Personnel File Checklist: Get Clarity on What to Include

A personnel file should be a comprehensive record of your employee’s entire time with the company, from their application for employment to the paper they are asked to sign at their exit interview. Follow this personnel file checklist to ensure that the employee records for your small business are up to date and understand best practices for keeping these critical documents.

Purpose of the Personnel File

The personnel filing system serves several purposes. They assist in the decision to promote or terminate an employee; they provide an effective tracking system for conflicts, accolades, training and other employment pathways; they keep your business in accordance with state, local and federal employment laws. They also provide records that can disprove employer liability in the event of a lawsuit. When determining whether to include a document in an employee’s personnel file, keep these three considerations in mind:

  • Would the document provide pertinent information if the employee sued the business in the future?
  • Is the employee aware that a specific document will be permanently filed? In most cases, you should have them sign and date the document in question to acknowledge receipt and placement in the file.
  • Does the document in question include opinions and speculation? If so, it does not belong in the file; documents in the personnel file should only include pertinent facts.

The personnel file provides a permanent written record that can support a range of employer actions, including positive events like raises and promotions and negative events like discipline and termination. Because this is an official legal record, it must include detailed, timely and factual information about relevant events. Include as much information as possible, being specific without delving into personal opinion. For example, rather than saying that an employee misses too much work or that you think he or she has personal problems, stick to the facts: “Employee A called in sick for three days last week without a doctor’s note.”

Basic Checklist

Every personnel file should include the following documents:

  • Original job application and supporting documents, including the employee’s resume and cover letter
  • Verification of the employee’s education and employment history
  • A rejection letter for those individuals who are ultimately not hired
  • Description of his or her position, along with any supporting documents used to create the position
  • Performance reviews
  • Job offer letter or employment contract
  • Drug and background testing acknowledgment and consent forms
  • The agreement with the individual’s employment or temp agency, if applicable
  • The employee’s signed acknowledgment that he or she has read and reviewed the employee handbook
  • Any legal agreements signed by the employee, such as an internet use policy, non-compete agreement or equipment contracts for a company smartphone or car
  • Internal job application, promotion information, transfer forms and any other pertinent documents created over the course of his or her lifespan with the company
  • Employee self-assessments
  • Records from formal counseling sessions and performance improvement plan documentation
  • Attendance records
  • Reports about disciplinary actions taken
  • Formal suggestions and recommendations made by the employee and responses where required
  • Training requests and records
  • Assessments of skills competencies
  • Needs assessments
  • Expense reports
  • Accolades and/or complaints from customers or colleagues
  • Employee resignation letter
  • COBRA notification
  • Termination paperwork if applicable
  • Exit interview records
  • Accounting for all final employee expenses, including but not limited to outstanding vacation pay, final paycheck and return of company property

What Not to Include

Knowing what to leave out of a personnel file is just as important as making sure it is complete. The following items should never be included in an employee’s official file:

  • Opinions of the employee’s supervisor and of the human resources staff
  • Unsubstantiated rumors and gossip items
  • Notes from former employers in addition to the official background check
  • Documents that are not signed and dated by the employee and the supervisor
  • Allegations and/or reports that were not further investigated by human resources
  • Medical information, which should be placed in a separate medical file that is also secure
  • Payroll information, which should be filed with payroll records
  • Documents that include the employee’s Social Security number
  • Documents that indicate the employee’s membership in a protected class, including race, gender, age, national origin, marital status, disability and religion. Federal law prohibits these documents from inclusion in a personnel file.
  • If an investigation is ongoing, documents about the proceedings belong in a separate file. Examples include employee complaints, employee and witness interviews, recommendations from the attorney and official findings and resolution
  • Background check documents belong in the medical file or in a separate protected file. This includes results of drug testing, employee physicals, criminal history and even credit reporting where applicable
  • Litigation documents
  • Workers’ compensation claims
  • Payroll and employment verification requests

Basically, if it is not factual or you would not want the employee to see it, do not include it in the personnel file. Establish a protocol for the documents that should be included and stick to it closely.

Personnel File Best Practices

When developing a personnel file policy, consistency is key. Make sure the same documents are filed in the same way and include the same information for each employee. Designate a gatekeeper, typically an HR manager or director, who maintains the files themselves and grants access based on pertinent guidelines when requested. Having one person who is responsible for the personnel files reduces the risk of error and unauthorized access.

Although it’s okay for supervisors to document their opinions about their employees’ performance, these personal notes belong in his or her personal management file, not in the official HR file. By the same token, the personnel file documents listed above should exist only in the official personnel file so that they are secured appropriately.

