[Workplace] Personnel Files: Friends Or Foes?

Personnel files are intended to establish a location for all of the job-related, historical documents that a company acquires on an individual employee. By now, most employers are aware that labor attorneys and government investigators rely heavily on personnel file documentation to build their cases against employers.

Because personnel files contain job-related documentation that can be used to make employment decisions (promotions, terminations, transfers and the like), one agency in particular — the Equal Employment Opportunity Commission (the federal agency that regulates fair employment in the workplace, also known as the "EEOC") — has a vested interest in personnel file documentation. Of course, in addition to the EEOC, there are a number of other federal agencies with regulations that address recordkeeping. To properly position your company to defend a discrimination claim or lawsuit, you must ensure that your personnel files are maintained in a manner consistent with all regulatory enforcement principles and provisions.

To reduce the liabilities associated with personnel files, most businesses create two separate files: a "personnel file" and a "confidential file." The personnel files are used to make employment-related decisions and contain documents and information that are strictly job-related, such as the application form, disciplinary notices, performance appraisals, dates of pay increases, pay rates and others. The confidential files should not be used to make employment-related decisions and contain documents and information that could be considered potentially discriminatory, such as information referencing race, creed, color, sex, religion, age, national origin, disabilities or other protected classes defined by state fair employment regulations. By removing this type of information from your personnel files, you can eliminate one source of liability and strengthen your compliance posture.

PERSONNEL FILE DOCUMENTS. Specifically, your personnel files should contain the following documents (assuming these documents do not reveal information related to one of the protected classes):

• Employment application

• Resume

• Pre-employment profile/test results

• Conditional job offer letter

• Performance appraisals

• Historical summary of pay increases

• Employee acknowledgment of 90-day introductory period

• Attendance records

• W-4 (although this document contains martial status, it is a generally accepted practice to maintain it in the traditional personnel file)

• Employee coaching and disciplinary action notices

• Commendations

• Job descriptions

• Receipt for employee handbook

• Records of seminars and workshops attended

• Training records

• Return-to-work statements from health-care providers

• Payroll deduction authorizations or change notices

• Change in job status forms

• Termination/separation reports

• Resignation letters

• Other job-related documents

CONFIDENTIAL FILE DOCUMENTS. Your confidential files should contain the following documents:

• Criminal background records

• Motor vehicle records

• Reference check documentation (Although these documents may not contain protected information, many employers that allow employee access to the personnel file are sensitive about employees reviewing comments made by previous employers.)

• Drug test results

• Background inquiry release form

• Health or medical records or health histories (To limit liability, these should request only job-related information.)

• FMLA forms

• Results of investigations related to the employee

• Workers’ compensation claims and background checks

• Health insurance enrollment forms

• Life, disability, 401(k), profit sharing or other documents with birth date, race, sex and other protected information

• Pictures of employees for photo identification cards

• Copies of driver’s licenses

FILE SECURITY AND PRIVACY. There is no federal privacy law covering the private sector nor is there any uniform definition of what constitutes an invasion of privacy. Consequently, there is much debate over file contents, access to medical records, release of personnel file documents and information, and, lately, even requests for social security numbers, which are required for reporting taxes and for criminal background inquiries. To limit liability, employers should become familiar with and abide by any state requirements related to employee record-keeping and should implement a "need-to-know" policy that identifies persons who may have access to employee records.

Typically, companies allow personnel files to be accessed by human resource professionals, owners and managers who are responsible for conducting a performance and/or pay review. Confidential file access should be strictly limited to only owners and human resource/benefit professionals. Both files should be retained in securely locked files.

Because of the recent sensitivity surrounding personal information maintained in employer files, many companies have implemented privacy and employee records policies that communicate what types of records are retained, how they are retained, who has access and how information is provided to legally authorized or company-authorized entities (for example, auditors). If you elect to implement a policy of this nature, it should be added to your employee handbook.

PERSONNEL FILE ACCESS. More than 12 states have enacted laws or regulations that give private-sector employees the right to inspect their personnel records, although that right is seldom absolute.

For example, employers in some states legally may impose reasonable restrictions on employees’ right of access (e.g., time, place or frequency of the review or review in the presence of a designated employer representative). Some state regulations permit employees to obtain copies of their files and some state regulations apply only to employers with a minimum number of employees or to employees with a minimum length of service. Among the states with regulations, there are also those that limit third-party disclosure and that allow for reasonable fees to be charged to the employee for copying the file. The wording and provisions of state laws that address access to personnel files vary.

Prior to developing a policy or practice related to personnel file access, employers should consult a human resource or other professional with knowledge and understanding of these employment-related regulations.

FINAL POINTER. No wonder there is so much confusion about personnel files! Even so, employment-related documentation is absolutely essential to meet the burden of proof required by government agencies and to justify your employment-related decisions. So what’s the bottom line? Don’t guess when it comes to your company’s personnel file practices. Improper maintenance and retention of employee information can expose your organization to a variety of legal problems — and it’s not likely that these regulations will go away. In light of growing privacy concerns, employers should anticipate expanded coverage.

The author is president of Seawright & Associates Inc., Winter Park, Fla. She can be contacted at jseawright@pctonline.com or 407/645-2433.