What to Keep in Employee Personnel Files

Learn how to maintain your personnel files so they don't become evidence in a lawsuit.

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Few of us enjoy dealing with paperwork, but taking the time to properly create and maintain employee personnel files will pay off in the long run. You will have all the important documents relating to each employee in one place, easily available when its time to make decisions on promotions or layoffs, to file tax returns, or to comply with government audits. And if you have to fire a problem employee, careful documentation will protect you from legal danger.

In the worst-case scenario, a personnel file may turn into evidence in a lawsuit brought by a disgruntled former employee. Make sure that you include all periodic evaluations, raises, commendations, and disciplinary actions in your personnel files so you always have easy access to the information you need -- and to protect your company in case of a lawsuit. 

This article explains what to keep in -- and keep out of -- employee personnel files. For help creating sound and effective personnel policies, pick up a copy of Create Your Own Employee Handbook, by Lisa Guerin and Amy DelPo (Nolo).

What to Keep in a Personnel File

You should begin a personnel file for each employee on the date of hire. Most, but not all, important job-related documents should go in the file, including:

  • job description for the position
  • 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 noncompete agreement, an employment contract, or an agreement relating to a company-provided car), and
  • documents relating to the worker's departure from the company (such as reasons why the worker left or was fired, unemployment documents, insurance continuation forms, and so on).

Reviewing Personnel Files

You should establish a time to periodically review each employee's personnel file, perhaps when you conduct the employee's annual evaluation. During this review, consider whether the documents in the file are accurate, up to date, and complete. Some questions to consider:

  • Does the file contain every written evaluation of the employee?
  • Does the file reflect all of the employee's raises, promotions, and commendations?
  • Does the file show every warning or other disciplinary action taken against the employee?
  • If your policies provide that written warnings or other records of discipline will be removed from an employee's file after a certain period, have they been removed?
  • If the employee was on a performance improvement plan, a probationary or training period, or other temporary status, has it ended? Has the file been updated to reflect the employee's current status?
  • If the employee handbook has been updated since the employee started working for you, does the file contain a receipt or acknowledgment for the most recent version?
  • Does the file contain current versions of every contract or other agreement between you and the employee?

What Not to Keep in a Personnel File

Your personnel files should not be a receptacle for every document, note, or thought about the employee. Here are some areas to be careful about:

Medical records. Do not put medical records into a personnel file. If your worker has a disability, you are legally required to keep all of the worker's medical records in a separate file -- and limit access to only a few people. Even for workers who are not disabled, you may have a legal obligation to keep medical records private (and it's a good idea to do so, in any case). For more information on storing medical records, read Nolo's article Keeping Personnel Files and Medical Records Confidential.

Form I-9s. Do not put Form I-9s into your employees' personnel files. (Form I-9 is a form from U.S. Citizenship and Immigration Services (USCIS), formerly the INS. You must complete an I-9 for all employees, verifying that you have checked to be sure that the employees are legally authorized to work in the United States.)

You should put all Form I-9s into one folder for USCIS. The government is entitled to inspect these forms, and if it does, you don't want the agents viewing the rest of the employee's personnel -- and personal -- information at the same time. Not only would this compromise your workers' privacy, but it might also open your business up to additional questions and investigation.

Unnecessary material. Although an employee's personnel file may contain any other job-related documents, don't go overboard. Remember that, in many states, employees have the right to view their personnel files. (For more information, read Nolo's article Employee Access to Personnel Files: Is It Required?) Indiscreet entries that do not directly relate to an employees job performance and qualifications -- like references to an employees private life or political beliefs, unsubstantiated criticisms or comments about an employees race, sex or religion will come back to haunt you. A good rule of thumb: Dont put anything in a personnel file that you would not want a jury to see.

 

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