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Personnel Records play an important role in how we manage our staff and our business.  Proper recordkeeping and documentation provides business owners with the support, tools, and proof that they need to insure good employee management and prove compliance with the law.   Many questions are raised about what should be kept, how long and who should have access to certain information.   It would be good to review your record keeping practices to insure you are in the best position to answer questions and provide the appropriate information when asked.

Many personnel files include all documents pertaining to an employee; such as resumes, applications, interview notes, employment testing, qualifications, copy of drivers’ license and social security card, I-9 form, W-2 forms, verification of training completed, handbook acknowledgement, job description, the supervisor's files, performance evaluations, request for medical leave, attendance records, doctors notes, notes of praise, discipline reports, promotion, raises, emergency contact, birthday cards, and the kitchen sink.   On the other hand, many contain only a few scraps of paper, maybe an attendance record….that is 10 years old.

In actuality, both of these practices are not quite right, and either could end the employer in an unwelcomed situation with inadequate defenses if a claim or lawsuit would arise.  Employers should manage the personnel file and documentation proactively as an additional layer of risk management best practices.  Like the story of Goldilocks, your personnel file documentation needs to be just right, not too much, not too little.

Several employment laws have a part in this story, American with Disability Act, EEO Civil Rights Act, Family Medical Leave Act, and the Fair Labor Standard Act just to name a few.   Employers are sued for a multitude of reasons and accused of wrong doing in a suspension, termination, layoff or simple job assignment.   Your defense is a well-documented and organized employee personnel file system. Often confusion arises because there are pieces of information that should only be accessible to certain members of your team and there are different retention requirement for other pieces of information. It is best to create separate files for 1) the personnel file; (2) the medical file;  3) payroll file. Having everything in one file makes it difficult to monitor and comply with these requirements.   It is important for your team to understand the importance of timely, consistent, unbiased documentation.  Retention of unneeded and purely opinionated documentation can hurt you, while not documenting issues and management decisions can leave you defenseless to a claim of discrimination.  No wonder Goldilocks had such a hard time making choices.

Here is some basic information to help you decide what should be kept, how long you should keep it and who should have access to information.

The Employee Personnel File  should contain unbiased factual documentation about employment history, application, verification and reference checks, policy and training receipts and certificates, performance reviews, accolades and corrective action, attendance at training or safety meetings, documentation about transfers, and/or layoffs.  It should be kept in a private secure location where it can be accessible to supervisors and managers on a need to know basis only, the employee and human resources.  It is a good practice to have employee date and sign each entry.

Personnel files are the storehouses of information that are used by the company to make job-related decisions affecting employees. These files should, therefore, only contain information that can be legally used in making these decisions. Because federal and state law prohibits the use of sex, race, national origin, color, religion, disability or veteran's status to make employment decisions, documents containing this information should not be kept in personnel files. Likewise, medical information, garnishment orders and records, and I-9 documents should also be kept separate from personnel files.           

The employee’s Medical File has serious legal restrictions. Here is where you would keep any information regarding personal medical info – medical exams, health screenings, drug testing, medical leave, workers comp, ADA accommodations notes, Healthcare selection forms and inquiries. All covered health plans under HIPAA are required to be in compliance with that law’s privacy rule and security rule for employees’ protected health information. This information should be kept highly confidential and secured accordingly.   The medical file is normally restricted to the person dedicated to the HR function.   

The Payroll File holds information about salary, benefits selection, date of birth, social security number, time cards, pension, wage deductions, pay rate changes, garnishments, and other legal documentation that affects an employee’s pay check. Access to the information in the payroll file should be limited to accounting staff on a need to know basis and your Human Resources staff.

Completed I-9 Forms should be maintained in a separate file.   This file is normally restricted to the person dedicated as the HR function, as it has specific information regarding national origin.  If you are required to obtain EEO information during the application process or employment, this too should be kept in a separate file, and immediately separated from the application prior to hiring manager’s review.  Credit and Criminal Background reports should also be handled and restricted to the person dedicated to the HR function. The Federal Trade Commission under the Fair Credit Reporting Act and the Fair and Accurate Credit Transactions Act (FACTA) requires employers to shred any and all documents that contain information derived from a credit report.

Also important to note is what not to include… You should not include documents created in anticipation of, or in response to, litigation, including investigation reports, notes, e-mails and other writings; confidential, privileged, attorney-client privileged and need-to-know-only information documenting employee performance. It is important to realize that items in the personnel files are discoverable and the documentation or lack thereof has been used as evidence of discrimination and other unlawful conduct in employment litigation. 

In closing, Goldilocks, a file that is too small, either by complete absence or lack of sufficient documentation to support a business decision; or too big, having irrelevant, bias or confidential information, leaves the employer open to claims of discriminatory motives.  It is important that you manage your personnel files and help your supervisors understand the importance of just right documentation and recordkeeping. 

Interested in reviewing your personnel file procedures and safeguarding practices to make sure they are just right?  Contact our office for more information or a  consultation.

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