – 1 year from termination
• Drug Free Workplace testing records – 1 year from test
• DWC-1 forms – at least 30 months
• Unemployment claims and records – at least 5 years
• Workers’ Comp claims – length of employment, plus 2 years (or until case resolved)

The Family and Medical Leave Act (“FMLA”) entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.  All covered employers are required to post the FMLA poster and include information about its FML policy included in its employee handbook.

Eligible employees are entitled to (qualifying reasons for FMLA):

• Twelve workweeks of leave in a 12-month period for:
• the birth of a child and to care for the newborn child within one year of birth;
• the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
• to care for the employee’s spouse, child, or parent who has a serious health condition;
• a serious health condition that makes the employee unable to perform the essential functions of his or her job;
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
• Twenty-six workweeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

Who is covered by FMLA?

The FMLA only applies to employers that meet certain criteria. A covered employer is a:

• Private-sector employer, with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including a joint employer or successor in interest to a covered employer;
• Public agency, including a local, state, or Federal government agency, regardless of the number of employees it employs; or
• Public or private elementary or secondary school, regardless of the number of employees it employs.

What employees are eligible for FMLA?

Only eligible employees are entitled to take FMLA leave.  An eligible employee is one who:

• Works for a covered employer;
• Has worked for the employer for at least 12 months;
• Has at least 1,250 hours of service for the employer during the 12 month period immediately preceding the leave*; and
• Works at a location where the employer has at least 50 employees within 75 miles.

The Employee Handbook provides a great opportunity for your business to communicate policies and procedures to its employees.  The Handbook can be printed, online or available on the company’s intranet, or a combination of ways.  Each employee should be given a copy and asked to sign an acknowledgement that they have received a copy, and it is their responsibility to read it.  This document is critically important to protect your business in court if an employee claims that they are ignorant of the company’s policies.  Employees are also informed about important company compliance responsibilities, including equal employment opportunity, non-discrimination and retaliation protection.

Employment at will policies state that either the employee or the employer may terminate the employment relationship for any reason, at any time, as long as the reason is not illegal or prohibited under federal, state or local law.  Florida follows the principles of “at-will” employment, but check with your legal advisor on any exceptions.

For protection purposes, these policies are critical:

• Equal Employment Opportunity
• No Harassment
• Employment at will
• Open door and complaint handling
• Code of Conduct and Disciplinary Policy
• Drug Free Workplace
• Dress Code and Appearance Standards
• Email, Internet Usage
• Employee Searches
• Solicitation and Distribution (Bulletin Board)
• Paid time off
• Timekeeping and Pay Dates
• Benefits (eligibility)
• Attendance and No call/no show
• Performance Evaluation
• Leaves of Absence (FMLA if over 50 employees)
• Confidential Information and Trade Secrets
• Conflict of Interest

A company’s employee handbook is a living document that should be regularly reviewed and updated to meet current conditions at the company.  Throughout the year, keep a file on situations that were not addressed in the handbook.  Annually take out this file and consider whether employees would benefit from a new policy (for instance – moonlighting, ethics, etc..).  If the situation was unusual, maybe no policy is necessary; however, if it will be repeated, your best option will be adding a new policy statement.

Small businesses develop a strategy for compensating employees, in order to best use limited resources.  The compensation strategy is how decisions are made to use these limited resources for the purposes of attracting, retaining and motivating employees.  As businesses grow and mature, they adjust the methods of compensation and benefits to match the growing organization.  Other factors impacting your compensation decisions include industry, location and competition.  Compensation is a variable cost because there are many specific rules and regulations that govern how you will be able to pay your employees.  Here are some of common compensation questions from small business.

Can I pay all my employees a salary?

No.  The Fair Labor Standards Act (FLSA) was enacted back in 1938, and there are still many employers that do not know its provisions.  The law requires that employers define the pay status (exempt or non-exempt) for all positions.  Non-exempt employees are not exempt from the overtime provision requiring that they receive time and one half for all hours worked over 40 in a work week.  Exempt employees are not entitled to overtime.  To determine if an exemption is available, you look at the duties.  There are four main types of exempt employees (with very specific rules or each): executive, administrative, professional (includes computer professionals) and outside sales.  Generally, only exempt employees are eligible to be paid on a salary.

Can salaries be regularly adjusted based on amount of work performed?

No.  The Department of Labor defines a salary as a regular, predetermined rate of pay for a weekly or less frequent basis (bi-weekly, semi-monthly, monthly).  Currently, the rules require that an exempt employee receive a salary of at least $455 per week, or $23,660 annually, to be classified as exempt.  The rules specifically state that the salary cannot be reduced because of variations in the quantity or quality of the work, and the employee must receive a full salary for a week in which any work is performed.  However, an employee does not need to be paid for a week, if they are starting or ending employment during the week (pro-rated ok).

Are there maximum hours that an employee can be worked in Florida?

