Personnel Files: Are They a Legal Time Bomb?

Posted in: Features, March 2013

Insights_HRforms.gifAn employee's personnel files should give an accurate and complete history of his/her employment with your organization. In case of a lawsuit, a judge and jury will expect documentation to back up your actions. Some documentation is required by law and could have very costly consequences in both time and money if they are not followed. For other records, you have a lot of leeway on exactly what you should file and how long you should keep it. This article will provide a basic guideline for personnel files. Always check that your state follows these basic federal guidelines.

What belongs in a personnel file

Here are documents that might be found in a personnel file, although some may be kept in another department like payroll:

  • Employment application and resume;
  • Attendance records (but not health-related absences);
  • Certificates of in-house or related training outside the company;
  • Awards and other recognition the employee has earned, along with letters of commendation from customers or clients that are job-related;
  • Performance evaluations, including any written response that the employee wants to make;
  • Receipts to show that the employee received your handbook or other specific policies, or attended a training session that is job-related; and
  • Employee separation information.

You will need to keep all personnel information in a secure, locked place to preserve confidentiality for your company and privacy for your employees.

Insights_FileCabnet.gifCertain types of documents should be kept separately from personnel files:

  • Medical information — This information is confidential and must be filed separately. This includes medical information regarding Workers' Compensation, Family and Medical Leave Act (FMLA) documents, Americans with Disabilities Act (ADA) documents, and health insurance as well as genetic information.
  • Records of investigation — When an employee is accused of harassment or other misconduct, documents relating to your investigation should be kept in a separate, confidential file. Disciplinary records include warnings, suspensions, memos from the employee's supervisor  documenting verbal warnings or informal counseling, and any written rebuttal from the employee (their side of the story). This not only protects the privacy of the accuser and witnesses, it could protect an employee who is falsely accused. If the investigation finds misconduct, the wrongdoer's personnel file should include the results of the investigation.
  • Legal case information — Documents pertaining to a lawsuit, an Equal Employment Opportunity Commission (EEOC) complaint, or consultations with your organization's lawyer should be kept separately. They could be protected by legal privilege, in which case you wouldn't have to allow the employee, or his/her lawyer, to see them.
    • I-9 forms — These forms, which verify that your employees are authorized to work in the United States, should be kept in a separate file. Although it isn't required by law, a separate file makes it easier to comply with an inspection by the U.S. Citizenship and Immigration Services, such as copies of I-9 documentation. You don't have to keep copies of documents that employees give you to prove their identity and work status, although some lawyers recommend it.

Retaining personnel files

Here are general timelines for keeping personnel documents:

  • Evaluations — Keep evaluations for all current employees no matter how old the documents are. If a long-term employee sues your company, you can try to use old evaluations to convince a jury they were good workers. The best way to address this concern is by making sure all current evaluations accurately reflect employees' deficits in performance and other areas.
  • Disciplinary records — Some employers remove disciplinary records from personnel files after a certain period of time, and some collective bargaining agreements require this. But removing these files makes it difficult for you to fire an employee for an unacceptable pattern of actions.
  • General  HR documents  — Many  types  of personnel records must be kept for at least one year  (Age  Discrimination  in  Employment  Act (ADEA), ADA, Title VII, and Rehabilitation Act). These are records relating to:
  1. Hiring (include job advertisements, applications, resumes, and records of employer-administered tests);
  2. Promotions, demotions, and transfers;
  3. Selection for layoff, recall, and discharge; and
  4. Notices to employees about openings, promotions, training programs, or overtime.
  • Terminated employees — For employees who are fired or laid off, you must keep their personnel files for at least one year after termination  (Title VII, 29 C.F.R. § 1602.14).
  • Pending complaints — If your company has been accused of discrimination by an employee or government agency, EEOC regulations require you to preserve all relevant records until the final disposition of the charge or lawsuit. Even if a lawsuit or complaint  hasn't been filed, you should save relevant documents  if  you  have reason to believe an employee will take legal action  against  your  organization.  Destroying evidence may look dishonest to a jury.

