Once you've hired an employee, you'll need to set up records and personnel files for certain employee information. Federal and state laws require employers to maintain certain records. State law governs access to employee personnel files.
In the course of the hiring process, an employer accumulates quite a bit of information, some mandated by law, about a new employee. Some of the information that you've collected must be kept on file and you may find that there's information that you voluntary choose to keep. You may be legally required to keep certain employee information separately.
Employee records employers must keep
There is no law that requires you to keep a personnel file on each employee. Specific employee records are what you must retain under federal laws.
The information that you keep depends on what the information is and which law covers the retention of that particular information. Laws may also dictate that certain information must be kept but that it cannot be kept with other personnel information for confidentiality and privacy reasons.
Technically, you don't even need a "file." If you have a better system for keeping all the information straight, use it! Many are opting for computer files. However, you must retain certain pieces of information that an employee or applicant must complete and sign, like the W-4 Form, Form I-9, and the job application, and those can be kept in a computer file if they are scanned in. As a practical matter, personnel files are the easiest means of keeping track of employee information to comply with those requirements and to keep track of information for your own business purposes.
In any case, you have to keep certain information to comply with federal laws. Most of that information is basic and can be kept on a form (with the exception of payroll records) in a file or on a computer. For bare-bones compliance, include:
- full name
- employee number (if you use one)
- home address, including zip code
- date of birth
- gender
- job title
- basic payroll records
Job-related requirement. Information collected about employees and retained in personnel files should be strictly job-related. You might consider keeping some of the records required by law in files separate from an employee's personnel file and limit the personnel file to information that applies only to the individual employee (such as resumes, performance evaluations, and work history). If required files are kept in separate files, they may be easily produced to prove compliance to government agencies without providing all other personnel information not relevant to the government investigation.
Example
Rocky Quarry, the owner of Big Boulders keeps all the I-9 forms required for his employees under the Immigration Reform and Control Act in one central file that contains only I-9 forms, instead of keeping the form in the file of each individual employee. If Rocky is asked to produce the I-9 records for a government inspection, not only can he quickly comply but he will have no problem producing only the requested information without giving the agent access to other personnel information.
Federal and state laws may require you to retain employee information. You may also need to keep certain employee records for business purposes.
The federal government requires that you keep an array of information under different laws. When reviewing the chart for record retention requirements, know which laws affect your business so that you can comply more easily with them.
Example
For employers with fewer than 15 employees (and not subject to federal anti-discrimination laws), some of these requirements may not apply.