Employers frequently ask HR Consultants “What records do I have to keep in an employee’s personnel file?” The answer is everything, however, in order for employers to be compliant most items need to be separated into different files and locations. This article will act as a guideline for employers who are interested in making sure that they are compliant with the organization of their employee records.
There are many ways in which employee records may be organized. At New Focus HR, LLC, we suggest one of two ways: 1.) Employee files may be separated utilizing one hanging file folder that includes a tab for the employee’s last name, first name and hire date. Different colored file folders may then by inserted inside the hanging file folder. Example: Employment information may be included in a manila file folder, performance management information may be included in a blue file folder, training and education information may be included in a purple file folder, payroll documents may be included in a green file folder and benefits information may be included in a yellow file folder. All colored file folders are then placed within the hanging file folder. Note: The employee’s last name, first name and title of the file folder, e.g. employment, performance management, training, payroll and benefits should be included on the tab of each colored file folder. New Focus HR, LLC utilizes a label maker to make all of the labels for not only the hanging file folder, but also each colored file folder. 2.) The second way that we organize employee files is by utilizing a large file folder that has six-sections within it. Generally, there is a two-hole clip at the top of each section. The first section would include a table of contents of what is included in each divided section. The second section includes the employee’s employment-related information. The third section includes the employee’s performance management-related information. The fourth section includes the employee’s training and education-related information. The fifth section includes the employee’s payroll-related information and the sixth section includes the employee’s benefits-related information. New Focus HR, LLC utilizes a label maker to make one label for the tab of the file folder to include the employee’s last name, first name and hire date. No matter which option that an employer selects, there are also two additional employee files that need to be separate from the above. The first is the filing of the Employment Eligibility Verification, Form I-9, and the second is the filing of an employee’s medical-related information.
The Employment Eligibility Verification, Form I-9, should be kept separate from all other employee records. The Consultants at New Focus HR, LLC, suggest that all Form I-9s be kept in a three-ring binder with an alpha A-Z index inserted within. The Form I-9 should be kept within the binder in alpha order according to the employee’s last name. If the organization has kept copies of the employee’s identification verifying their eligibility in accordance with the Form I-9 requirements, then the copies should be attached to the completed form and inserted into the binder. Employers who do not use a binder should consider filing all Form I-9s utilizing a file folder or some other method in order to separate the Form I-9s from all other employee documents. Form I-9s should not be kept in an employee’s personnel file.
An employee’s medical-related information, e.g. return to work notifications, FMLA paperwork, benefit questionnaires that include medical information, etc. should be kept in a separate file folder away from all other employee information. At New Focus HR, LLC we generally select a red file folder for all medical-related information. On the tab we include the employee’s last name, first name and under this information we classify the folder as “Medical”, so that employers truly designate that the file contains only medical information.
Where should these files be kept? Employee files should be kept in one central location. This location may be the Human Resources Office, the CEO’s Office, the CFO’s Office, the Clerk-Treasurer’s Office, the Auditor’s Office, the Payroll Office, or someplace of the like. All files should be kept in a locked file cabinet in the person’s office who is responsible for keeping such employee information. Form I-9s and medical files should be kept separate from the original employee file, again, in a locked file cabinet, preferably in a different file cabinet or drawer from all other employee files. As stated above, it is strongly recommended that all employee files be kept in one central location as a best practice. Employers who are in an audit situation either by a federal or state agency who has the authority to request to review such records, don’t want to have to scramble to locate all of the employee files when requested. Also, those same agencies don’t want to have to wait for the employer to gather all of the records. Employers who have elected to not keep hard copy documents included in an employee’s file must make sure that all information used in business system applications are safeguarded under the organizations proprietary electronic transmission and intranet policies and security systems.
Should managers and supervisors keep a second set of employee files in their offices? Generally, only managers and supervisors who are on a “need to know” basis have the right to review certain documents in an employee’s file. Those documents generally include the performance management and training and education information. They generally don’t have the right to review and or the “need to know” what benefits that an employee elects or who they designate as their beneficiary, for example. So, reviewing a benefits section of an employee’s file is not necessary. There are many laws that govern which documents an employer must keep, how they should be maintained, how long that they are kept, and the manner in which they need to be destroyed. So, allowing managers and supervisors to keep a separate file for each employee mandates that employers prepare their managers and supervisors to comply with such laws. In addition, the employer should want to minimize the records related to employment matters that they are not aware of or that exist. If the employer needs to defend itself, it may be harmful to the employer if there are employee records that they were unaware of or destroyed outside of the guidelines of the law. When an employer wants to allow managers and supervisors to keep employee records, they may allow them to keep only copies of certain documents and require that all originals be submitted to the person who is the centralized keeper of such records for filing in the employees main personnel file. Examples of these types of documents may be limited to include: performance evaluations, disciplinary action reports, and emergency contact information.
For additional information on employee files and record keeping, contact us at www.newfocushr.com.
Written by: Kristen Deutsch, M.B.A., CCP