Unfortunately, for some businesses in Hawaii, the recent flooding from Hurricane Lane has resulted in the loss of business records that are subject to retention requirements under Hawaii and Federal law.  The question that now comes to mind is whether a business can be excused from maintaining employment records (such as time cards, I-9 forms, etc.) that are lost or destroyed as the result of a natural disaster.

This article (1) discusses an employer’s obligations to maintain employment records in the case of a natural disaster and (2) provides some suggestions for protecting such records in the case of future storms and/or flooding.   Additionally, the bottom of this article includes a link to a publication that was prepared by the Hawaii Employers Council and outlines the types of employment records that must be retained and for how long. 

Employers’ Record Keeping Requirements

The various labor and employment laws that require employees to maintain records for a certain period of time (e.g. ADA, ADEA, ERISA, FMLA, FLSA, etc.) do not include provisions that would excuse an employer from their record keeping requirements, even when such documents are destroyed at no fault of the employer.  Therefore, generally speaking, employers who lose employment records because of a natural disaster still need to find a way to comply with their record keeping requirements. 

Although the various employment laws governing record keeping requirements are silent on this topic, the DOL has issued an advisory opinion with regards the loss of employment records and ERISA.  See ERISA Advisory Opinion 84-19A (April 26, 1984).  This advisory opinion provides employers with at least some guidance on how the DOL views record keeping requirements in the context of natural disasters.  Specifically, according to the DOL, if certain records that are required to be maintained under ERISA are lost or destroyed prior to the six-year retention period, “it is the view of the Department that such loss or destruction does not discharge the persons required to retain records[.]”   

Possible Reconstruction of Records

With regards to an employer’s record keeping requirements when employment files are destroyed by a natural disaster, the DOL’s advisory opinion added three key points that employers should keep in mind: 

• First, the nature of the remedy for failure to maintain proper records is “necessarily dependent on the facts and circumstances of each case.” For instance, where the reconstruction of records is impossible or possible only at an excessive or unreasonable cost, the employer might be excused from reconstructing or attempting to reconstruct the lost or destroyed records. 
• Second, and conversely, when the employer has access to records or documentation from which the lost or destroyed records could be reconstructed, the reconstruction of such records would be required to the extent necessary for the company to retain records to discharge their statutory duty under Section 107 of ERISA.
• Third, if the company has access to records or documentation from which the lost or destroyed records could be reconstructed and such records would be available to the company for the remainder of the requisite six-year retention period under ERISA, reconstruction of the records would not be required if the company makes agreements and arrangements necessary to ensure that such other records are retained and available for the remainder of the six-year period.

Employers should note that ERISA Advisory Opinion 84-19A was written for purposes of record retention requirements under ERISA.  As noted above, however, this advisory opinion provides at least some guidance on how the DOL views an employer’s record keeping requirements when such documents are lost or destroyed through no fault of the employer. 

Therefore, following this guidance by the DOL, employers should utilize their best efforts to reconstruct files that were lost or damaged from a natural disaster, especially in situations where reconstructing such records is not impossible or possible only at an excessive or unreasonable cost.  In addition, employers should also try their best to salvage whatever documents they can.

Finally, companies should also keep a record of the damage that was caused by a natural disaster with photos, videos, and memoranda explaining what happened and which documents were lost or destroyed.   Such documentation should also include a description of (1) the documents that were maintained before the natural disaster and (2) the employer’s efforts to reconstruct the lost or damaged documents after the natural disaster.  If the employer cannot reconstruct the lost or damaged documents, the memorandum should also include an explanation of why the reconstruction of such documents would have been either impossible or possible only at an excessive or unreasonable cost.

Future Preventative Measures

Looking forward, employers should also take necessary steps to preserve their employment files in the future, especially now that we are in the middle of a hurricane season (which usually runs from June through November).  Such precautions can include the following:

• Maintaining electronic copies of files;
• Storing files in an off-site location that is safe from flooding and other natural disasters;
• Files that are stored on-site should be in a location that is not susceptible to flooding;
• If possible, moving files to a safe location when a storm is pending.

HEC Resource Regarding Record Keeping Requirements

HEC has prepared a comprehensive memorandum and chart explaining the record keeping requirements for employers under Hawaii and Federal laws.  This resource is available to HEC members only and can be obtained at the following link:  Employee Files and Record Retention Tools.