What You Should Keep in Your Employees' Personnel Files

Small-business owners and human resources departments should update their employee records often. Personnel files can become evidence if a former employee believes they were wrongfully terminated. Employee personnel files must contain certain items and should not contain others.

Employment records are not an op-ed page. They are official documents and should be strictly professional. If you have questions about employee personnel legal requirements, contact a local employment law attorney.

What To Include in the Main Personnel File

The main personnel file should contain a chronological history of the employee’s job-related journey with your company. Either you or your HR department should regularly update the file to keep it current. The main file should contain:

• The offer letter
• The job application or resume
• A current job description
• Signed acknowledgments for the employee handbook and company policies
• Performance evaluations, signed by the employee
• Training records and certificates
• Disciplinary actions or warnings, signed by the employee
• Awards or commendations for job performance
• Emergency contact information
• Signed agreements (e.g., non-compete, non-disclosure, vehicle use)
• Exit interview documents (if applicable)
• Information on continuing benefits post-termination (e.g., COBRA, pension/401(k) rollover)

Some small businesses have too many employees to leave the responsibility for updating records on the owner’s shoulders.

Documents To Keep in Separate, Secure Files

While the main personnel file contains a history of an employee’s job performance, some records are too sensitive or governed by specific laws that require separate storage. Keeping these documents in separate files is not just a best practice; it’s often a legal requirement. This protects employee privacy, ensures compliance with federal law, and limits access to sensitive information.

Below are the key categories of documents you must store separately from the general personnel file.

Medical Files and Health Information

Federal laws like the Americans with Disabilities Act (ADA), the Health Insurance Portability and Accountability Act (HIPAA), and the Genetic Information Nondiscrimination Act (GINA) strictly require employers to keep employee medical records confidential and separate from their main personnel file.

This includes any document related to an employee’s health, such as:

• Doctor’s notes
• Requests for medical leave
• FMLA (Family and Medical Leave Act) paperwork
• ADA accommodation requests
• Health insurance enrollment forms

Access to this file should be severely restricted to only those with a legitimate need to know.

Form I-9 (Employment Eligibility Verification)

Government officials from agencies like Immigration and Customs Enforcement (ICE) or the Department of Labor (DOL) may need to audit your I-9 forms. Keeping them all in a single, dedicated binder or digital folder (separate from all other personnel files) makes it easy to comply with an audit request quickly and correctly. This prevents officials from accessing other confidential employee information.

Payroll and Tax Documents

This file contains documents needed for payroll processing and tax compliance. Keeping them separate from the main personnel file limits access to sensitive financial data, such as bank account numbers.

• W-4 form (Employee’s Tax Withholding Certificate)
• Direct deposit authorizations
• Time cards, attendance records, and other payroll calculation documents

If you’re not sure where a financial document should go, err on the side of caution and keep it isolated from a general file.

EEO Data and Internal Investigation Files

These records are extremely confidential, and access must be strictly controlled. They include:

• EEO Data: This includes voluntary self-identification forms regarding race, gender, veteran status, or disability. This data is collected for government reporting and must be kept separate to prevent any appearance of bias in employment decisions.
• Investigation Files: This includes all records related to internal complaints (including third-party complaints), witness statements, investigator’s notes, and disciplinary actions stemming from investigations into issues like harassment or discrimination. Confidentiality is critical to the integrity of any investigation and to protect the privacy of all parties involved.

For documents this important, consider getting legal advice from an employment law attorney on filing protocol.

Background Checks and Credit Reports

Any pre-employment screening reports, such as criminal background checks or credit reports, should be separate from an employee’s main file. The Fair Credit Reporting Act (FCRA) imposes specific rules on how employers handle consumer reports. These documents contain highly sensitive personal data and should be stored securely with limited access to ensure compliance with the FCRA and protect applicant and employee privacy.

Personnel File Recordkeeping Requirements

Some federal laws have specific document management rules employers must follow. These include:

• The Age Discrimination in Employment Act (ADEA) requires employers to keep payroll records for at least three years. Keep all employee benefit plans and seniority or merit system plans for the full term of the plan, plus one additional year.
• The Fair Labor Standards Act (FLSA) requires employers to retain payroll records for three years. Records or documents that explain the reasons for differences in wages (such as pay scales, performance reviews, seniority and merit systems, or collective bargaining agreements) must be kept for at least two years.
• The Equal Employment Opportunity Commission (EEOC) requires that employers keep all employment records for at least one year. Violation of EEOC policies can involve fines and other sanctions.

Get legal advice or check with your state’s Department of Labor when storing employee records.

How To Store and Secure Personnel Files

Here are some tips for storing and securing employee personnel files:

• Secure confidential files in a locked file cabinet in a secure location. Only human resources and those responsible for employee benefits should have access to employee information.
• Protect digital files with strong passwords, multi-factor authentication, encryption, and role-based access. Only qualified employees should have access.
• Back up digital records securely and have a plan for restoring them after a computer problem, cyberattack, or disaster. Keep the backups in a safe, secure location.
• Shred paper employee documents and delete electronic records when they are no longer required. Never leave personnel records where others can easily access them, even while waiting to be destroyed.

Whatever method you use, it must be secure and protect all confidential data, such as employee Social Security numbers and tax information.

Get Legal Help With Your Personnel Files

A good employee personnel file won’t protect you from an employee lawsuit, but it can supply evidence that you didn’t commit wrongdoing or unlawfully terminate an employee under federal or state laws. If you’re unsure about any of your employment policies or need help with your personnel files, speak with a local employment law attorney who can advise you on the best way to proceed.