How Long Should You Keep Employee Files?

With every new employee hired, there’s a lot of paperwork that needs to be filled out and kept in an appropriate place. The flow of documents continues throughout their tenure with your company.

The human resources (HR) department is responsible for all employees’ personnel files, including government forms, sensitive employee information, and company policies.

In some states, current and former employees have the right to see their personnel files, and it’s the HR department’s responsibility to allow it, as they’re expected to keep employee records safe and confidential.

There also are instances where employee records might be required to answer a lawsuit or be requested by federal agencies such as the Internal Revenue Service or U.S. Citizenship and Immigration. In such a situation, you wouldn’t want to search and wonder what documents you should leave in or out.

Because we live in times where many employee forms migrate to electronic document systems and services such as pay stub creator are used to guarantee that you or your employee have proof of income on the go, it’s imperative that you plan for filing, retaining, and storing employee documents.

Why Keep Employee Records?

One of the first reasons for keeping employee records is the legal aspect. There are state, federal, and local laws that require you to keep certain types of information about your employees. For example, federal guidelines require you to keep personnel records for one year after termination.

Another reason for keeping employee records is that it makes it easier to find information when you need it. You don’t want to be scrambling trying to find a particular piece of information that could cost your company clients or money. Having proper recordkeeping makes it easier to find what you need when you need it. This is especially true if you’re in an industry where you have a lot of turnovers, such as the restaurant business. 

Keeping employee records might also help you avoid lawsuits. Taking the time to document policies and procedures and training new employees ensures that they are doing what they’re supposed to be doing and following guidelines. Documenting these processes creates a paper trail that backs up your claims if a dispute arises.

What Should Be Included in an Employee File? 

Your employee file should include any documents and data pertaining to the employee in question, such as: 

  • Resumes,
  • Pay stubs,
  • Work schedule,
  • Employee handbook and/or other policies,
  • Performance evaluations,
  • Termination letters (for both you and your employees),
  • Training records,
  • Complaints,
  • Health insurance information and ID cards,
  • Other forms required by state or federal law.

What to Avoid?

When you’re keeping the employee records, there are certain things you should always avoid, so you can set up a filing system that ensures you’re meeting legal requirements.

Don’t Combine the Files of Different Employees

One employee’s document should never be mixed with those related to another employee. It’s easy to combine the personnel files of different employees mistakenly. If you choose to store employee files electronically, you should use software that will allow you to create separate folders for each employee. This way, if you need to retrieve an employee file, you’ll be able to find it right away. When it comes to paper records, the best practice is to store the employee records of each individual in separate file folders.

Don’t Throw Away Files Early

If an employee quits, you might be tempted to shred some of the papers that accumulated during their stay with the company as an attempt to free some space for other documents. However, there are federal requirements that say that certain types of files need to be kept for a specified period. Therefore you should never throw away any files right after the employee leaves your company and make sure you have them archived for the required time.

Don’t Give Unapproved Access to Confidential Files

You might find yourself in a situation where someone in a supervisory position asks for access to the personnel file of another team member. Before providing them with it, you should ensure that the details of their performance evaluations are separated from confidential documents that only the HR department should have access to. If you let a supervisor see another employee’s medical forms or tax documents, you could violate their privacy, and they might take legal action.

What Happens if You Get Audited?

If you get audited for any reason, such as for taxes or because someone is taking legal action and your company is involved, whatever documents you have on file in your office need to be organized and easy to locate. That way, when you get audited, you can give all pertinent information quickly and efficiently so they can see that you’re doing everything right.

Apart from being able to prove that you are in compliance with other regulations and laws, having clean and organized files also protects your company legally by providing proof of all things related to employment practices should a former employee make allegations against your company.

An Employee’s Perspective

Many employees have questions about their records. That’s why while talking about the methods and procedures around storing them, it’s also crucial to state that every employee should be given access to view and make copies of their personal files if they request it. For this reason, companies should have specific viewing policies in place.

There are no laws that could prevent previous employees from providing your new employees with the details of your termination. However, many companies have their own policies that limit the information that can be provided to hiring managers that ask for them on behalf of other companies.

An employee is not required to keep paper copies of documents that can be accessed online – it’s a matter of personal preference. However, some people like to have hard copies of important documents on hand.

In Conclusion

Record-keeping rules vary according to federal and state government requirements. Therefore it’s crucial that you maintain employee records for the maximum length of time to avoid situations where some essential information has been removed too early. It’s perfectly fine to store these records in paper form as long as you have a well-organized HR department that keeps an eye on every document, but you also shouldn’t be afraid to explore the option of going digital. 

In the end, your goal should be to make sure that your employees’ records remain confidential and secure. Make sure you follow all applicable laws and regulations when storing employee files.