Smart Benefits: Record Retention - What to Keep in an Employee’s File

Monday, August 26, 2019

Rob Calise, GoLocalWorcester Business/Health Expert

{image_1}Employers collect important documents relating to each worker throughout the employee life cycle containing the history of the employment relationship from the job application through exit interview. In the worst-case scenario, a personnel file may turn into evidence in an employment lawsuit. That’s why accurate recordkeeping is essential.

Follow these tips for organizing and storing personnel records for compliance and security.

1. Consistency is the key. You should begin a personnel file for each employee on the date of hire and most, but not all, important job-related documents should go into this file.

2. Limit access. Limit storage and day-to-day access to employee files to a single individual or department whose authorization must be gained before others are permitted to view the files, such as the Human Resources department. And keep the files in a locked, fireproof filing cabinet to protect the confidentiality of employee information.

3. Keep two separate files. It’s wise to maintain two separate folders for each active employee: an Administrative Employee File and a Confidential Employee File. If your employee has a disability claim, you are legally required to keep all of their medical records in a separate file — and limit access to only a few people. Only Human Resources and Benefit Administrators should have access to confidential employee files, which contain sensitive data such as disability claims and medical information.

4. Know your record retention guidelines. Use best practices for record retention. Most business records need to be kept for six years (if tax-related) or 10 years (if related to hiring, firing, or other employment actions). However, be aware that record retention rules can differ from industry to industry. Be sure to talk to your accountant and attorney if you are unsure about when you can toss something out.

5. File Form I9s separately. You must complete an I9 for all employees, verifying that you have ensured that the employees are legally authorized to work in the United States. But don’t put Form I9s in your employees' personnel files. Instead, file them separately.

6. Notify your employees when required. Some state laws require you to notify employees when placing in their personnel file any information that is being used, has been used, or may be used to negatively affect their qualification for employment, promotion, transfer, additional compensation or the possibility that they will be subject to disciplinary action.

7. Access to employee records. Requirements for access to employee records vary by state. For example, in Massachusetts, employees must be granted access to view their personnel file within a minimum of five business days after they have made a written request. Make sure you have a policy that complies with your state guidelines that addresses topics like how to make a request, who must be present, and photocopying.

8. Audit files periodically. You should establish a time to periodically review each employee's personnel file, perhaps when you conduct their annual evaluation. During this review, consider whether the documents in the file are accurate, up to date, and complete.

Rob Calise is the Managing Director, Employee Benefits of The Hilb Group of New England, where he helps clients control the costs of employee benefits by focusing on consumer-driven strategies and on how to best utilize the tax savings tools the government provides. Rob serves as Chairman of the Board of United Benefit Advisors, and is a board member of the Blue Cross & Blue Shield of RI Broker Advisory Board, United HealthCare of New England Broker Advisory Board and Rhode Island Business Healthcare Advisors Council. He is also a member of the National Association of Health Underwriters (NAHU), American Health Insurance Association (AHIA) and the Employers Council on Flexible Compensation (ECFC), as well as various human resource associations. Rob is a graduate of Bryant University with a BS in Finance