No.  The FLSA does not provide a maximum number of hours that can be worked by employees, as long as hours worked over 40 by non-exempt employees are compensated at time and one-half their wage rate.  Likewise, Florida law does not address maximum hours.  If the employee is under the age of 18, companies must review the federal and state child labor laws, which may restrict the number of hours worked for minors, based on their age.

Can I pay my exempt employees “overtime” for working extra hours?

Yes.  The FLSA does not prohibit paying extra compensation or overtime to exempt employees.  Some employers choose to pay exempt employees overtime for hours worked beyond 40 in a week, and can do so without losing the exemption.  As long as the regular salary is no affected, the extra compensation could be paid at straight time, overtime or any other set rate.

When does travel time need to be paid to employees?

Sometimes.  The FLSA rules state that regular home to work travel does not need to be compensated.  However, travel during the course of the workday needs to be paid to employees (for instance, making a trip to a supplier to pick up materials).  Other special cases that require payment of travel time include: (1) emergency travel from home to work (after hours to address a customer issue), (2) one day offsite assignment (for example a day long training course), (3) travel between job sites, during the normal workday; (4) travel away from home that keeps an employee away from home overnight.

When does employee training time need to be paid?

For non-exempt employees, the wage and hour regulations for determining the compensability of training time applicable to all FLSA-covered employees are set forth in 29 C.F.R. §§ 785.27 through 785.32.  Participation in training programs need not be counted as working time if all of the following criteria are met: (1) attendance is outside the employee’s regular working hours; (2) attendance is in fact voluntary; (3) the course, lecture or meeting is not directly related to the employee’s job; and (4) the employee does not perform any productive work during the attendance.  See 29 CFR 785.27.  FLSA 2009-15 Opinion Letter.

Does time spent completing training “homework” need to be paid?

Yes, according to a Wage and Hour Opinion Letter, if the “homework” is required by the employer and the employee is non-exempt.  However, time spent in outside study is not compensable if the studying is not required by the employer.  For instance, supplemental after hours reading assignments that are not supervised or tested, and are not necessary to pass the final examination are primarily for the employee’s benefit and may be excluded from compensable hours of work.

Pre-employment investigations are important to ensure that the applicant is the best qualified individual and that the information provided by the applicant is tested for accuracy and validity.  Most Florida employers conduct a criminal background testing of applicants.  When your business uses a vendor to conduct these tests, you must follow the requirements of the Fair Credit Reporting Act (FCRA) and the recent guidance by the Equal Employment Opportunity Commission (EEOC) on using criminal background checking on applicants.

Sample Background Checking Procedures

To comply with federal law governing background check procedures, (insert company name) (“the company”) should follow the steps outlined below.  The company’s third-party background check vendor, [insert vendor’s name], has a process that will allow the company to follow these steps.

The Company will only conduct background checks on employees/applicants once the company has obtained a signed “Disclosure and Consent to Request Consumer Report Information” form. This form will be included in all new hire packet forms. A copy of this signed form will remain in the company’s records. An English and Spanish version of this form is included in the new hire paperwork.

Also included in the new hire packet is a form titled, “A Summary of Your Rights Under the Fair Credit Reporting Act” document.

The company must make a conditional job offer to an applicant conditioned on the applicant’s successful completion of a background check.  If the individual is a current employee, the company should simply inform the employee that it will be conducting a background check on the employee (and re-execute if needed).

If the results are clear, then the company does not need to take any further action.

If the results contain a record unacceptable under our requirements (according to the background check matrix of job related convictions), then the company must provide the applicant/employee with the following:

1. A copy of the entire background report;
2. A copy of the “A Summary of Your Rights Under the Fair Credit Reporting Act” form provided by the background check vendor
3. A Pre-Adverse Action letter prepared by the company (and if in California, the California Statement of Consumer Rights form).  The Company will reference all state FCRA Rulings to determine if any other state requirements are warranted.
4. If the background check was conducted on an applicant, do not assign an applicant to company jobs during this time.
5. If the background check was conducted on an employee, the company should continue assigning the employee work during this time.
6. After 14 days, if the employee/applicant does not wish to contest the results of the background check, the company must provide written notice of termination or withdrawal of the conditional job offer (Adverse Action Letter).

The Adverse Action letter must state: the background check vendor’s name, address, and telephone number; a statement that the vdnor did not make the decision to withdraw the conditional job offer/terminate and is unable to provide the applicant/employee with specific reasons why the offer was withdrawn or the termination occurred; the adverse action letter communicates to the applicant they are no longer being considered for employment and the decision was influenced by the Consumer and/or Investigative Report made at the company’s request and provided by the vendor.

Enclosed with the Adverse Action letter must be the following: a copy of the entire background report; a copy of the “A Summary of Your Rights Under the Fair Credit Reporting Act” form provided by vendor; and if in California, The California Statement of Consumer Rights form.  State FCRA rulings will be reviewed to determine if any state requirements are warranted.

All background check results, pre-adverse and adverse actions shall be kept apart from the employee’s personnel file, and in a separate file.  These files shall be kept by year, then by month and then by alphabetical order of the employee/candidate’s last name and then by employee number.