Up Close and Personnel

Personnel File Documents

The importance of having in place complete, accurate, and appropriate employee records cannot be overstated.  Remembering that 25% of court actions are employment-related, the employee file is often a landmine where plaintiff’s attorneys make hay with the contents. Accordingly, creating and maintaining appropriate employee files is a critical first step in establishment of an effective human capital management infrastructure.

There is no “one size fits all” approach to what should be included in employee files.  While some state laws impose restrictions on the type of information to be contained in an employee file and various federal laws impose restrictions on when different types of employee-related documentation may be destroyed, there are some common practices that small business employers should be aware of and adhere to.  Ultimately, when devising an approach for employee file management, employers should design a suitable approach for their operation.

Create an employee file for each employee prior to (or on) the date of hire.  Most, but not all, important job-related documents should be placed in the file, including:

  • job description
  • job application and/or resume
  • offer of employment
  • IRS Form W-4 (the Employee’s Withholding Allowance Certificate)
  • receipt or signed acknowledgment of employee handbook
  • performance evaluations
  • forms relating to employee benefits
  • forms providing next of kin and emergency contacts
  • complaints from customers and/or coworkers
  • awards or citations for excellent performance
  • records of attendance or completion of training programs
  • warnings and/or other disciplinary actions
  • notes on attendance or tardiness
  • any contract, written agreement, receipt, or acknowledgment between the employee and the employer (such as a non-compete agreement, an employment contract, or an agreement relating to a company-provided property), and
  • documents relating to the termination of the employment relationship (such as reasons, if any, why the employee left or was terminated, unemployment documents, insurance continuation forms, etc.)

What NOT to Keep in a Personnel File

Employee files should not be a receptacle for every document, note, or thought about the employee, and employee files should never contain any of the following:

Medical records. Employers are legally required to keep worker medical records (disability/accommodation requests, worker compensation claims, etc.) in a separate file — and access to a Medical Record file must be limited to a select few who have a need to know.

Form I-9s. Form I-9s must be completed for each employee within three days of an employee’s start date.  This Form should be placed into a separate file and located in a different drawer from the employee files.  Failure to properly segregate these forms from employee files compromises employee privacy and opens employers up to additional questions, investigation, and penalties.

Unnecessary Material. Although employee files may contain any job-related documents, employers are wise to carefully consider what they will include and consistently apply a standard approach to employee file management.  It is important to remember that in many states, employees have the right to view their files.  Indiscreet entries that do not directly relate to job performance and qualifications will prove to be problematic.  A good rule of thumb: Don’t put anything in a personnel file that you would not want a jury to see.

Considerations in Conducting an Employee File Audit

When conducting a self-audit of an employee file, consider whether the file:

  • Contains every written evaluation of the employee
  • Reflects all of the employee’s raises, promotions, and commendations
  • Shows every warning or other disciplinary action taken against the employee
  • Has been updated to reflect the employee’s current status (e.g., following disciplinary action including a performance improvement plan)
  • Reflects the employee’s agreement with any and all updated policy statements (e.g. updated Employee Handbook Acknowledgement)
  • Contains current versions of every contract or other agreement between employer and employee

Smart Tip: Active employee files should be maintained in a location that is easily accessed by HR personnel, but kept in a cabinet that is locked when not in use.  Meanwhile, terminated employee files should be separated from the active files and retained only to the extent required by state law record retention requirements.  Terminated employee files, however, like active employee files, must be kept in a file that is locked and not easily accessed, except by authorized personnel.