News + Events
Keeping Pandora's Box Closed: Best Practices in Maintaining Personnel Records
May 21, 2009
Rebecca Williams Shanlever
Picture this: a recently terminated employee with a grudge against the company calls you up, demanding access to her personnel file. There is a state law where you operate requiring you to give her access to the personnel file. Is she going to find information about her employment (or termination of her employment) that will motivate her to file a lawsuit against the company? Worse yet, if she does file a lawsuit, is there anything in the personnel file that will get the company in trouble? This article provides some tips for maintaining your personnel files so that they don’t come back to haunt you.
The Basics
Most, but not all, job-related business records should be contained in the employee’s personnel file, including documents used by the company to determine an employee’s eligibility for employment, promotion, compensation, termination, or other personnel action. These documents may be requested by employees or subpoenaed by third parties, and they are useful in defending against employment-related litigation. Documents you should take care to include in your personnel files include:
- Applications and/or resumes
- Offer letters
- Job descriptions
- Signed acknowledgements of receipt of employee handbook and company policies
- Documentation of employee training, particularly anti-harassment and anti-discrimination training
- Contracts between the employee and the company, such as noncompete, nondisclosure, and arbitration agreements
- Requests for non-medical leaves of absence
- Authorizations for wage deductions
- Job-related correspondence from employees, such as requests for promotion and letters of resignation
- Documentation of promotions or demotions and wage increases or decreases
- Documentation of terminations, whether voluntary or involuntary (although avoid keeping multiple drafts of termination or separation notices in the personnel file that may contain different information – keep only the final, original version in the personnel file)
Put a Special Emphasis on Maintaining Performance Documentation
Maintaining performance records deserves a special mention, because they are often critical to an employer’s ability to get a lawsuit dismissed or win at trial. Conversely, failing to maintain performance records can turn a simple explanation for discipline, demotion, or termination into drawn-out (in other words, expensive) litigation. For these reasons, it is important to make sure your personnel files contain thorough and dated records of employee performance like:
- Formal and informal evaluations or reviews;
- Documentation of warnings, coachings, and discipline;
- Notes on absenteeism or tardiness; and
- Records of performance improvement plans and progress reports.
Employers should maintain all performance records in the personnel file so that it is possible to recreate the entire story of the employee’s performance for purposes of litigation. Even having something as simple as an email counseling an employee about absences or tardiness can mean the difference between getting a case dismissed and going to trial. And while there is usually nothing facially wrong with managers keeping their own, separate files for their employees, make sure that managers understand the importance of keeping only copies of performance documents in their manager files and forwarding all originals to the central personnel file.
Watch Out for Information That Identifies an Employee as a Member of a Protected Class
Employers cannot make personnel decisions based on protected categories, such as race, sex, color, age, religion, disability, and, in some states, sexual orientation, arrest or conviction records, and marital status. Although there are appropriate business reasons for maintaining documents that identify some of this information, such as birthdates, you should always consider whether the information is necessary and whether it is better kept in a separate file, away from the personnel file. For example, some employers are required to request demographic data from applicants, but they should keep this information separate to help defend against any suggestion that a manager considered the demographic information in making a personnel decision.
Keep the Medical Information and I-9s Out
Medical records and I-9s are good examples of documents that could contain information identifying an employee as being a member of a protected class, but there are other good reasons for keeping medical records and I-9s out of your personnel files. The Americans with Disabilities Act (ADA) and Health Insurance Portability and Accountability Act of 1996 (HIPAA) require employers to keep certain medical records confidential and in separate files. To ensure that you are fully complying with these laws, keep all medical-related documents in a separate file. This includes health or life insurance applications, requests for medical leaves of absence (including requests for maternity or other FMLA leave and short term disability applications), accident or workers’ compensation reports, doctors’ notes, and any other documents that contain private medical information about an employee.
Employers are not legally required to maintain I-9s and supporting documents in separate files, but the best practice is to keep these records out of personnel files. In addition to ensuring that managers do not consider the information in making employment decisions, keeping I-9s in separate files helps protect your personnel files from review by government agencies. The Office of Federal Contract Compliance Programs (OFCCP) and the federal and state Departments of Labor (DOL) are entitled to inspect your I-9s and supporting documents. If you maintain these documents in your personnel files, your entire personnel files will be subject to inspection, and anything an inspecting agency finds in a personnel file is fair game.
Investigation Records Should be Kept in Separate Files
Records of investigations (such as background checks and investigations of employee complaints and charges of discrimination) often contain embarrassing, confidential or extremely personal information about an employee that could lead to a lawsuit alleging defamation, invasion of privacy, or even that a personnel decision was made in retaliation for making a complaint or participating in an internal investigation. Consider the recently terminated employee discussed in the beginning of this article: if she were allowed to inspect her personnel file and discovered that a former co-worker had accused her of engaging in sexual harassment, it could upset her enough to make her talk to a lawyer. Further, employees may be more likely to report policy violations or speak frankly in an investigatory interview if they know that all records related to the investigation are kept confidential and separate from their personnel files.
Ultimately, only documents that are necessary to the business and maintaining proper employee relations should be kept in personnel files. Some states have laws that specifically set forth information that an employer must include or exclude from its personnel files, as well as how long personnel files must be maintained, so be sure to check the laws in your state to ensure that your personnel files meet any such requirements.