Setting Up Employee Records and Personnel Files
Once you've hired an employee, you'll need to set up records and personnel files for certain employee information. Federal and state laws require employers to maintain certain records. State law governs access to employee personnel files.
In the course of the hiring process, an employer accumulates quite a bit of information, some mandated by law, about a new employee. Some of the information that you've collected must be kept on file and you may find that there's information that you voluntary choose to keep. You may be legally required to keep certain employee information separately.
Employee Records Employers Must Keep
There is no law that requires you to keep a personnel file on each employee. Specific employee records are what you must retain under federal laws.
The information that you keep depends on what the information is and which law covers the retention of that particular information. Laws may also dictate that certain information must be kept but that it cannot be kept with other personnel information for confidentiality and privacy reasons.
Technically, you don't even need a "file." If you have a better system for keeping all the information straight, use it! Many are opting for computer files. However, you must retain certain pieces of information that an employee or applicant must complete and sign, like the W-4 Form, Form I-9, and the job application, and those can be kept in a computer file if they are scanned in. As a practical matter, personnel files are the easiest means of keeping track of employee information to comply with those requirements and to keep track of information for your own business purposes.
In any case, you have to keep certain information to comply with federal laws. Most of that information is basic and can be kept on a form (with the exception of payroll records) in a file or on a computer. For bare-bones compliance, include:
- full name
- employee number (if you use one)
- home address, including zip code
- date of birth
- job title
- basic payroll records
Job-related requirement. Information collected about employees and retained in personnel files should be strictly job-related. You might consider keeping some of the records required by law in files separate from an employee's personnel file and limit the personnel file to information that applies only to the individual employee (such as resumes, performance evaluations, and work history). If required files are kept in separate files, they may be easily produced to prove compliance to government agencies without providing all other personnel information not relevant to the government investigation.
Rocky Quarry, the owner of Big Boulders keeps all the I-9 forms required for his employees under the Immigration Reform and Control Act in one central file that contains only I-9 forms, instead of keeping the form in the file of each individual employee. If Rocky is asked to produce the I-9 records for a government inspection, not only can he quickly comply but he will have no problem producing only the requested information without giving the agent access to other personnel information.
Federal and state laws may require you to retain employee information. You may also need to keep certain employee records for business purposes.
The federal government requires that you keep an array of information under different laws. When reviewing the chart for record retention requirements, know which laws affect your business so that you can comply more easily with them.
|Information ||Retention requirement ||Law |
|Employee name and any identifying number used in place of the name used on any work records ||4 years from tax due date or payment of tax, whichever is later ||Social Security Act |
|Social Security Number ||4 years from tax due date or payment of tax, whichever is later ||Social Security Act |
|Employee home address, including zip code ||4 years from tax due date or payment of tax, whichever is later ||Social Security Act |
|Date of birth if the employee is under 19 ||3 years ||FLSA
Equal Pay Act
|Date of birth of all employees ||3 years ||ADEA |
|Gender of employee ||3 years ||FLSA
Equal Pay Act
|Occupation of employee ||3 years ||FLSA
Equal Pay Act
|Age records ||No time period specified by law ||ERISA |
|Service record to determine whether an employee has worked 1000 hours or has incurred a break in service ||No time period specified by law ||ERISA |
|Marital status record ||No time period specified by law ||ERISA |
|Form I-9 ||3 years after hire or the date of recruitment or referral (if directed from an employment agency) or, after termination, for one year or 3 years after hiring, whichever is later ||Immigration Reform and Control Act of 1986 |
|Complete job application ||1 year ||Title VII
|Resumes or other forms of employment inquiry ||1 year ||ADEA |
|Other hiring material ||1 year ||Title VII
|Job orders submitted by an employer to an employment agency ||1 year ||ADEA |
|Test papers for a position if the test paper discloses the result of the test ||1 year ||ADEA |
|Results of a physical examination that is considered by the employer in connection with personnel action ||1 year ||ADA |
|Advertisements relating to job openings ||1 year ||ADEA |
|Records of job movement (promotions, demotions, transfers) ||1 year ||Title VII
|Material relating to layoffs ||1 year ||Title VII
|Material relating to termination ||1 year
Records of involuntarily terminated employees must be kept for a period of one year from the date of termination.
|Selection for training or apprenticeship ||1 year ||Title VII
|Requests for physical job accommodation ||1 year ||ADA |
Federal laws address the length of time that certain employee records must be kept, but not how long the entire personnel file must be kept. Some state laws require that personnel files be retained for a given period of time following an employee's termination. The retention periods range from 60 days to three years following termination.
