Personnel Records: Court Rules Departing Employees Can’t Take Confidential Documents; How To Maintain Control Of Your Records

When employees are fired or quit under difficult circumstances, they may try to take confidential papers you didn’t intend them to have or see. And if they later sue you for wrongful termination or other employment-related matters, the ex-employees may try to use the records against you. But a new court ruling, along with some preventive measures, will make it tougher for departing workers to take and use documents without your permission.

Employees Leave With Confidential Records

When human resources manager Shirley McCarley and several other women were laid off by the large San Francisco-based law firm of Pillsbury, Madison & Sutro, someone took originals and copies of a number of sensitive firm documents without its consent. The materials were turned over to the women’s attorney, Steven Schectman, who used the records to sue the firm for age discrimination.

But Pillsbury turned the tables on Schectman and his clients. It sued them, claiming the papers should be returned because they belonged to the firm and had been improperly lifted from its offices. Schectman argued that the documents supported his clients’ claims and were needed to help pursue the case.

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Court Orders Documents Returned

The Court of Appeal sided with Pillsbury and ordered the files-and all copies and summaries-returned. The court noted that employees who are suing or preparing to sue have no right to help themselves to your documents. This is true even if the papers are relevant to the case or the employee had legitimate access to them while still employed. The court concluded that if McCarley and the other employees needed Pillsbury’s sensitive records, they had to follow normal court-approved methods for requesting the documents instead of just taking them.

How To Maintain Control Over Confidential Materials

In the event a disgruntled employee absconds with your files, a court will more likely order them returned to you if you have consistently taken precautions to maintain the confidentiality of your records.

This doesn’t mean, however, that you’ll always be able to shield your files from disclosure. For example, if during a lawsuit an employee uses the court’s procedures to request to see your records, you might have to allow it. But you will still be in a stronger position to limit what they can review.

Here are some ways to dissuade employees from taking your records, or if someone does make off with them, to help convince a court they were confidential and should be returned:

  1. Adopt a strict confidentiality policy. It’s important to have a clear, written policy stating that company records, books and files-both paper and electronic-are confidential and may not be copied or removed from your premises without permission, except to the extent needed to perform work duties. This should be included in a stand-alone confidentiality agreement signed by the employee that is not part of your employee handbook or policy manual. 
  2. Identify documents as confidential. You should ensure that classified documents are clearly marked as confidential or, if applicable, as attorney-client privileged.
  3. Segregate sensitive records. Confidential or privileged materials-including, for example, correspondence with attorneys, medical information, and reports of internal investigations-should not be stored in general personnel files, but should be kept separate.
  4. Conduct exit interviews. Ask departing employees to verify in writing that they don’t have company property or records, documents or computer files in their possession. They should also confirm that they haven’t disclosed your proprietary information to anyone. At the same time, remind terminating employees of their confidentiality obligations.
  5. Move promptly to recover documents. If you learn an employee has taken confidential or privileged materials, it’s important to take prompt action to get the documents back. If you wait too long, your delay could signal to a court that you didn’t really intend to restrict access to the files.