Hard to come up with a sexy title for this topic – but it is vital to your organization. Employee records include both those items mandated by various laws, examples – I-9 forms and payroll records, and those important to managing the organization and the employee.

You can keep employee records in paper, scanned into a secure system, or managed entirely electronically. However you keep these records, you must ensure their security, limit access, and have back-ups. Once your growth takes you to 50 or more employees, it is often smart to buy a HRMS – software that keeps the records you need and allows you to do the analysis you need for management. These also support your EEO and AAP requirements if you are a government contractor or rely on federal funding.

State laws govern whether employees must have access to their records.  It is usually a smart practice to allow current employees access to their master records. This form of transparency reduces employee fears. You may also want to allow employees to respond or rebut items in their records. Most won’t , but again it is a morale issue.

What are employee records?

Master file: offer letters, resume or application, emergency contact info, pay and job change documents, performance reviews, letters of commendation, client notes, discipline records, and similar documents
Hiring file: reference checks, background checks, assessments, original job description, and other documents needed for EEO/legal compliance but which the employee does not have access to normally.
Payroll file: all records relating to pay including timesheets, vacation and other paid leaves, tax forms, state-ordered payments. These are usually kept in payroll.
Medical file: anything that has any personal medical information. This may include drug tests, medical leave documents, physicals, and anything health-related. These records are not open to managers and cannot be used for hiring, promotion, pay, or firing actions among other prohibited uses.
Immigration (I-9) forms should be kept in one separate file for all current and terminated employees. Having such a file or notebook ensures that if you are audited, the auditors do not see other personnel records.

In many small companies these records are kept by the founder, locked in their desk or file cabinet. As you grow it is smart to identify a specific person to maintain such records securely. It is also important to limit who has access and who can make any changes in either paper or electronic records. This reduces your liability while ensuring you have the records you need for effective management and legal compliance.

Managers may keep records of current performance, discipline issues, client comments to assist them in managing performance and recognition programs. These must be deleted after inclusion in formal documents or the master file. They should not be kept past 12 months. They must be secured. Anything kept by managers must also be transferred to the master record on termination of employment.

Employee records offer:

  • documentation of actual events and changes across the individual’s employment
  • resources for program management, awards and recognition, selection for training and development, information for lay-offs and other terminations
  • support for reducing your liability in unemployment compensation cases or other legal actions
  • information to comply with federal and state laws and regulations which apply to your business.

I usually recommend a simple 4 section classification file, available at any office supply, for your manual records.

These basic records are important to effectively managing your operations and limiting your liability. Remember to keep them secure and limit access to ensure you are protected.