Eddy’s HR Mavericks Encyclopedia
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Physical Employee Files
Organizing your employee files might be something your company does not worry about too frequently, but the regulations on employee record keeping can be brutal. Be sure to take note, no matter your organization size. Where does medical information go? What about notes from the interviews? Read on to learn more about physical employee files.
What Are Physical Employee Files?
Physically housing your employee files refers to keeping an actual, physical file folder (not electronic) for each employee. Since these files are physical, they should be held under lock and key at your business location with only a member of HR staff holding the key.
Why Is It Important for Businesses to Keep Physical Employee Files?
Employee files for each employee are necessary for your organization. The Equal Employment Opportunity Commission ( EEOC) requires that organizations keep all personnel or employment records for one year for active employees. This is different for employees who quit or were terminated, in which case you should keep files on hand for a year after the termination date. Let’s look at why it’s so important to retain these files for your organization.
- Employee evaluations. Employees will usually be intentional about their pay and performance, wondering when their last raise was, why they didn’t get a bonus one year vs. the other, etc. This information is an essential part of employee morale, and keeping it easily accessible when an employee comes to HR with questions is extremely beneficial in those conversations.
- Litigation protection. Potentially the most important reason to keep employee files is to ensure your organization is protected against litigation. Should you terminate an employee, the factual reasons or lack of performance documentation should be recorded appropriately in the employee file to protect your organization against wrongful termination litigation.
What Physical Employee Files Should Companies Retain?
There are key physical employee files your organization should retain. Let’s review them below.
Hiring Records
Keep a careful record of your job descriptions and any changes that have been made since the employee has started. Also keep the employment application submitted by the employee, including their resume. Since this documentation can be evaluated if a lawsuit hits your organization, training may need to take place so that your employees are taking appropriate notes. Hiring records should also contain any signed agreements required by your organization, both when employees were hired and as they continue to be employees.
Pay and Performance Evaluations
The way your employees perform is detailed at your organization by promotions, demotions or compensation adjustments up or down. This information should be documented in your physical employee files. Perhaps create a standard form you can use for promotions, transfers, pay adjustments, awards, attendance records and performance improvement plans so that each of these items are consistent. This part of physical employee files makes up the bulk of the file housing and is the most necessary information for each employee and their lifecycle at your organization.
Exit Documentation
Whether your employee exits voluntarily or involuntarily, if they are terminated for misconduct or quit for a new opportunity, this documentation should be kept in the physical employee file. Ensure you have the “why” behind the separation with the appropriate documentation filed accordingly. If they were separated, you should have the supporting documentation as to why your organization terminated their employment along with any signed agreements and required separation checklists. If the employee resigned, be sure to include the resignation letter as well as all the documentation listed above.
What Should Not Be Kept in an Employee File?
A common misconception is that the best physical employee files include all documents together so that nothing is lost and you have easy access at all times. On the contrary, there are items that should not be kept in a physical employee file, both from legal requirements and best practices.
Non-Official Records
Dialogue may happen between a manager and an employee on or off the record and the hiring manager may bring you reports on rumors, gossip or staff opinions to house in the employee file. Be cautious to do so. The last thing you want is non-factual information making its way into employee files that could be used against your organization should litigation arise. Any opinions or non-official records presented to HR should not be included in a physical employee file.
Confidential Information
The list of items that should not be kept in an employee file is extensive, but it’s good to note that confidential information should be kept outside the file in its own confidential employee file. Items like background checks, I-9 forms and beneficiary information, to name a few, should not be kept in the same location as the employee file. Take the appropriate measures to ensure you’re in compliance with the necessary filing requirements.
How to Set Up a Physical Employee Filing System
Now that you understand the basics of the physical employee files, let’s go over a few tips on how to create them for your organization.
Step 1: Select a Secure Location
Before you can begin, select a secure location in your office. It doesn’t matter if you work from home, in a physical office or a hybrid model, the location should be secure. Do your best to ensure that your physical employee files are stationed out of the way of common areas that employees frequent. Best practice would be to house these in the office of a member of your HR department or perhaps an executive, should HR not have an office. Choose a location as out of the way as possible to avoid prying eyes.
Step 2: Purchase/Establish File Organizers
If you do not have lockable file cabinets at your office, now is the time to purchase them. If you do, take the time to establish them as your physical employee file holders and put them in your secure location. Ensure these cabinets are fire and waterproof. If something happens to your location, these documents will still be kept safe. Make sure they have a lock on the cabinet, either with a key, a combination code or a mix of both to ensure your documents are kept secure. Be sure you’re keeping the employee file and the confidential employee file separate for compliance purposes.
Step 3: Create a Procedure
The final and potentially most important step in establishing physical employee files is to create a procedure for those who have access to the files. These procedures will guide when and if employee files are accessed by others. Even if a manager asks for information on an employee’s pay as they evaluate raises, that doesn’t mean you should hand over the key and let them find what they are looking for. Best practice suggests that a member of HR is the only one to access these files and can give information out accordingly. In your procedure, you could detail a succession of who is in charge of the cabinets daily and who ensures they are managed if someone needs information from them. The procedure does not have to be extensive, but something should be in place to effectively manage your new physical employee file system.
Topics
Shalie Reich
Shalie has over 4 years of experience working in a variety of HR positions and organizations including: working as an HR department "of one", working with a start-up based in Europe, to working in a fully established robust USA based HR department. Shalie has experience in multiple states and countries with all aspects of the HR spectrum. She has a passion to share her knowledge and experience to benefit the HR profession!
