Personnel Records: Papering the File
Keeping good personnel records can help an employer track the performance of employees, demonstrate compliance with labor laws, and justify a disputed termination. Keeping personnel records poorly, on the other hand, can expose an employer to liability. It is important for every employer to know what should and should not go into personnel files.
Each employee’s personnel file should document his or her history with the company, from Day 1 to termination, telling the story of that person with the company – the highs and the lows, the changes in position or duties, and the justification for any decisions the employer has made about the employee. Given the personal nature of employee files, they should be held in a secure location and be kept strictly confidential. Access should be restricted to those with a legitimate “need to know” or as required by law.
A primary purpose of documenting is to provide evidence during litigation. Employers should document as though everything will one day appear in front of a judge and jury: Use appropriate language, write clearly and succinctly, and be thorough – and err on the side of over-documenting. When in doubt whether an incident should be documented, it is better to document the issue. Although documenting is time-intensive and tedious, it is better to be safe than sorry – every employment issue has the potential to turn into litigation.
What Should Be Included?
Hiring documents. Documentation should include records obtained from the employee at the outset of employment: the application, resume, references, any authorizations obtained from the employee (i.e., background check or drug testing), the employee’s W-4 and I-9 forms, and any benefit election/waiver forms.
Job description. Job descriptions should set forth the major functions or duties, responsibilities and/or other critical features of a particular position. The description should include any specific skills required, expected efforts and/or outcomes, and should describe the working conditions, such as hours or location, in which the job will be performed, and should be signed by the employee. Having documentation of the essential functions of a job in the personnel file becomes critical if an employer receives an employee request for a reasonable accommodation (such as ADA, Americans with Disabilities Act) or must defend a claim of disability discrimination.
Acknowledgement of receipt of company handbooks, policies, and training. The file should include documents demonstrating the employee received, read, and acknowledged the company handbook and policies, including the company’s sexual harassment, discrimination, FMLA (Family & Medical Leave Act), and social media policies. Employment policies should be reviewed and updated annually, and employees should be encouraged to read any updates and ask questions. Employees should always sign an acknowledgment that they received the materials and understand that it is their responsibility to read them and ask questions. The acknowledgments should be kept in the employees’ files.
Education and training records. File any documents or results related to trainings and tests used to make employment decisions related to an employee’s promotion, demotion, transfer, layoff or other employment action.
Pay and benefits. Information documenting rates of pay and other forms of compensation, including any changes, should be included in personnel records.
As an employer, you should be documenting both the positive and the negative aspects of your employee’s performance and/or conduct. This is perhaps the most important category in an employee’s personnel file. Why? For one reason: It is important to track an employee’s progress in the company and provide an employee with notice that his or her performance or conduct needs improvement, or to document when an employee has performed well and deserves recognition.
Additionally, personnel files often play a critical role in an employer’s defense of an adverse employment decision. Documentation of employee performance or conduct contained in personnel records may become critical evidence of the employer’s legitimate and lawful reason for the administration of discipline or involuntary termination. As such, personnel files should contain documentation of any disciplinary notices, written warnings, incident reports, records of verbal counseling, reprimand/disciplinary reports, action plans for improving performance, last-chance agreements or other documents supporting adverse employment actions.
Unfortunately, most managers and supervisors do not take the time to thoroughly document employment policy violations, performance, and conduct. All too often, an employer only begins to document misconduct after it has made the decision to terminate an employee but wants to create a paper trail that the termination is valid. This is a bad idea. When documentation is manufactured after the fact in anticipation of litigation, its credibility diminishes. Every employer should commit to regularly documenting:
- Positive and negative conduct
- Complaints and commendations from co-workers and customers
- Attendance and leave of absence issues
- Job changes, such as promotion and transfers
- Policy or rule violations
In addition to conducting regular performance evaluations, supervisors should document any negative employee interactions at the time of the incident or shortly after the occurrence, to provide an accurate record of what happened. When documenting misconduct, include the facts – the “who, what, where, when, and how.” Note the purpose of the record and indicate any consequences of the incident if appropriate. Let the employee know about the record. He/She cannot improve without knowing where he/she needs to improve.
Employers should discuss each employee’s performance evaluations with him and ask him to sign his evaluation. An employer can remind the employee that his signature does not mean he agrees with it, but acknowledges that the employer discussed it with the employee and was provided a copy. For documentation outside of performance evaluations, an employer can send the employee an email that memorializes the informal conversation and keep a copy of the email, the employee response, or the “read” receipt in the personnel file.
Investigations and Complaints
Document investigations and complaints relating to or raised by the employee. Employers should retain documents that reflect the nature of the complaint, what action the company took in response, identify the witnesses, and describe the ultimate disposition of the complaint or investigation. For minor issues, maintaining related documents in the personnel file is acceptable. For more serious or sensitive complaints or investigations (i.e., harassment or discrimination complaints by or against the employee), the employer should maintain a separate file.
Documents used in the process of employment termination should be retained in personnel files. They may include a termination action form, termination checklist, waivers and severance agreements, and exit interview questionnaires, among others. The employer should also maintain a copy of any correspondence or documentation relating to the return of company property, and a copy of the Consolidated Omnibus Budget Reconciliation Act (COBRA) notice that went to the employee in the employee’s file. The employer should also keep a record of any unemployment compensation proceedings.
What Should Not Be Included?
Certain employee records should be kept separately from the personnel file because they are protected confidential documents. Others may not be used as a basis for employment decisions and thus should not be mixed with documents that do provide a basis for such decisions, in order to insulate employers from liability. This category of documents includes the following types of records:
All medical records, including pre-employment medical exams; disability benefit claim forms; notes from doctors; requests for FMLA leave; requests for ADA accommodations; worker’s compensation history; claims and related documents; fitness for duty results; functional capacity assessments; referrals concerning an employee’s participation in the company’s employee assistance program; results of drug/alcohol tests; reimbursement requests for medical expenses; health-related information about an employee’s family members; and any documentation about past or present health, medical condition, or disabilities.
Credit reports, including any consumer-related credit information, personal and/or financial data.
Immigration forms, including U.S. Citizenship and Immigration Services (USCIS) Form I-9 and supporting documents confirming employment eligibility (keeping these documents separate also makes it easier for a company to produce the desired records if subject to a government audit).
Documents related to complaints and investigations, including internal claims, government agency claims and lawsuits, which are to be kept on file until the claim or other litigation is fully resolved.
Notes that reflect personal thoughts about an employee that have nothing to do with the employee’s job responsibilities or performances.
Payroll data required by Fair Labor Standards Act and state labor laws governing the types of and requirements for records and related documents (e.g., garnishment orders) that must be maintained. In addition, under the Lilly Ledbetter Fair Pay Act of 2009, employers now need to be prepared to document the reasons for their pay decisions, so these records need to be kept as well.
Applicant data for candidates who were not hired, including job advertisements, resumes, employment applications, job orders submitted to any agency, reference checks, results of physical examinations, employment test results, credit reports, validity documentation of tests used in the selection process and related information.
Keeping thorough, complete employee records is an important duty for employers and should not be ignored or done cursorily. The investment an employer spends in keeping an accurate and consistent history of all of its employees will pay off in the unfortunate event of litigation or audit.