DOs and DON'Ts of Documentation
Print Issue: March 2010
MANY EMPLOYERS HAVE A “SLICED BREAD” PROBLEM. They tell employees that they are “the best thing since sliced bread.” Such hyperbole speaks to the lazy penchant to record better-than-warranted assessments of an employee’s performance in a written performance evaluation, rooted not in reality but in the evaluator’s fear of a confrontation with the employee. It becomes a very real problem when an employer feels compelled to terminate an employee for poor performance that, in the employer’s view, can no longer be tolerated.
The average jury, sitting in the average courthouse, deliberating on the average wrongful termination lawsuit, will find the claim that the employee is so much less than average difficult to believe when performance evaluation records, which are often the only relevant documents available in the case, declare that the employee has been above average for several years leading up to the poor performance termination that is supposedly based on poor performance.
To develop a sound policy and document employee performance accurately, companies must develop a solid foundation for record creation and retention, and they must follow best practices on documenting interactions between managers and employees over time.
The best practices for employment documentation, whether of employee performance, investigations, or disciplinary situations, are essentially the same whether paper or electronic records are to be the official company record. And it’s best to start from the ground up, considering first the foundation for good employment documentation practices at the company and building from there to implement specific document and recordkeeping practices that protect the company in case of litigation.
Culture, policy, training, and accountability are the keys to establishing good employment documentation and recordkeeping practices.
Culture. Culture is established by a company’s management and manifested by the directives and resolutions of the CEO or the board of directors. These executive authorities must establish that good record-keeping and employment documentation are corporate priorities with a declaration of principles and the appointment of a person or department responsible for fostering good practices. Regular reporting and follow-up at the CEO level is vital to ensuring the success of the program as it matures.
Written policy. A written policy spells out the company’s requirements for record-keeping and employment documentation. A good policy will contain at least the following components.
The policy should define which records created and maintained by the company are subject to its provisions. This should include a specific recognition of all types of records—paper or electronic—and all types of storage mediums. It should note whether electronic drafts are considered records.
The policy should recognize and pledge compliance with legal requirements for creation and retention of records. It should also establish a procedure for a “legal hold” to suspend the routine disposal or destruction of any records that may be relevant to any reasonably anticipated legal dispute.
The company must establish basic retention guidelines for official records, including employment records. The policy should delegate responsibility for policy implementation, enforcement, and record retention to a specific person or department. This responsibility should include retention rules by category of record or by department in larger organizations.
A disposal schedule should be determined and a procedure established for the destruction of records the company no longer needs or desires to keep. A company may want to designate why the records are being destroyed—for example, because a minimum legal retention period has expired or because the record no longer has operational or business value or necessity.
The policy should require at least annual reporting back to the CEO or board of directors regarding accountability under the policy. Penalties for noncompliance should be laid out clearly.
The policy should be approved at the highest level of the company, with appropriate notice to all employees. This will be the first step toward creating, supporting, and developing a culture of good recordkeeping and employment documentation practices.
Training. The responsible person or department should provide training to any employee in the organization who will be creating or maintaining records under the auspices of the policy. Culture and policy declarations are of little value if the company fails to educate employees about their responsibilities for recordkeeping.
The company should create and retain written materials to be used in the training. It should also document each employee’s attendance at the training.
Accountability. Perhaps the most important component of any program is accountability, and record keeping is no exception to this rule.
In practice, accountability at the top means that the CEO gives serious consideration to how effectively the company’s record-keeping and documentation policy and practices have been implemented and enforced each year, including whether changes need to be made to any policy or practice. At the ground level of the organization, it means that supervisors and managers are evaluated each year on how well they have met their document policy responsibilities. In this evaluation, any deficiencies should be noted, any penalties for infractions should be assessed, and followup training should be provided, if necessary.
The importance of accountability can be seen in EEOC v. Target Corporation (U.S. Court of Appeals for the Seventh Circuit, 2006). What began as a race discrimination case regarding hiring practices in Target’s Wisconsin districts also became a case about accountability for the proper enforcement of Target’s internal record-retention policies.
The Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Target on behalf of a group of prospective employees who claimed that they were not hired because of their race. Target requested summary judgment—a hearing based on the facts of a case without a trial. The U.S. District Court for the Eastern District of Wisconsin granted Target’s request. The EEOC appealed the district court decision.
The U.S. Court of Appeals for the Seventh Circuit reversed the decision, allowing the case to go to trial. The court of appeals noted that evidence showed that employees responsible for retaining employment applications were not aware of legal retention requirements and, worse, permitted the destruction of applications that would have been relevant to the lawsuit. The appeals court found that while Target had a seemingly proper record retention policy in place and even provided some training on it, the company did not ensure that all employees who actually handled records understood and complied with the policy.
Further, the court noted that Target’s policy and accountability could have been improved by including incentives for compliance and specific penalties for employees who failed to comply.
