Federal regulations require that employers keep all personnel or employment records for one year. Thus, if an employee is involuntarily terminated, his/her personnel records must be retained for one year from the date of termination. Furthermore, when the Equal Employment Opportunity Commission (EEOC) notifies an employer of a charge of discrimination, the company has the duty to preserve all records related to the matters under investigation. Failure to comply with this duty can have serious consequences for the company and make the difference between prevailing or losing a lawsuit. A Puerto Rico-based employer faced a similar situation in the case of EEOC v. Ventura Corp., Civ No. 11-1700 (PG), (DPR Feb. 12, 2013).
The EEOC enforces most anti- discrimination laws in the U.S. and at some point was investigating Ventura Corporation for same-sex discrimination under Title VII. Ventura is a corporation engaged in wholesale beauty products, jewelry and other personal care items to retailers.
The charge had been filed by a male employee who claimed he had not been offered a management position in the company. After the administrative filing, the employee was promoted but eventually fired.
The EEOC subsequently sued Ventura. In its complaint it alleged that Ventura had engaged in a pattern or practice of refusing to recruit male staff to work as area and support managers. It also claimed that the company promoted an employee to area manager when he complained of the practice; just to set him up towards failure and eventually fire him in retaliation for his opposition to the illegal recruitment practices. Ventura denied the allegations.
During the course of litigation, the EEOC complained to the court that despite repeated warning to the company to preserve relevant information to the claim, the company had destroyed critical evidence including resumes of job applicants and important electronic communications among managers. Arguing that the lack of information hindered their ability to process the claim, the EEOC moved for sanctions against the company.
The employer responded by stating among other things that it could not find the resumes requested and that other electronic documents had been lost during a migration of the computer information system. Written and oral testimony of the HR analyst showed that certain documents from the Human Resources Department were either taken to a warehouse or shredded as a result of an office restructuring in 2009 and that no application materials were found in the boxes that were sent to a warehouse.
The Court determined that the EEOC had met its obligation to prove that relevant evidence in the hands of Ventura existed and was destroyed after it was on notice that litigation might ensue. This action is legally known as ” Spoliation”, a legal term to describe the failure to preserve evidence that is relevant to pending or potential litigation.
Parties to a claim must assure that relevant evidence is protected from loss or destruction or risk court-imposed sanctions. The obligation to preserve relevant evidence arises once litigation is reasonably anticipated. Failure to comply may bring sanctions for the party.
The Party that claims spoliation must show that there is evidence that has been destroyed or not preserved. If the court finds that evidenced has been spoiled it may impose sanctions to avoid unfair prejudice to the opposing party. The level of sanctions will depend on the severity of the prejudice suffered. They can range from exclusion of evidence or testimony, instructing the jury on a negative inference to spoliation (whereby jury may infer that party that destroyed evidence did so out of realization that it was unfavorable) to the dismissal of the action.
With regards to defending the claim of the discharged employee, the court precluded the company from offering evidence regarding the qualifications and number of men that applied to the positions of Zone Manager or Support Manager during the relevant periods. This was a pertinent issue because the employer had made reference to the lack of applicants and/or qualifications as a defense for not having hired one for the positions in question. The court further ruled that during trial, the jury would be instructed to infer that the content of emails lost would have been unfavorable to the Company.
Not surprisingly, the lawsuit settled. The company agreed to pay $354,250, including a payment to the terminated employee of $150,000. The remaining funds will be distributed to a class of qualified male job applicants who applied for the manager jobs with the company from 2004 to 2014 but were not consider for hire. The agreement also requires the employer to “implement a detailed applicant tracking system; actively promote supervisory accountability for discrimination prevention; provide anti-discrimination training to all company employees and anti-discrimination training specific to those Ventura managers and employees who play a role in the hiring process; and provide bi-annual hiring reports to the EEOC for three years.”