Keep in mind that if your organization permits managers to maintain desk files about their employees, these are discoverable in the event of a lawsuit. Institute training to ensure that documents in these files do not include discriminatory language. Train supervisors and managers about the proper language to use in official documents. If they are unaware of these guidelines, they may write performance reviews that include unsubstantiated opinions or other inappropriate inclusions.

By the same token, interview notes that are used to decide whether to hire a candidate belong in a specific hiring file. After the hiring decision is made, move the official documents in the checklist above from the hiring file to the secure personnel file.

A personnel file should not simply be a record of disciplinary actions. Balance the positive and negative aspects of each employee to paint a clear picture of his or her time with the organization.

Develop an organization system to be used for personnel files that makes sense for your company. The two most common methods are to organize documents in chronological order or to divide them into sections based on the type of document.

Personnel File Security

Personnel files should always be kept in a locked storage area in the human resources or management office. When determining where these files should be stored, follow the guidelines established by the Health Insurance Portability and Accountability Act (HIPAA) as well as pertinent state and federal laws. Establishing best practices for document security can prevent costly issues in the future. If documents are kept electronically, it is essential to use a secure storage system with password protection. Have a reliable backup system for all personnel files. In fact, most experts recommend having two backup strategies in place.

Access Requests

No one beyond human resources staff and the employee’s direct supervisor should have access to this information. The employee can request a copy of his or her personnel file at any time. However, employees are not allowed to view documents pertaining to reference checks, management investigations, medical records, judicial proceeding and employee planning. This prohibition also includes any document that reveals confidential information about another employee. Personnel file documents that are accessible by the employee include information about hiring qualifications, disciplinary action, promotion, training records, policy acknowledgments and transfers.

In addition, an attorney can file a subpoena to access the personnel file if it is relevant to a complaint with the Equal Employment Opportunity Commission or a lawsuit. Because of these official uses, the human resources staff must ensure that all documents in the file are factual and unbiased.

Develop a specific policy under which employees can request access to their personnel files. For example, they must request access from Human Resources in writing with 24 hours notice. They may not remove or copy documents from the file, but they can request that copies be made for them by HR. The employee can request removal of any document, but the removal must be approved by human resources staff.

Length of Filing Time

The policy should also indicate how long each type of employee document should be kept in the personnel file. This is governed by state and federal laws, as well as recommendations from the Society for Human Resources Management (SHRM). In general, hiring documents must be kept for one year from the date of the hiring decision. This is important in case your hiring decision is legally called into question. Drug test results must be kept on file for one year, or five years if the employee in question does a transportation-related job. This is regulated by your state’s department of transportation.

Although payroll records are technically separate from the official personnel file, these should also be retained. Keep timecard and payroll statements on file for at least three years, or five years after the termination date if the employee is let go. These documents should detail the amount the employee was paid and the total number of hours they worked as well as how the pay rate was calculated. This category includes W-4s, garnishments, wage deduction acknowledgments and state withholding forms.

The employee’s I-9 form should also be saved, apart from the personnel file, for three years after the employee was hired and one year after he or she left the company.

Information pertaining to pension benefits and health insurance, along with documents related to COBRA for those who are eligible, should be kept for at least six years. Summary Plan Descriptions can be used in court if an employee legally claims that he or she is entitled to a higher pension.

If an employee takes time off under the Family and Medical Leave Act (FMLA), documents related to the leave should be saved for three years.

After the minimal filing time expires for each type of document, protect the individual’s information by securely disposing of these documents either with an on-site shredder or by using a reputable document disposal company. Once a year, review each personnel record and remove items that are outdated or unnecessary. You should also take the opportunity to make sure the file includes every written employee evaluation, information about raises and promotions, documents pertaining to warnings and disciplinary actions, acknowledgment that the employee has reviewed the latest incarnation of the employee handbook and any current contracts and agreements (a work from home arrangement, for example).

Creating a System that Works

Maybe you are a sole proprietor and you are hiring your business’s first employee. Even though you have only expanded by one person, it is still important to have a personnel file in place. Establishing a functional system with best practices that adhere to legal guidelines now will save you from issues down the road. You can download online templates for the forms you need or consult with an employment attorney or human resources specialist to create documents specific to your company.

Whenever you employ other individuals, significant costs will be involved. If you need more assistance to expand your venture but think you can not afford the responsibility and expense of hiring an employee, consider exploring the flexible funds available from an online small business lender. You can apply from any device for a credit line of up to $250,000. This can be invested in salary, security systems, HR consulting, equipment and everything else you need to create a job in your community.

 

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