Personnel Policies and Practices FAQ

Answers to common questions about personnel policies, including maintaining personnel files and evaluating employees.

Who is allowed to see an employee's personnel file?

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?

Do I need an employee handbook?

There is no law requiring employers to have an employee handbook, but it's a good idea. A handbook lets you inform your employees about your workplace rules in an efficient, uniform way. Your employees will know what is expected of them and what they can expect of you. And you will be able to prove that all employees were aware of the rules if an employee later decides to challenge you in court.

An employee handbook can provide your company with valuable legal protections. For example, an at-will policy can provide a valuable defense against employee claims of breach of contract. The handbook also gives you a good place to collect policies that must be in writing, such as policies on smoking, drug testing, or family and medical leave.

For more suggestions on what to include in an employee handbook, see Nolo's article Why You Should Create an Employee Handbook.

How do I avoid legal problems when giving employee evaluations?

Create an evaluation form for each job category that focuses on the skills needed for successful job performance. Focus on job duties, not personality traits. Some generally appropriate considerations are work quality, dependability, punctuality, and communication skills. Allow your employees to see the form ahead of time, so they will know the basis for their evaluations.

Be honest and consistent with your employees. Try to maintain an overall positive approach so your employees will be motivated to improve, but don't sugarcoat the bad news. Give your employees a real opportunity to improve by giving them constructive criticism and performance goals. And make sure to back up your evaluations with real consequences: If an employee is far exceeding expectations, consider giving a raise or other recognition. If an employee is having serious performance problems, discipline might be in order.

For more on employee evaluations and performance appraisals, see Nolo's article How to Conduct Employee Evaluations.

What is progressive discipline?

Progressive discipline is a broad term, referring to any employee discipline system that provides a graduated range of responses (often referred to as steps) to employee performance or misconduct problems. The intent of progressive discipline is to allow the "punishment" to fit the "crime" by providing disciplinary measures that are appropriate and proportionate to the employee's problem. Many companies use progressive discipline, although some call it by a different name, such as performance improvement plans or corrective action procedures. For more information on what progressive discipline is and how it can help your company handle employee problems, see Nolo's article What Is Progressive Discipline for Employees?

How can we discipline employees effectively?

Using progressive discipline, you can take the opportunity presented by an employee's conduct or performance problems to understand the underlying facts, communicate that the company takes the problem seriously, and enlist the employee in coming up with solutions. Done well, progressive discipline is a collaborative process, in which manager and employee work together to resolve workplace problems. And, if progressive discipline fails, you will have laid the groundwork for a legally defensible termination. For learn about the seven steps of effective discipline, see Nolo's article Using Progressive Discipline.

Can our company be sued if an employee harms a customer or other third party?

It depends on the circumstances. If an employee injures someone while carrying out his job, the company will almost certainly be liable to the injured person. For example, if a delivery driver for a florist hits a pedestrian while rushing around making deliveries on Valentine's Day, the pedestrian can sue the company for damages. At the other extreme, if an employee hurts someone while off-duty, with no connection to work, the company won't be liable. For example, if that delivery driver sings in a band on the weekends and injures a fan by knocking over a tower of amps, the company can't be sued.

Your company may also face liability if it hires or retains an employee whom it knew -- or should have known -- posed a danger to the public. For more information on when employers can be sued for injuries caused by employees, see Nolo's article Employer Liability for an Employee's Bad Acts.

How can a small business recognize and reward good performance -- without breaking the bank?

Raises, bonuses, and other forms of monetary compensation are the traditional rewards for good performance, but they aren't the only things employees value. Offering a good benefit package, generous leave policies, reimbursement for tuition or gym memberships, and the opportunity to bring pets to work can motivate employees to give their all. When an employee does a particularly good job, express your appreciation and recognize the employee's effort with a small gift, such as flowers or a gift card or certificate. For more information on rewarding employees, see Nolo's article Motivating Your Employees.

Must we investigate every complaing of harassment, no matter how far-fetched?

In a word, yes. Until you investigate, you can't really know what happened or who's responsible. This doesn't mean you have to spend weeks looking into minor incidents, however: You can scale the investigation to the seriousness of the underlying conduct. But you should investigate all harassment complaints, both to make sure you have uncovered and dealt with any misconduct and to help your company defend itself if either the complaining employee or the alleged harasser files a lawsuit. For more information on conducting an investigation, see Nolo's article Investigate a Workplace Complaint.

What should I keep in employee personnel files?

You should keep a personnel file for each of your employees. The files should hold every important job-related document, including job applications, offer letters, employment contracts, benefits and salary information, government forms, performance evaluations, and disciplinary actions.

However, there are some things you shouldn't keep in personnel files: I-9 forms and medical records. For each of your employees, you must complete and keep Form I-9, provided by the agency now known as U.S. Citizenship and Immigration Services (USCIS, formerly called the INS). You should keep these forms in a separate I-9 folder for all employees, however, not in the employees' individual personnel files. As to medical records, the Americans with Disabilities Act (ADA) imposes strict rules intended to maintain the confidentiality of information obtained through medical examinations and inquiries.

For more on personnel files, including tips on keeping them up to date, see Nolo's article What to Keep in Employee Personnel Files.

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