Are your employee files in need of a little TLC to ensure they’re fully updated?

It’s tempting to put off doing necessary (but unexciting) paperwork, especially when there are often so many other human resources (HR) related fires to tackle. And with two years of pandemic adjustments behind us, it’s not surprising that many companies are finding themselves behind in maintaining staff files. But to stay in compliance and protect the company from unwanted legal liabilities, these files must be kept in shape.

Fortunately, with employees coming back to the office these days and pandemic restrictions easing, now is a perfect time to review your employee files and ensure everything is completely filled out and up to date so that you’re in keeping with best practices for your industry.

Here’s what to know and do as you “spring clean” employee records.

Understand the laws and regulations governing personnel files.

As an employer, you must be aware of any requirements set by the federal government, the state, and your industry regarding employee records. Companies that have 15 or more full-time employees are expected under federal labor laws to comply with federal anti-discrimination laws. And even smaller companies might want to consult with HR experts (like us!) to evaluate ways to avoid accusations of discrimination.

The following federal laws apply to businesses to help prevent discriminatory practices related to employment. Note that each agency on this list has its own document retention requirements and guidelines, which can be obtained with a visit to their governmental website. (We’d be happy to provide guidance to help you comply with these guidelines. We can even put together a training seminar for your HR team.)

• EEOC requirements — The Equal Employment Opportunity Commission (EEOC) mandates that employers keep all personnel or employment records for one year. If an employee is fired, their personnel records must be retained for one year from the date of termination.

• Age requirements — Under the Age Discrimination in Employment Act (ADEA), employers with 20 or more employees must keep payroll records for three years. Additionally, employers must keep on file any employee benefit plan (such as pension and insurance plans) and any written seniority or merit system for the full period the plan or system is in effect and for at least one year after its termination.

• Payroll requirements — Under the Fair Labor Standards Act (FLSA), employers must keep payroll records for at least three years. Also, employers must keep for at least two years all records that explain the basis for paying different wages to employees of all genders in the same establishment (including pay rates, performance reviews, seniority and merit systems, and collective bargaining agreements).

Thorough documentation protects the company.

Remember that “spring cleaning” employee records is one of the best ways to ensure that the company is following all necessary compliance requirements. And maintaining files according to HR best practices can make it a lot easier to keep files up-to-date and simple to access over the long-term. 

Defending the company against employment litigation and making HR work easier at the same time? That’s what we call a win-win.

What personnel records to keep

As you assess your employee records, be aware that US employers typically keep the following types of records:

• Personnel files for every employee
• Payroll files
• Employee medical files
• Form I-9s

Some of these records are considered confidential. That means that HR records should be carefully stored so that general personnel files (such as emergency contacts) should be stored separately from the more confidential items. What should you store separately to maintain confidentiality?

• Medical records
• Benefits information
• Credit information
• Immigration forms
• Documents related to complaints and investigations

In addition, because employers must be ready to present Form I-9s within three days of a federal request, you must file Form I-9s separately where they can quickly be accessed and presented. (Learn more about how to properly handle Form I-9s here.)

When to update employee records

It’s a good idea to update an employee’s file at least once a year, as well as whenever a reason occurs to make updates.

Wondering what constitutes a reason to update someone’s personnel file? Think about it this way: You should create and retain documentation about any personnel issues that arise over the course of employment. Best practice is to prepare and file these documents as soon as possible.

There are several situations when it makes sense to add or update documents, such as:

• Employment application materials, including initial application as well as internal promotion applications
• Work history
• Changes in personal information, such as emergency contacts, phone number, or address
• Performance evaluations
• Compensation changes and related rationale
• Disciplinary letters
• Employee recognition

How long to hold onto employee records

Different types of records and documents must be retained for differing lengths of time. The key is to make sure you’re being compliant and following best practices, which can help ensure that the company remains protected against potential legal action.

As a general rule of thumb, follow these guidelines for file retention:

• Pre-hire records = 1 year
• Applications and interview notes = 2 years
• Background check = 3 years
• Payroll records (wages paid) = 3 years
• Timecards and work schedules = 2 years
• Performance-related information = 1 year after employee leaves the company
• Medical records = 3 years after the employee leaves the company
• Benefit records = 3 years after the employee leaves the company
• Form I-9 = 3 years after an employee is hired, OR 1 year after their employment ends,
• depending on which is later
• Employment tax documents = 4 years
• Accident and injury records = 5 years
• Separation/termination records = 1 year

What if employees want to see their files?

Employees are allowed to access their employee personnel files under the guidance and supervision of designated staff. It’s easier and quicker for this process to happen smoothly when personnel files are being maintained properly. You can request they schedule an appointment to do so, and also avoid letting them make copies or take pictures of what is included.

How to set up and review personnel files

If you’re just beginning to establish employee records, or if you are reviewing your HR procedures to ensure your files are being maintained according to best practices, here are the steps we recommend you follow:

Step 1:

• Take inventory. Use an employee personnel file checklist to make sure you have the correct documentation and information in each file. Need a checklist? Contact us today!

Step 2:

• Update documentation. Request any missing or outdated items from employees, based on the personnel file checklist you’re using to audit the files.

Step 3:

• Store documents properly. Follow the suggestions above in the section “what personnel records to keep.” If you need help setting up a system, we’d be happy to help!

Step 4:

• Audit files periodically for accuracy. We recommend doing this at least once a year at a set time, so it becomes a consistent practice.

Get Help Auditing Personnel Files with Help from Our HR Experts

As you can see, there are a lot of to-dos when it comes to maintaining employee records properly. Fortunately, you don’t have to do it alone. At Who’s Your HR?, our human resources professionals provide auditing help that takes the pressure off your team and ensures your company is positioned well for any compliance checks, legal concerns, or other employee-related regulations.

Our employee file auditing checklist can be personalized to fit your company, and we’ll make it simple to onboard and maintain employees properly—so you can concentrate on the work you do best.

Contact us at 539-215-8868 to schedule a consultation or to learn more about our auditing process.