Most small businesses are employers, and they may face lawsuits from current or former employees, such as an employment discrimination claim. In order to defend themselves from these claims, employers should keep certain employment records. These employment records include performance appraisals and disciplinary notices. Some employers also must file statistical records with the Equal Employment Opportunity Commission (EEOC) or other administrative agencies.

Performance Appraisals

Employers should keep a personnel file for each employee. The file should contain the employee's resume and application for employment. It should have documents indicating compliance with United States immigration laws. It should also contain accurate evaluations on the employee's performance or periodic performance appraisals.

Too often, the personnel file of an employee who is discharged or disciplined for performance-related problems contains evaluations that contradict the reasons given by the employer for the action taken. These discrepancies may arise because the employee's supervisor was too busy to write an accurate and detailed account of the performance problems or sought to avoid the confrontation that a negative evaluation might provoke with the employee.

Supervisors and managers should be instructed on how to correctly complete performance appraisals. Appraisals should:

  • Give an accurate description of an employee's performance
  • Note areas where improvement is required
  • Note the time frames given for improvement to be achieved
  • State the possible disciplinary consequences if such improvement does not occur

Finally, the performance appraisal should be discussed with the employee and such conversations should be documented.

Performance appraisals may have to be presented in an employment discrimination lawsuit as evidence of the employer's rationale in terminating the employee. Therefore, they should accurately reflect what occurred.

Disciplinary Notices

Like performance appraisal forms, disciplinary action forms can be valuable evidence when defending a charge of employment discrimination. Persons responsible for taking disciplinary actions should be instructed as to the importance of creating a written record of each disciplinary conference or counseling session, including:

  • Date and nature of the offense
  • Rule violated
  • Type of discipline being administered (such as a reprimand, suspension, discharge)
  • Possible consequences if the employee commits the infraction again or otherwise fails to live up to the company's standards

Ordinarily, disciplinary actions should be handled face to face with the employee and the conversation should be documented.

EEO-1 Forms

Certain employers are required by law to prepare and submit to federal agencies Answers to EEO-1 Forms, which provide statistical information on the employers' work force. This information consists of the race, sex and national origin composition of major job groupings.

The following kinds of employers must file EEO-1 Reports:

  • Employers subject to Title VII of the Civil Rights Act of 1964, as amended, who employ more than 100 persons. They must file an EEO-1 report with the EEOC on an annual basis.
  • Employers of more than 50 persons having government contracts aggregating in excess of $50,000 in any 12-month period. They must annually file EEO-1 reports with the Office of Federal Contract Compliance Programs (as required by Executive Order 11246).
  • Employers required to file EEO-1 reports under both Title VII and the Executive Order may satisfy this obligation by filing one such report with either agency.

Race, national origin and sex data for report forms may be compiled by making a visual survey or by requesting employees to provide such information after they are employed.

Employers are supposed to group jobs into EEO-1 categories. These categories include:

  • Officials and managers
  • Professionals
  • Technicians
  • Salespersons
  • Office and clerical workers
  • Craft workers (skilled)
  • Operatives (semi-skilled)
  • Laborers (unskilled)
  • Service workers
  • Trainees

Instructions are available to complete the EEO-1 form at EEO-1 Survey.

If you have any questions about information about employees that should be retained in case of employment discrimination lawsuits, contact a small business lawyer in your area.

Questions for Your Attorney

  • Should an employer document every disciplinary action taken against an employee?
  • If a supervisor forgot to document a disciplinary action taken against an employee, is it alright if the supervisor writes a report a couple of years later for trial?
  • Do performance appraisals of employees have to be made on a regular basis?