Business owners have good reasons to keep several personnel files—some legal and some for employment best practices. Proper documentation is needed in order to compile an accurate view of an employee’s work history, support any decisions that may be made about an employee’s status and, if properly preserved, may help protect the business in the event of an employee lawsuit.
Why is maintaining a personnel file important?
Having all important information about an employee stored in one place means it’s easy to find any relevant details about their role and responsibilities and allows businesses to set up a system of how employee documentation is handled and can prevent lost or misplaced documents.
It also means that any necessary records or documents can be easily prosecuted in the event of a threat, or actual, lawsuit (they are on the rise). This stresses the importance of keeping the files and records up-to-date. It ensures all the relevant documents are there, which will come in handy if an employee dispute arises so there is an easily accessible record that details the performance and treatment of employees.
8 Must-Have Documents in Employee Personnel Files:
Consider these to be eight employee-related HR documents that every personnel file must contain, including legal employment records such as payroll tax forms as well as employee-employer agreements:
- Basic employee information (name, address, and phone number) and emergency contact details
- IRS tax withholding forms
- Payroll and compensation information, including any paycheck or pay card data
- Contracts or agreements between the employee and the employer, such as a non-compete agreement, an employment contract, or an agreement relating to a company-provided property
- Forms relating to employee benefits, such as enrollment forms and beneficiaries
- Child support/garnishments and/or legal or litigation documents (if any)
- Workers compensation claims (if any)
- Termination documents, such as reasons why the worker left or was fired, unemployment documents, insurance continuation forms, etc.
Recommended Documents to Include in Employee Personnel Files
These next documents aren’t necessarily what would be called “must-have”, but are often included in an employee’s personnel file. They may need to be accessed by the employee’s manager, payroll clerk, or the employee. They include job and employer-related files such as the job application, performance reviews, and employee time-off records. It’s more convenient and a better management system to keep track of these documents in the file as well:
- Signed offer letter
- Receipt or signed acknowledgment of the employee handbook
- Job description for the position
- Job application (if one was used)
- Resume (if one was provided)
- Performance evaluations, including awards or citations for performance
- Warnings and/or other disciplinary actions, including summaries of customer or employee feedback and notes on attendance
- References
- Leave of absence and vacation time records
What not to keep in the Employee File?
Your personnel files should not be a receptacle for every document, note, or thought about the employee. It is common for employers to have a "confidential" or "other" file that contains most of these records. Here are some areas to be careful about:
- Medical records
- Do not put medical records into a personnel file. If your worker has a disability, you are legally required to keep all of the worker's medical records in a separate file -- and limit access to only a few people. Even for workers who are not disabled, you may have a legal obligation to keep medical records private (and it's a good idea to do so, in any case).
- Results from Background Checks, Drug Tests or similar information
- It’s too sensitive, you don’t want this information as readily available as the common personnel file information.
- Information or service papers related to an employee's wage garnishment.
- Form I-9s.
- Do not put Form I-9s into your employees' personnel files. You should put all Form I-9s into one folder for USCIS. The government is entitled to inspect these forms, and if they do, you don't want the agents viewing the rest of the employee's personnel -- and personal -- information at the same time. Not only would this compromise your workers' privacy, but it might also open your business up to additional questions and investigation.
- Indiscreet entries that do not directly relate to an employee's job performance and qualifications
- Examples would be references to an employee’s private life or political beliefs, unsubstantiated criticisms or comments about an employee’s race, sex or religion will come back to haunt you; you shouldn’t have them at all, but if you do, keep them out of the personnel file.
Who has the right to see your personnel records?
No federal laws govern employee access to personnel files, so it’s mostly governed by the states. Businesses should be aware of who has a right to personnel records and specifically what information can be seen. For example, in Virginia, employees have a right to see certain documents in their personnel file, but not their entire personnel file.
Employers should develop internal policies and procedures for reviewing and responding to personnel file requests.
Have questions about personnel files, policies or procedures; or legal and advisory services in general? Contact us to schedule a free consultation.