A best practice would be to retain required records and keep a personnel file for seven years after any employee terminates employment. Among the reasons for this recommendation are that your business may be called upon to provide an employment reference for the employee in the future or may be drawn into a dispute over the reason for the termination.
Other employment records routinely maintained by employers, but not specifically listed in the federal requirements, include:
- work history
- performance evaluations
- disciplinary records
- personal commendations
- sick days
- vacation days
- benefit enrollments
- beneficiary designations
- payroll withholding statements
- reports of reference checks
- workers' compensation information
- medical records
- lie detector test information
Who Is Permitted to See Personnel Files?
Just as there is no federal law about keeping a personnel file, there are no federal laws about who gets access to it, although the information that you collect about employees is sensitive and few people should be allowed to see it.
A number of states, however, have passed laws that limit or otherwise regulate the employee's access to the personnel file. Therefore, the restrictions you can place on access may very well be governed by state law.
Keep in mind, however, that despite technical ownership issues, a personnel file contains information about an employee that could affect his or her future. That employee frequently wants to know the information contained in the file, whether the information is correct, and to whom the information will be shown. We recommend that, whether or not your business is located in a jurisdiction requiring employee access, you allow reasonable access to personnel files as part of a policy of treating employees with fundamental fairness.
Consult our state map for information on your state's access to personnel files.
If you decide to allow access to personnel files, you may want to consider the following restrictions:
- Limit the frequency of access to a specified number of times per year or to a "reasonable" frequency of access.
- Require advance requests for access so that you have time to review the file or to transfer the file from a computer file to paper.
- Specify the time or place of viewing a file so that it will interfere as little as possible with the working time of both the employee and the employer.
- Require that a personnel file be viewed only in your presence or the presence of someone designated by you in order to safeguard the integrity and the contents of the file.
Can you limit the information employees can see? State law may permit your company to limit the information to which the employee must be given access. You may, however, provide access to more information than the state requires. Typically, employees must be given access to information used by you to determine the employees' qualifications for employment, promotion, and additional compensation, as well as information about discipline and terminations.
Some states permit you to withhold certain types of information from employee access, including certain medical records and information on other employees. If your state is one that doesn't address the issue, you may handle it as you think will best serve your business's interest.
Can the employee copy the file? Generally, the employee may either make a copy or request a copy of all or part of the information found in the employee's personnel file. Some states allow you to charge the employee for the cost of making the copies. You may also specify whether the employee may make the copies or whether he or she may only request a copy from you.
What if the employee disagrees with information in the file? A few states' laws address the issue of the procedure you should follow. Whatever state your company is in, you should establish a policy to follow in such an event.
Typically, when an employee disagrees with information found in the employee's personnel file, removal or correction of the information may be agreed upon by you and the employee. If you cannot agree upon the removal or correction, the employee should be permitted to submit a written statement explaining his or her position. The statement becomes a permanent part of the employee's personnel file and must accompany any transmittal or disclosure from that file to anyone else who's allowed to see it.
Who else can see the file? Generally, only other supervisors or managers, if there are any, in the business may be allowed access to files on a need-to-know basis only.
If a lawsuit is brought against your business, you have the option of protecting the privacy interests of other employees by refusing to turn over personnel file information requested in the suit until forced by a subpoena. Even then, you should insist that the order be as narrow as possible and that any information sought should relate directly to the allegations in the suit.
If the government audits you for certain recordkeeping requirements, and the records are in personnel files, then they get the whole file, unless you take out the pieces they want individually.
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