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How To Organize Employee Records And Remain Compliant

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Last Updated on March 8, 2023 / Recordkeeping

Image of hanging files with colored tabs representing employee records files

HR Question:

Now that we’ve started another new year, I’d like to organize our employee records, but I’m not sure where to start. Should I keep employee records in filing cabinets or should I create electronic records? Can you provide some guidance?

HR Answer:

Before you put yet another document into an overstuffed employee file, make a fresh start by reevaluating your current employee record-keeping system. If you are using paper files, consider color-coding the files for easy access. Whether you’re going to stick with paper files, create electronic files, or store your records in the cloud, it is recommended that you create separate sets of records based on the information you are storing. Some recommend up to five separate sets of employee records. Of course, there is some leeway in employee records storage, so below are some considerations on file separation as you organize your own records.

 Create 5 Separate Sets of Records

  1. Personnel File: Outlines basic information such as name, address, phone number, emergency contacts, Social Security number, and anything else that’s specific to the employee. This is the “main file” that includes such things as the employment application, personnel data (or action) forms, offer letter, job description, policy acknowledgments, disciplinary documentation, performance management forms, etc.
  2. Medical File: HIPAA requires employee medical information to be maintained and kept confidential in a separate and secured file. It is recommended they are kept in a different drawer or area other than the personnel file and should never be released to supervisors or other inquiring parties. Documents that would be stored in this file include things such as drug/alcohol screening forms, physician notes, disability claim information, and FMLA data if it is due to an employee’s serious health condition.
  3. Confidential – Non-Medical File: Includes non-medical records that require confidentiality and should be stored separately to protect against discrimination based upon any protected status. Many employers like to keep any information regarding an employee’s criminal background check in this confidential file as well as items such as EEO self-identification forms, information on garnishments or child support, and any information related to discrimination or harassment claims. We recommend a subcategory file of Compensation and Benefits containing salary information, benefits, pay rate changes, and other legal documentation that affects the employee’s paycheck.
  4. Form I-9 File:  All employees are required to have an I-9 form on file with their employer. It is recommended that these I-9 forms are maintained in a separate file in the event of an audit by the Department of Homeland Security. US Citizenship and Immigration Services (USCIS) provides guidance on the best practice for storing these forms. If you stumble upon I-9 Form mistakes, here’s what you should do.
  5. Candidates Not Hired File: Contains documentation during the recruiting phase for candidates relating to decisions of no-hire, including the position(s) for which the candidate applied. This is not part of the actual “Employee File” but rather part of your applicant tracking records in the event of discriminatory hiring claims.

BONUS! We’re offering a FREE Recordkeeping Desktop Reference that includes everything you need to organize your employment files, including how they should be stored, who can have access to each file, and how long each file should be retained.

Don’t miss out on this awesome resource – download it today!

Download a FREE Recordkeeping Desktop Reference

Tips on Maintaining Employee Records

Separating and maintaining employees’ files helps ensure that you’re in compliance with federal regulations and that files are secure and will be managed appropriately. A good records-management system can also protect your organization in the event of an audit or litigation.

Here are some tips that can help you to organize employee records:

  • Document all decisions related to an employee’s hiring, initial training, ongoing training, and disciplinary action. Store the documents in the appropriate file folder.
  • Know how long you must legally keep each document you put in an employee file. Our Recordkeeping Desktop Reference can help you stay compliant with document retention.
  • Create a checklist (either electronic or on paper) showing what needs to be recorded and kept, how to document that information, and how long to keep it.
  • Choosing an electronic format for record storage ensures you will be able to retrieve employee records when you need them. Setting up a standard for naming these electronic files will also help with quick retrieval of the records.
  • Records, whether on paper or electronic, need to be stored securely. Full access should be limited to HR only. Managers may need limited access. File folders should be kept in a secured area in locked cabinets. Electronic files should be password protected and secured further by enlisting the help of your IT Department.
  • Develop a secure system for destroying employee records once you do not have to legally retain them. Consider not only paper files or computer-based records, but also consider the hard drives of computers you take out of service and any copies that employees might have saved to mobile devices or home-office computers.
  • Some organizations may need to maintain additional documents (i.e., safety training) to report to government agencies. These should be kept in a separate and secure file for each type of record along with their corresponding reports.

For some HR professionals, recordkeeping isn’t an exciting part of their job, but it certainly is an important one to do correctly to protect your organization.

Thank you to Janine Cummings, PHR, SHRM-CP, HR Business Advisor, Patti Dunham, MBA, MA, SPHR, SHRM-SCP, Director of HR Business Solutions, and Sherri Hume, SHRM-CP, HR Business Advisor, for contributing to this HR Question of the Week.

Recordkeeping is full of “if this, then that” situations. You will often hear us say “it depends” when asking about employee files and recordkeeping. Keep the guesswork out of keeping your files in order and up-to-date. Strategic HR has a handy Recordkeeping Desktop Reference that outlines the employee documents you should have on file and how long to keep them. Learn more about our HR HR Compliance & Recordkeeping Services or Contact Us for help!