Frequently asked questions
Other Related Terms
Eddy’s HR Mavericks Encyclopedia
Physical Employee Files
Organizing your employee files might be something your company does not worry about too frequently, but the regulations on employee record keeping can be brutal. Be sure to take note, no matter your organization size. Where does medical information go? What about notes from the interviews? Read on to learn more about physical employee files.
What Are Physical Employee Files?
Physically housing your employee files refers to keeping an actual, physical file folder (not electronic) for each employee. Since these files are physical, they should be held under lock and key at your business location with only a member of HR staff holding the key.
Why Is It Important for Businesses to Keep Physical Employee Files?
Employee files for each employee are necessary for your organization. The Equal Employment Opportunity Commission ( EEOC) requires that organizations keep all personnel or employment records for one year for active employees. This is different for employees who quit or were terminated, in which case you should keep files on hand for a year after the termination date. Let’s look at why it’s so important to retain these files for your organization.
- Employee evaluations. Employees will usually be intentional about their pay and performance, wondering when their last raise was, why they didn’t get a bonus one year vs. the other, etc. This information is an essential part of employee morale, and keeping it easily accessible when an employee comes to HR with questions is extremely beneficial in those conversations.
- Litigation protection. Potentially the most important reason to keep employee files is to ensure your organization is protected against litigation. Should you terminate an employee, the factual reasons or lack of performance documentation should be recorded appropriately in the employee file to protect your organization against wrongful termination litigation.
What Physical Employee Files Should Companies Retain?
There are key physical employee files your organization should retain. Let’s review them below.
Hiring Records
Keep a careful record of your job descriptions and any changes that have been made since the employee has started. Also keep the employment application submitted by the employee, including their resume. Since this documentation can be evaluated if a lawsuit hits your organization, training may need to take place so that your employees are taking appropriate notes. Hiring records should also contain any signed agreements required by your organization, both when employees were hired and as they continue to be employees.
Pay and Performance Evaluations
The way your employees perform is detailed at your organization by promotions, demotions or compensation adjustments up or down. This information should be documented in your physical employee files. Perhaps create a standard form you can use for promotions, transfers, pay adjustments, awards, attendance records and performance improvement plans so that each of these items are consistent. This part of physical employee files makes up the bulk of the file housing and is the most necessary information for each employee and their lifecycle at your organization.
Exit Documentation
Whether your employee exits voluntarily or involuntarily, if they are terminated for misconduct or quit for a new opportunity, this documentation should be kept in the physical employee file. Ensure you have the “why” behind the separation with the appropriate documentation filed accordingly. If they were separated, you should have the supporting documentation as to why your organization terminated their employment along with any signed agreements and required separation checklists. If the employee resigned, be sure to include the resignation letter as well as all the documentation listed above.
What Should Not Be Kept in an Employee File?
A common misconception is that the best physical employee files include all documents together so that nothing is lost and you have easy access at all times. On the contrary, there are items that should not be kept in a physical employee file, both from legal requirements and best practices.
Non-Official Records
Dialogue may happen between a manager and an employee on or off the record and the hiring manager may bring you reports on rumors, gossip or staff opinions to house in the employee file. Be cautious to do so. The last thing you want is non-factual information making its way into employee files that could be used against your organization should litigation arise. Any opinions or non-official records presented to HR should not be included in a physical employee file.
Confidential Information
The list of items that should not be kept in an employee file is extensive, but it’s good to note that confidential information should be kept outside the file in its own confidential employee file. Items like background checks, I-9 forms and beneficiary information, to name a few, should not be kept in the same location as the employee file. Take the appropriate measures to ensure you’re in compliance with the necessary filing requirements.
How to Set Up a Physical Employee Filing System
Now that you understand the basics of the physical employee files, let’s go over a few tips on how to create them for your organization.
Step 1: Select a Secure Location
Before you can begin, select a secure location in your office. It doesn’t matter if you work from home, in a physical office or a hybrid model, the location should be secure. Do your best to ensure that your physical employee files are stationed out of the way of common areas that employees frequent. Best practice would be to house these in the office of a member of your HR department or perhaps an executive, should HR not have an office. Choose a location as out of the way as possible to avoid prying eyes.
Step 2: Purchase/Establish File Organizers
If you do not have lockable file cabinets at your office, now is the time to purchase them. If you do, take the time to establish them as your physical employee file holders and put them in your secure location. Ensure these cabinets are fire and waterproof. If something happens to your location, these documents will still be kept safe. Make sure they have a lock on the cabinet, either with a key, a combination code or a mix of both to ensure your documents are kept secure. Be sure you’re keeping the employee file and the confidential employee file separate for compliance purposes.
Step 3: Create a Procedure
The final and potentially most important step in establishing physical employee files is to create a procedure for those who have access to the files. These procedures will guide when and if employee files are accessed by others. Even if a manager asks for information on an employee’s pay as they evaluate raises, that doesn’t mean you should hand over the key and let them find what they are looking for. Best practice suggests that a member of HR is the only one to access these files and can give information out accordingly. In your procedure, you could detail a succession of who is in charge of the cabinets daily and who ensures they are managed if someone needs information from them. The procedure does not have to be extensive, but something should be in place to effectively manage your new physical employee file system.
Topics
Shalie Reich
Shalie has over 4 years of experience working in a variety of HR positions and organizations including: working as an HR department "of one", working with a start-up based in Europe, to working in a fully established robust USA based HR department. Shalie has experience in multiple states and countries with all aspects of the HR spectrum. She has a passion to share her knowledge and experience to benefit the HR profession!
Frequently asked questions
Other Related Terms
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