As I've written before, the Lilly Ledbetter Fair Pay Act requires employers to revisit their document retention policies. Julie Brook at CEB Blog has put together an excellent list of how long to keep various types of records. Unfortunately (unless you're in the document storage business), some records need to be kept forever.
Just over a year ago, Congress enacted the Lilly Ledbetter Fair Pay Act. This was in response to the U.S. Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. that said the statute of limitations on discriminatory pay claims begins running when the pay rate was determined. Congress didn't like that and enacted the LLFPA to provide that each paycheck constitutes a new violation.
Judy Greenwald at Business Insurance Magazine interviewed me for a story about the LLFPA's impact one year after its enactment. The Act has not thrown open the floodgates, as many feared. But as a result, it seems that many employers have done nothing in response to the law. That's a mistake.
In the article, I and others stress the need to revisit document retention policies. Under Title VII, the Americans With Disabilities Act, and the Age Discrimination in Employment Act, compensation decisions that had to be challenged within a year of being made, can now be challenged years down the road. By the time the decisions get challenged, the decision makers may be long gone. Even if they're available, they may not remember what they did or why.
Anyone who's worked with management-side employment lawyers has heard this before. It's important to document employment decisions. That's because it's much easier to defend employment decisions when someone can explain and support the basis for the decision. Don't ask me why. It just is.
It's especially important now to maintain that documentation if it relates to compensation decisions. This includes not just payroll records, but performance reviews, correspondence between managers, compensation policies, and anything else that bears on the decision what to pay someone. The standard advice used to be to keep this information for 7 years. Now, it's important to keep it almost indefinitely. Only if everyone affected by the decision has been gone at least two years should you think about disposing of it.
Will this increase storage costs? Yes. That's why storage companies were such huge supporters of the Act. [OK. I made that last part up.]