How to Organize Employee Files

It is important for businesses to know the type of information that should or should not be included in a basic employee personnel file. Basic personnel files are accessible to internal personnel, such as supervisors and human resources, as well as people outside the company, such as former employees and federal and state agencies conducting audits or investigating harassment and discrimination claims. Basic personnel files include the following: 

• Job descriptions and details of the scope of work
• Records relating to job offers, promotion, demotion, transfer, layoff, discipline and termination
• Performance evaluations, performance goals, education, training and letters of recognition
• Records relating to employment practices (including policy acknowledgements and agreements)

Confidential Files

Certain information, such as medical records, is protected and belongs in a separate, confidential file. Other types of records should be kept in separate files for strategic reasons. The following are categories of information that should be kept in a separate file with restricted access, instead of the basic personnel file.

• Immigration Form (I-9)—Form I-9 and any related documentation should be kept in a separate file, not in the employee’s personnel file.
   
• Equal Employment Opportunity (EEO) records—Any EEO data collection, as well as any other hiring or employment records, should be maintained separately and used only for reporting purposes, such as for an affirmative action program (AAP), the Form EEO-1 and internal diversity tracking.
   
• Hiring records—Files containing subjective interview notes, employment test results, background checks, criminal history, credit reports and other hiring records, if they contain protected information, should be kept separately.
   
• Payroll and tax records—Payroll and tax information such as W-4s, withholding forms, pay information, wage deduction authorizations and time-keeping records.
   
• Medical/Insurance/Benefits/Worker’s Compensation—Medical questionnaires, benefit enrollment forms and claims, personal information collected for insurance and other coverage, doctors’ notes, accommodation requests and workers’ compensation injuries and claims records.
   
• Investigation or litigation records and court orders—Records other than the relevant disciplinary action, counseling or other direct communications relating to an employment investigation, complaint or charge. Court orders relating to child support or garnishments should also be maintained separately.

Record Retention

Maintaining separate files often makes it easier to comply with the differing record retention requirements. For example: 

• I-9 files must be kept three years from the date of hire or one year after termination. 
   
• Equal Employment Opportunity Commission (EEOC) regulations require that private employers keep all personnel or employment records for one year. If an employee is involuntarily terminated, the personnel records must be retained for one year from the date of termination. 
   
• The Age Discrimination in Employment Act requires employers to keep all payroll records for three years and to keep any employee benefit plan and any written seniority or merit system on file for the full period the plan or system is in effect and for at least one year after its termination. 
   
• The Fair Labor Standards Act recordkeeping requirements applicable to the EPA require employers to keep payroll records for at least three years and to keep records that explain the basis for paying different wages to employees of opposite sexes for at least two years.

Federal Contractors

Federal contractors and subcontractors are subject to additional employment recordkeeping regulations enforced by the U.S. Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFFCP). Some examples include:

• Personnel records—Federal contractors are required to maintain any personnel or employment records made or kept by the contractor for two years from the date of the making of the personnel record or the personnel action, whichever occurs later. However, contractors with fewer than 150 employees or a contract of less than $150,000 only have to keep records for one year. Such records may include job descriptions, postings, applications, resumes, interview notes, promotion, demotion and termination and compensation information.
   
• Affirmative action plans—The plan generally must be kept for the duration of the federal contract. Records of complaints should be kept at least one year. Documentation of good faith efforts and support data are kept for two years.
   
• Building contracts—The Davis-Bacon Act requires most federal construction contractors and subcontractors to keep employee records, including payroll records, during the course of the contract work and for three years after final payments and all other pending matters are closed.

Note: Independent contractors are not employees, and their files should not be kept with employee personnel records.