Maintaining Employee Records

Maintaining employee records involves knowing which records to keep, how to store them, and how long you need to store them. Appropriate recordkeeping practices can prevent administrative and legal issues.

Employers typically keep various employee records as a way of documenting that employee’s relationship with the company. In certain situations, the records in a personnel file provide important supportive data, such as an employee’s discipline history. Employee records can also
track performance goals, leaves of absence, and other employment related agreements. 

In addition to being good business practice, employers may be required to keep certain types of records to comply with federal and state law. 

The first category of employee records are personnel records, which typically include basic information about the employee, such as documents related to the hiring process and performance review records. Examples include commendations, awards, and basic notes on performance issues or disciplinary actions. Employment related agreements such as non-disclosure or non-compete agreements, as well as compensation records may be included also. This is where documentation related to an employee’s termination, such as an exit interview, termination, or resignation notices, and information regarding post-employment benefits should be kept. 

The second category of employee records is confidential information. It’s best practice and sometimes legally required to keep certain employee records and information in a confidential file separate from the personnel file. The confidential file may include medical records, leave documents, background checks, and documents pertaining to an employee investigation. 

Both personnel files and confidential files may contain information that is legally required to be kept under state and federal law. Federal record keeping requirements generally fall into three categories: compensation and benefits, employment matters, and equal opportunity in employment. 

For example, the federal Fair Labor Standards Act, or FLSA, requires employers maintain basic payroll records, including the employee’s full name, social security number, and address along with details on hours worked and wages paid. These records are required to be kept for at least three years. Records regarding wage computations, such as timecards, are required to be kept for two years. Individual states have their own record keeping requirements that may be more stringent than federal ones. 

It is HR’s role to establish a formal record keeping policy and make sure it’s in compliance with federal and state laws where the company does business. Store files in a secure and locked location, and keep confidential files separate from personnel files. Documents should be reviewed and updated on a regular basis and disposed of securely. You must determine whether you’ll keep digital or hard files and how individuals will be allowed to access files, including a procedure for responding to third-party requests for employee information such as reference checks which may require written authorization.

While employee record keeping is subject to many rules at the federal and state level, systematically keeping accurate records will help simplify your management efforts and keep you in compliance with the law. We can provide services to ensure your recordkeeping practices are in compliance. Contact us to find out how we can help.