If there is one thing that we have stressed on this blog, it is to keep good employee records. A proper employee record retention program is essential to defending lawsuits or surviving an investigation. Moreover, various federal and state laws require that employers keep certain records and allow employees to review them, even after the employee has left the company. Because good recordkeeping is so important, I thought that it might be useful to provide some suggestions about how to do it:
Keep a Detailed Personnel File
You should create a personnel file for each employee on the day of his or her hire and this file should contain important job-related documents like:
- The employee’s application and resume
- The employment contract
- Non-compete, non-solicitation, and non-disclosure agreements
- IRS Form W-4 (i.e. the employee’s withholding allowance sheet)
- Employee benefits designations
- Emergency contact forms
- Performance evaluations
- Awards, disciplinary actions, or complaints from coworkers or clients
Also, remember that employees have a right to access their personnel file at least twice per year upon request to the employer. The employer must grant the employee’s request within seven business days or request a seven-day extension if the employer has a valid reason for it. An employer can limit what the employee sees, however, as employees do not have the right to review their medical records, records of criminal activity, and records that might invade the privacy of other employees. Also, employers do not have to let employees see disciplinary records that are more than four years old.
Keep a Payroll File
Include in this file a record of all of the employee’s paychecks. This will come in handy when figuring out whether to give an employee a raise or back pay. Also, the Age Discrimination in Employment Act requires employers to keep all payroll records for three years. And the Fair Labor Standards Act requires employers to keep records for at least two years that explain the bases for differing pay between men and women.
Keep Medical Records Separate
Don’t put medical records in a personnel file, as they need to be kept in a separate file if an employee has a disability. Also, in Illinois employees do not have a right to review medical records, so keeping these in a separate file will reduce the likelihood that they are inadvertently disclosed to an employee.
Keep Employee Files Confidential
Employee records should be treated as private and access should only be limited to the employee, his or her supervisor, and the HR department. Keep employee files in a locked cabinet or in a password-protected file on your company server. If you find out that people in your organization are sharing employee files with anyone outside of these select few employees, you should discipline or fire that person immediately.
Keep Irrelevant Materials Out of Personnel Files
Go through your employee personnel files periodically and take out everything that does not pertain to the employee’s performance. Not only do irrelevant materials take up valuable space in a file, but they give your opposition extra material to review in the event of a lawsuit. You should especially be sure not to include information that might be damaging in a lawsuit like references to an employee’s race, religion, sexual orientation, etc. Even if these documents are innocuous, they can still add to the perception that the employee was fired due to being a member of one of these groups. Also, don’t include gossip or personal attacks in an employee’s files. That will not make you look good in the event of a lawsuit.
Feel free to contact me if you would like some advice for keeping good records in your workplace.