Many states have laws giving current and former employees access to their own personnel files. The extent of access provided varies from state to state. In order to avoid lawsuits and problems, be sure you know the law in your state. And even if your state doesn't require employee access to files, you might want to establish a company policy that allows some access.
Generally, personnel files should be treated as private records belonging to you and your individual employees. You don't want to allow anyone in the company to rummage through the performance evaluations, salaries and job applications of coworkers. But there are employees who have a legitimate need to view the information in a personnel file. For example, a supervisor may need to review performance evaluations to decide whether to promote an employee, or the human resources manager may need to review an employee's salary information to decide what to pay a new hire in the same position.
Treat personnel files like any other private company records. You can do this by keeping employee files in a locked cabinet. Make them available only to those people in your company who have a legitimate business need for access to the files. For example, you might establish a policy that only the Human Resources manager, the individual employees manager and the employee have a right to see an employees file. This will protect your employees privacy and limit opportunities for inappropriate documents to find their way into the files.
Usually, you won't have to let the employee see sensitive items such as information assembled for a criminal investigation, reference letters, and information that might violate the privacy of other people. In a few states, employees may insert rebuttals of information in their personnel files with which they disagree.
And, typically, if your state allows employees to see their files, you can insist that you or another supervisor be present to make sure nothing is taken, added, or changed. To find out about your state's law, contact your state's labor department.
Some state laws allow employees to obtain copies of items in their files, but not necessarily all items. For example, a law may limit the employee's access to only copies of documents that he or she has signed, such as a job application or contract (a nondisclosure agreement, for instance). If an employee is entitled to a copy of an item in the file, or if you're inclined to let the employee have a copy of any document in the file, you -- rather than the employee -- should make the copy.
Even if your state does not expressly allow employees to inspect their personnel files, you might consider making it your policy, or at least informing your employees of documents you are putting their files.
If you are planning to take action against an employee based on material in the personnel file -- a complaint or documented performance problems, for example -- let the employee know. That way, the employee will have a chance to explain or discuss the problem and an opportunity to improve. An employee who finds negative information in a file only after being fired is likely to believe, rightly or wrongly, that those documents were created after the fact. (For more information on maintaining personnel files, read Nolo's article What to Keep in Employee Personnel Files.)
For help creating effective personnel policies, including a policy on employee examination of personnel files, see Create Your Own Employee Handbook, by Lisa Guerin and Amy DelPo (Nolo).