In some circumstances, personnel files can become evidence in a lawsuit brought against your company by an unhappy former employee or employees. As a result, you should always ensure that certain documents are maintained and updated in your employees’ personnel files in order to protect yourself. For example, personnel files should always contain periodic employee evaluations, notices of raises, employee commendations, and any evidence of any disciplinary proceedings that were taken against the employee.
You should never keep documents or entries that do not relate to the employee’s job performance or qualifications. Many employers have gotten into trouble for keeping documents or notes that relate to an employee’s political views, private life, or unsubstantiated criticisms about an employee’s race, gender, or religion.
Include Everything Relating to Employee Performance in the Personnel Files
One good practice to get in the habit of is to periodically inspect and clean out all of your employee personnel files. You should set a time to do this at least once a year, perhaps at the same time you are conducting employee performance reviews. When you go through the personnel files, you should be looking to take out any documents that are not necessary. Here are some questions to keep in mind when performing this task:
• Does the employee personnel file that you are holding contain every written evaluation of that employee, to the best of your knowledge?
• Does the employee personnel file that you are holding contain every written document that pertains to all raises, promotions and commendations that the employee has received?
• Does the employee personnel file that you are holding contain all written documentation that pertains to all warnings or other disciplinary action taken against that employee?
• If your company has policies in place about removing documents regarding warnings and discipline after a certain period of time, have all documents meeting these criteria been removed from the personnel file?
• If your company engages in “performance plans” or “probationary periods” for struggling employees, are all files updated to reflect each employee’s current status?
• If you have updated your employee handbook since an employee has started working for you, do you have a written and signed acknowledgement of receipt of the new handbook from the employee?
• Does the employee personnel file you are holding contain copies of current contracts or other agreements between you and the employee?
You should keep these questions in mind when going through your personnel files. Updating and cleaning out personnel files is much like keeping a computer running smoothly by periodically removing unnecessary files — it is a chore, but it must be done.
Other Items to Keep in Your Personnel Files
You should always remember that employee personnel files are very important to your company. As such, most, but not all, documents relating to employment should be kept in your employees’ personnel files, including:
• A job description for the position that the employee holds;
• The job application and resume of the employee;
• Your offer of employment to the employee;
• The employee’s W-4 Form (Employee’s Withholding Allowance Certificate);
• A receipt or signed acknowledgement of receiving your company’s employee handbook;
• All performance evaluations;
• Any forms relating to benefits that your employee enjoys;
• Emergency contact and next of kin forms;
• Any written complaints from customers or co-workers;
• Awards or certificates of excellent performance on the job;
• Any documents pertaining to completed training programs;
• Records and notes of any disciplinary proceedings taken against the employee;
• Any notes or warnings on bad attendance or tardiness to work;
• Any employment contracts, written agreements, or acknowledgments between the employee and the employer (including, but not limited to, noncompete agreements, agreements about company vehicles…etc); and
• Any documents that relate to an employee leaving the company (such as an exit interview or a document that lays out clearly the reasons why an employee was terminated). In addition, this can include documents relating to continuing benefits (such as COBRA), or agreements about future filings for unemployment benefits.
It is always a good practice to start an employee personnel file for each employee at the time you hire him or her.
What You Should Not Keep in Your Personnel Files
There are some items that you should not keep in your personnel files, either for reasons relating to potential lawsuits, or because of state or federal laws. Here are some items that you should be careful with:
• Employee Medical Records — If you employ someone that has a disability, you are required by the Americans with Disabilities Act (ADA) to keep that employee’s medical records in a separate file and limit the access to that file. Even if you plan on keeping medical records for employees without disabilities, you may not be allowed to keep their medical records in their personnel files.
• I-9 Forms — You will get Form I-9s from the United States Citizen and Immigration Services (USCIS). These forms are used for all employees to verify that you have checked their eligibility to be employed within the United States. Instead, you should keep all of these forms within a separate folder for the USCIS. The government maintains the right to inspect these forms. If the government does come to inspect the Form I-9s, you do not want the government seeing the other documents contained within your personnel files.
• Unneeded Records — Although there is not much that stops you from keeping other documents within your personnel files, you should try to keep a limit on what gets put in them. You should always keep in mind that, depending on your state, your employees may have the right to inspect their own personnel file.
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