Under Target’s corporate policy, managers were supposed to use a national recruitment Web site where applications and relevant documents could be stored. Managers were allegedly told to upload applicants’ resumes, test results, and interview forms to the site. However, the manager accused of discrimination testified that he did not know of the policy and that he threw out the applications in question to protect the privacy of the applicants. A district manager testified that she did not send the documents to the Web site either. Instead, she retained them in her office in paper form. Senior managers also testified that the company did not penalize managers who failed to comply with this policy, indicating a lack of oversight. Instead, the company addressed retention issues only after an accusation was levied.
With the proper culture and policies in place, with effective training, and with measurable accountability regarding record-keeping and employment documentation, attention can be directed at specific documentation practices that best protect the company from litigation over employment decisions.
Document everything. Supervisors or managers often fail to make a record of good or bad performance throughout the year as employees work on particular projects or assignments. Any other discussions with employees about their performance should be documented as well. Having all records available at evaluation time will ensure that the process is an accurate and complete assessment of the employee’s performance for the entire year, rather than simply the last month leading up to the evaluation, which may be freshest in the manager’s mind.
Having far-reaching historical records can have a very real impact in employment lawsuits. The lack of such a record can also be a significant factor in litigation. For example, in Stephens v. Associated Medical Specialists (U.S. District Court for the District of South Carolina, 2007), an HR director terminated for poor performance sued. As evidence that she was wrongfully terminated, the director offered her last annual performance appraisal, which noted that she “met job requirements.” The company was able to prevail in the case, however, because it showed that it had documented the employee’s significant performance downturn since the last annual appraisal, including records of coaching sessions and e-mails detailing various performance problems in the interim.
Similarly, in Burrell v. Utah Department of Workforce Services (U.S. District Court for the District of Utah, 2008), the employer, in a performance-based termination lawsuit, successfully countered the plaintiff employee’s claim that she was a solid performer with documented evidence of poor performance in the five months prior to her discharge. As further proof, the employer offered reviews by the employee’s direct supervisor and regional supervisor as well as results of skill tests and warning letters.
In the case of Pastran v. K-Mart Corporation (U.S. Court of Appeals for the Tenth Circuit, 2000), however, the court found that the company began documenting performance problems only after the employee made complaints of discrimination. That led the court to send the retaliation case to trial. In the case, Moses Pastran, a male Hispanic employee, was passed over for a promotion that he had been promised. Pastran made plans to sue the company for discrimination, claiming that he had been refused promotion while several white females had been promoted ahead of him. After Pastran told the company that he felt the move was discriminatory, management began preparing documents indicating that Pastran was insubordinate. Pastran was fired a short time later. The court noted that the timing of the poor performance records was suspicious, as was the fact that Pastran was “employee of the year” at his facility when he was fired.
Documentation problems were also an issue in Walton v. Nalco Chemical Company (U.S. Court of Appeals for the First Circuit, 2001). In that case, the evidence showed that, among other things, a sales employee’s “deficient” written performance evaluation was contradicted by sales data showing that the employee was one of the highest grossing salesmen in his territory. The point here is that a company can’t fulfill a requirement for documentation simply by putting words on a page; the substantive statements about poor performance must be supported by provable facts on the job.
The plaintiff in the case, Gary Walton, was 60 years old at the time of the lawsuit. He was his company’s highest paid and most successful salesperson. Walton had told his employers that he planned to continue working until he was 65.
The company began shifting some of Walton’s largest accounts to younger salespeople. Within a year, all of Walton’s accounts had been given to other employees. Walton was then offered a part-time position at one-third of his salary. Walton sued the company for age discrimination.
After the company received a letter from Walton’s attorney, the company required that he submit to an employee evaluation. He was marked as “deficient” on 13 of the 15 categories. Walton was given low marks on salesmanship and customer service, despite the fact that he was a top earner and had never received a customer complaint.
These facts convinced a federal appeals court that the evaluation was a pretext for the company’s discrimination. Walton was awarded more than $357,000, the maximum damages allowed under the law.
Investigations. Documentation is also critical to internal misconduct investigations. In those cases, documentation is important from two perspectives. First, the recorded documentation may aid in the investigation and will have to be available to the investigator. Second, the investigation itself will have to be properly documented so that its results are auditable and defensible. Thus, the investigator will need to follow procedures for documenting witness statements and information gathered from interviews.
Having a document and record retention policy is one thing. Implementing it in a way that can stand up in court is another. The proactive company—the company that wants its document policies and practices to be the best thing since sliced bread—will do both.
Jim Thelen is a principal with the Lansing, Michigan, office of the Detroit-based law firm Miller Canfield. He advises employers on all aspects of employment law and frequently speaks and writes on these issues. He is a former president of the Human Resource Management Association of Mid-Michigan, a Society for Human Resource Management affiliate chapter, and he sits on the Human Resources and Labor Relations policy committees of both the Michigan Chamber of Commerce and the United States Chamber of Commerce.