Nonprofit Accounting Basics

Employee Files

Author: 

Sheila Amo

The Perry Perspective

Keep only what you need in an employee's personnel file.

Taking the time to properly create and maintain your personnel files will pay off in the long run. You will have all the important documents relating to each employee in one place, easily available when it's time to make decisions on promotions or layoffs, to file tax returns, or to comply with government audits. For termination situations, accurate personnel files can mitigate the impact of legal action to the employer.

What to Keep in a Personnel File

All important job-related documents should go in the file, including:

• job description for the position
• job application and/or resume
• employment offer letter (s)
• IRS Form W-4 (the Employee's Withholding Allowance Certificate)
• receipt or signed acknowledgment of employee handbook
• performance evaluations
• employee benefits descriptions
• emergency contacts & next of kin documentation
• complaints from customers and/or coworkers
• awards or citations for excellent performance
• attendance records & related info on tardiness
• certification of training programs completed
• warnings and/or other disciplinary actions
• any contract, written agreement, receipt, or acknowledgment between the employee and the employer (such as a noncompete agreement, an employment contract, or an agreement relating to a company-      provided car), and
• termination documentation (such as reasons why the worker left or was fired, unemployment documents, insurance continuation forms, and so on).

What Not to Keep in a Personnel File

The following documents do not belong in an employee's personnel file:

Medical records. Do not put medical records into a personnel file. If your worker has a disability, you are legally required to keep all of the worker's medical records in a separate file -- and limit access to only a few people. Even for workers who are not disabled, you still have a legal obligation to keep medical records private (and it's a good idea to do so, in any case.

Form I-9s. Do not put Form I-9s into your employees' personnel files. (Form I-9 is a form from U.S. Citizenship and Immigration Services (USCIS), formerly the INS. You must complete an I-9 for all employees, verifying that you have checked to be sure that the employees are legally authorized to work in the United States.)

You should establish a practice of keeping all Form I-9s in a three ring binder for USCIS. The government is entitled to inspect these forms, and if it does, you don't want the agents viewing the rest of the employee's personnel -- and personal -- information at the same time.

Lawsuit evidence. Don't put anything in a personnel file that you would not want a jury to see.

Unnecessary material. Although an employee's personnel file may contain any other job-related documents, don't go overboard. Remember that, in many states, employees have the right to view their personnel files.

Maintaining a Personnel File

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