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In most states, employees -- or former employees -- have the right to inspect at least certain documents from their own personnel files. Typically, if your state allows employees to see their files, you can be present for the inspection, to make sure nothing is added, removed, or altered.
Generally, you should treat personnel files as you would any other private records. Limit access to those with a need -- or a legal right -- to view the information. A reasonable policy might allow access to you, the employee, and the employee's supervisor or manager, as necessary, to make personnel decisions.
To learn more about keeping personnel files confidential while allowing access to those with a need or right to inspect them, see Nolo's article Employee Access to Personnel Files: Is It Required?