Legal

The Importance of Personnel Files and keeping Accurate Records

 There are several reasons why information on your employees should be properly organized.  The first is simply that it makes good business sense to have accurate information handy and organized when you want to use it.  The second reason is that most business owners and managers will eventually encounter the need to produce documentation about employee performance, compensation and work history, usually via a government investigation or lawsuit.  Having the proper records to retrieve is vital when the need presents itself.  There has been a recent increase in wage & hour lawsuits filed where employers have been improperly classifying employees as exempt, as well as failing to properly pay overtime.  Accurate record-keeping is the key to successfully resolving these disputes.  Also with the increasingly aggressive approach being taken by the EEOC with respect to improper information being placed in a personnel file, knowing what should be placed in these “personnel” files has taken on added importance. 

 

Additionally, there are a number of documents about your employees that come into the employer’s hands that need to be retained for a variety of reasons.  A few examples include: health insurance application form, workers' compensation report of injury or illness, W-4 Form, I-9 Form, verification of income for loan forms, and garnishment orders and records.  All of these forms need to be retained by the employer, just not in the employee’s official “personnel” file.  Lumping all information on an employee into one convenient file, dubbed the personnel file will lead to trouble down the road.

 

 All information in an employee’s personnel file will be imputed to all those who have access to the file, which is usually the employee’s supervisors.  Therefore, if a health insurance application form in improperly placed in the personnel file and it contains information on a particular medical condition of the employee that qualifies as a disability under the American’s with Disabilities Act (ADA), such information will be imputed to the supervisor.  A decision that the supervisor later makes could then be challenged under the ADA even though the supervisor did not have any direct knowledge of the disability merely because it was contained within the employee’s personnel file.

 

 An employer can keep as many separate files on an employee as they like.  However, the employer must keep one official “personnel” file.  In the personnel file the employer should maintain all documents that bear on the qualifications of the employee to perform the job and on the performance of the employee while employed. 

 

The following documents may be included in an employee’s “personnel file”:

 

  • Job application/resume’/reference letters
  • College recruiting interview report form
  •  Employment interview report form
  • Education / employment verification
  • School transcripts/diplomas
  • Certifications/achievements/awards
  • Commendations
  • Signed acknowledgment form showing receipt of employee handbook
  • Checklist from new employee orientation showing subjects covered
  • Employment offer letter
  • Employment Agreement/Non-competition Agreement
  • New employee progress reports
  • Performance appraisals
  • Performance improvement program records
  • Training history records
  • Safety training/meeting attendance/summary forms
  • Hazardous substance notification and or reports
  • Job description and acknowledgment of receipt of job description
  • Compensation history record
  • Compensation recommendations
  • Notification of wage and or salary increase/decrease
  • Report of coaching/counseling session
  • Disciplinary actions/warnings against the employee
  • Commendations
  • Termination and Separation notices/forms
  • Employer response to Employment Security (Unemployment)
  • Record of documents given with final paycheck
  • COBRA notification/election
  • Absentee calendars (reason for absence not listed)

 

 

The following documents should be kept in a separate file, called an “Employee File,” with access restricted on a “need to know” basis.  Where possible, supervisors should not have access to this file.

 

  • Medical records and/or test results
  • Genetic information
  • Health insurance application form
  • Workers' compensation report of injury or illness
  • I-9 form and attached documentation
  • Verification of income for loan forms
  • Absentee sheets that record the reason for absence, including doctor’s excuses
  • Weekly time sheets
  • Individual attendance records
  • Pay records
  • Pay advance request record
  • Payroll deduction authorizations
  • Vacation accrual/taken form
  • Medical/Dental/Vision coverage waiver/drop form
  • Emergency Contact Form
  • Annual benefits statement acknowledgment
  • Employee benefit plan information
  • Employee W-4 forms/withholding statements
  • Wage garnishments
  • Drug screening records
  • Discrimination complaint investigation information
  • Accusations of policy/legal violations
  • Background investigation information
  • Exit interview
  • Authorization for release of private information
  • Authorization for all other payroll actions
  • Marginal notes on any document indicating management bias or discrimination (e.g.: "This guy's too fat. He'd never make it," or "She's too old for this job.")
  • Any other personal information about the employee

 

            Some employers have a third file in which they put documents relating to any investigations into the employee’s conduct, such as an investigation file.  While not required, the “Investigative File” is a good idea, provided the employer has the space available.  Some employers keep separate “medical files” containing all such information on the employee.  Also, under the recently enacted Genetic Information Nondiscrimination Act (called GINA) employers, employment agencies, and labor unions that have any genetic information about workers are required to keep that information in separate files and to treat it as a confidential medical record.  They are also prohibited from disclosing a worker’s genetic information except in very limited circumstances.  Other employer’s create an “I-9 file” where only information related to the I-9 is kept.  That way the government investigator is not looking through other information while looking for your I-9 form and verifying documentation.