Today, we’re going to discuss one of the most essential—if not the most glamorous—tasks in HR management: employee recordkeeping. Knowing which records to keep, how to store them, and for how long can spare you administrative and legal headaches. We’ll take a look at how recordkeeping works, and offer you some easy to follow do’s and don’ts to guide your efforts.employee_recordkeeping

Employers typically keep a number of different employee records, often called personnel files, as a way of documenting an employee’s relationship with a company. In certain instances, documentation in a personnel file can provide important supportive data—for example, to show an employee’s discipline history in support of a termination. The personnel file can also track performance goals, leaves of absence, and any employment-related agreements.

In addition to being a good business practice, employers may be required to keep certain types of records in order to comply with specific provisions under both federal and state law. These laws mandate what information should be collected, what your company may or may not do with that information, and how long employee records should be kept.

For purposes of today’s discussion, we’re going to divide employee records into two categories: personnel records and confidential records. Personnel files typically include basic information about the employee, documents related to the hiring process, and performance review records—including such things as commendations, awards, and basic notes on performance issues or disciplinary actions. The personnel file is also a good place to keep employment-related agreements such as nondisclosure or non-compete agreements, as well as compensation records such as W-4s. Finally, the personnel file is the place to store documentation related to an employee's termination, such as exit interview forms, termination or resignation notices, information regarding post-employment benefits, and the like.

The second category of employee records is confidential information. It’s a good idea, and may in some instances be legally required, to keep certain employee records and information in a confidential file separate from the personnel file. The confidential file may include such items as medical records, leave documents, background checks, and documents pertaining to an employee investigation.

Both personnel files and confidential files may contain information that is legally required to be kept under state and federal law. Federal recordkeeping requirements generally fall into three categories: compensation and benefits, employment matters, and equal opportunity in employment. Specific laws dictate the particular records that must be kept and for how long.

For example…the federal Fair Labor Standards Act, or FLSA, requires that employers maintain, for all non-exempt employees, basic payroll records including the employee's full name, social security number, and address, along with details on hours worked and wages paid. These records are required to be kept for at least three years…and records on which wage computations are made, such as timecards, are required to be kept for two years.

Furthermore, individual states have their own recordkeeping requirements that may be more detailed or stringent than the federal ones. States may also mandate certain procedures and rules regarding employee access to personnel files.
Indeed, employee recordkeeping can be complex…which brings us to our list of “Do’s and Don'ts” which will help you get started.

To begin, do establish a formal recordkeeping policy, and make sure it is in compliance with federal and state laws in the state or states where you do business.

Do review every document to determine whether it belongs in a personnel file or a confidential file…and store those files in a secure and locked location. Don’t store an employee’s confidential file in the same place as his or her personnel file.

Do follow a timeline for reviewing and updating documents that age out of their required timeframes… and don’t put them in the trash. Your best bet is to shred or retain secure disposal services. Additionally, you will want to determine whether you are retaining hard or digital copies of documents, and have a backup plan for the accidental destruction of either. You should also identify a limited group of individuals who will have permission to access employee records.

You’ll also want to define the specific circumstances under which employees can access or copy their files (taking care to comply with any state-specific requirements), and be sure not to allow them to remove or modify documents. If there is an area of dispute, have the employee submit a written statement regarding the disagreement and include it in the file. Finally, establish a procedure for responding to third-party requests for employee information, such as for a future job reference, including obtaining a written employee authorization.

Remember, while employee recordkeeping is subject to many rules at the federal and state level, systematically keeping accurate records will help simplify your management efforts and keep you in compliance with the law. It’s well worth your time and careful attention.

To access a detailed list of both federal and state recordkeeping requirements for your business, and to learn more about our subscription options to our HR Compliance Library with over 500 downloadable forms and policies and video training on topics like ‘Preventing Sexual Harassment in the Workplace,' go to HR360.com and click on the ‘products’ tab.

Download the Employer Recordkeeping Guide

Topics: Employee Recordkeeping

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