The Information Every Employer Should Keep in Its Personnel Files

By Leslie Austin / March 17, 2015 / Uncategorized No Comments

It takes a lot of paperwork to hire employees, provide them with benefits and track their work history with your company. Not only do you need to collect this information from employees, but you also need to store it properly for future reference.

And in many cases, it’s not enough to simply have the required documents on file. If they are filled out incorrectly, enforcing agencies may inflict penalties as if you’d never filed the documents in the first place. For example, every portion of the I-9 that’s filled out incorrectly is subject to a $100 penalty, up to a cap of $1,100 per form. That adds up quickly.

The Society for Human Resource Management offers a chart of record-keeping recommendations. Keep in mind, though, different agencies have different requirements, and state laws and regulations may vary widely. No matter where your business operates, you will need a file-management protocol with multiple personnel files to store everything appropriately — not just one file per employee.

Here are some essential forms and other information your protocol should cover.

I-9s

The Employment Eligibility Verification Form I-9, for example, should be stored separately from other employment information. In the event of a Form I-9 audit, you want to be able to give auditors only these documents. If they see other paperwork and spot violations, they will cross-report to other agencies, so separating your I-9s from other personnel records and keeping them in a separate location is considered a best practice.

Payroll Information

After the I-9, personnel files can tend to get cumbersome. Payroll records, for example, don’t need to go with other employee records such as performance reviews.

Payroll records are vital if you ever face a Department of Labor audit or lawsuit regarding unpaid overtime or other wage violations. You may store them electronically in payroll software or on timecards. However you record this information, having a well-organized and carefully maintained  a strong payroll record system can help protect your organization against fines and other penalties.

Health Insurance Information

Pay attention to how you store health insurance information, as you don’t want to violate your employees’ privacy. Storing health insurance records separately can help ensure they stay private.

The Affordable Care Act — also known as the ACA or Obamacare has brought a lot of new regulations to employers. For employers subject to the large employer mandate portion of the law, one of the most important things to keep in mind is if any of your employees turns down the health insurance you offer, you must get them to sign a waiver. Before the ACA, obtaining waivers was a best practice and effective way to mitigate certain risks under other laws, such as the Employee Retirement Income Security Act, now having the waiver on file can mean the difference between compliance with the ACA or large penalties under the law.

Keep your waivers on file becasue if your organization is required to offer health insurance and cannot prove that each employee has been offered it, you’ll be subject to fines as if you never offered it in the first place. For example, if you receive notice that an eligible, full-time employee has qualified for a premium tax credit to purchase coverage through your state’s insurance exchange or the federal Health Insurance Marketplace, you want to be prepared to appeal the determination and avoid any possible associated tax penalties.

Personnel Information

Store employment history information such as offer letters, original applications, resumes, performance reviews, disciplinary actions and other documentations of employees’ status in individual personnel files. This is especially important in case challenges come up later. If you don’t have changes on file, it will be your word against the employee’s regarding a demotion, discipline or alleged retaliation. Having strong personnel records can help protect your company in the event of an Equal Employment Opportunity Commission claim or alleged ERISA violation, for example.

Knowing how and where to file different personnel forms is more than just good record-keeping. In the event of an audit or lawsuit, it can protect your business’s future.

Need some guidance on how to store personnel files? Contact us! We’re ready to help.

HR Solutions is a human resources outsourcing firm based in Baton Rouge, Louisiana. We eliminate human resources headaches for businesses with 10 to 1,000 employees by handling their payroll, employee benefits, regulatory compliance and other staffing needs. Contact us to learn how we can streamline your company’s human resources function to save money and reduce risk.

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