Retaining specific documents

Various laws tell you how long to keep certain documents:

  • I-9 forms — Three years from the date of hire or one year after termination, whichever is later (Immigration Reform and Control Act).
  • ADA employment records — One year from the date the record (such as job application, request for accommodation, promotion, demotion, etc.) is made or the action described in the record is taken, whichever is later. Recordkeeping requirements generally are the same for Title VII of the Civil Rights Act of 1964.
  • FMLA records  — Including  requests, leave taken, and notices given to or received from the employee: at least three years.
  • EEO-1 reports — The annual tally of employees' race, ethnicity, and gender that must be kept by private-sector employers with at least 100 employees and for many government contractors: you must keep the most recent report.
  • Payroll records — Including name, address, date of birth, occupation, and rate of pay: three years (Fair Labor Standards Act, Age Discrimination in Employment Act, Equal Pay Act). You may need to keep these records for more than three years for tax purposes; ask your attorney to be sure.
  • Timecards — Along with schedules and other documents used to determine wages: two years (FLSA, Equal Pay Act).
  • Employment contracts — Individual contracts as well as collective bargaining agreements: three years after the contract expires (FLSA).
  • Seniority or merit system documents— As long as the system is in effect plus at least one year (ADEA).
  • Occupational Safety and Health Administration (OSHA) Forms — Log and Summary of Occupational Injuries and Illnesses: five years (OSH Act).
  • Employee benefit plans — As long as the plan is in effect plus one year (ADEA).
  • Employee Retirement Income Security Act (ERISA) records — Documents that verify contents of required reports: at least six years from the date reports are filed. Records relating to benefits payable under plans: keep indefinitely.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) records — six years.

These are time frames based on federal laws, so check with your attorney for any state law requirements. If more than one law applies to a document, keep it for the longer time period.

Government contractors have additional record-keeping requirements under Section 503 of the Rehabilitation Act and Section 402 of the Veterans' Act:

  • Personnel records — Must be kept for two years, beginning on the date the record was made or the personnel action was taken, whichever is later. If you have fewer than 150 employees or your government contract is under $150,000, then it is one year.
  • Affirmative action plans — The plan itself generally must be kept for the duration of the federal contract. Records of complaints should be kept one year. Documentation of "good faith efforts" and "support data" (applications, personnel records, and documentation of promotions and terminations) are kept for two years.
  • Building contracts — The Davis-Bacon Act requires most federal construction contractors and subcontractors to keep payroll records for three years after the contract ends. Other federal record-keeping laws may apply, so check with counsel.

Employee Rights

What should you do if an employee asks to see his/her own personnel file?

  • State law — Some states require employers to allow employees (and sometimes former employees) to  see their own personnel files. Some laws give access to only a portion of the file, and some don't include ex-employees.
  • Voluntary access  — If  your  state  doesn't have such a law, you might want to let a current employee see his/her file to show that you have nothing to hide. But some lawyers recommend showing him only specific documents that he/she requests, not the entire file. Lawyers are also divided on whether you should give an employee copies of documents in his/her file. It is probably a bad idea to allow a former employee to look at his/her file unless your state's law requires it.
  • Procedures — When an employee looks at his/ her file, an HR person should be present to make sure he/she doesn't add or remove anything.

Public employers — If you are a government entity, the general public may have a right to basic information about your employees. This may include employees' name, title, and perhaps disciplinary action and pay. Consult legal counsel for specifics.

Electronic records

Many employers are streamlining and simplifying their personnel files by converting paper records to electronic versions. It can be cheaper and easier than paper, especially if you have a lot of records to store.

There are several ways to create personnel files that can be stored electronically. You can scan the existing paper documents that are in your employees' personnel files and maintain them in a database or word processing format. This would require you to responsibly store or dispose of the paper documents you are replacing.

Regardless of whether you convert existing personnel records to an electronic format, you could use electronic forms (for such things as applications, insurance enrollment forms, etc.) that are "filled out" on the computer and stored electronically without ever creating a paper document.

You still must be careful. Converting or storing records electronically can be tricky, and there are several potential problems you need to consider. For documents that are required by law, you need to know whether the statute or regulation allows electronic records. Don't dispose of paper documents until you have the electronic system in place with all the legal and technological kinks worked out. Take extra care to make sure that confidential information is kept confidential. Make sure you will be able to find the documents you need a couple of years down the line and that you will still be able to access them after computer upgrades.

In a lawsuit,  you might  have to prove when a document was created or that it wasn't wrongfully altered. You can use software that prevents alteration.

Falsifying documents

A manager might be tempted to put false documents in a personnel file. For example, supervisors have been known to create documents that are false or have incorrect dates to justify a termination. That is a really bad idea, even if the supervisor thinks he/ she is simply creating an after-the-fact record of what happened.  If an employee sues your organization and  his/her  lawyer discovers  that the  documents were fake, it will destroy your credibility in court and possibly subject your company to penalties.

Phil Mussallem has 30 years of experience in the staffing industry, over 20 of which have been exclusively in the electrical  field.  In 1998, Phil founded Electrical Staffing Inc, a IEC National Bronze Industry Partner, where he serves as president.  He has conducted over 50 seminars at IEC National Conventions and at IEC Chapter meetings on the topics of employment issues, such as hiring and firing.