Employee record keeping is one of the core functions of HR. Each new hire generates various documents, and some are essential while others can be thrown out right away. Each employee document should be handled with care for the most part since it's an official company record.
To help you determine the best approach, here's everything you need to know about employee record keeping.
Which Employee Records Should You Keep?
There are different employee records, and it's important to know which ones to keep.
Personnel Files
Personnel files contain various details about the employee, and documents are generated even before the employee gets hired. For instance, you can find recruitment material such as training checklists, background checks, and employee handbook acceptance forms.
In addition, personnel files can contain anything from performance reviews and promotions to separation records and employee contracts.
Each file should contain basic details such as employee contact information and address. If there are any complaints or lawsuits on file, then it's imperative to retain that personnel file until the case is resolved, in case some of the documents will need to be used as evidence.
Payroll Files
As expected, payroll documents contain information about an employee's salary and benefits. Other payroll documents include time cards, payroll tax records, and other payroll documents. Various state and federal laws protect these payroll files so keeping them is a matter of necessity if you want to comply with the applicable laws.
Medical Files
An employee's medical file typically contains documents, such as application forms for health insurance as well as any other medical records. Medical information about employees' family members may also need to be retained.
Generally, the list of medical files or documents that need to be retained includes doctor's notes, accident records, worker's compensation claims, injury reports, and other medical information.
Other Employee Records
Other files that need to be kept separately include I-9 forms, which are used to verify if someone is eligible for employment in the US. It's crucial to keep these files because you never know when an auditor might ask for them to check that you're compliant with immigration and employment laws.
Overall, keeping up-to-date employee records not only ensures that you are compliant but it also works to your advantage should you need proof when resolving a dispute or during an audit.
What Are The Rules and Regulations Surrounding Employee Record Keeping?
Remember that legal requirements for employee record keeping vary from state to state, but generally, federal regulations apply to every employer. Here's a quick guideline on how long you should keep employee records.
- Personnel records. According to EEOC, personnel records should be kept for one to two years.
- Payroll records. The Age Discrimination in Employment Act (ADEA) requires that employers keep records for three years. This is the same amount of time enforced by the Fair Labor Standards Act (FLSA). Most payroll documents should be kept for three to seven years.
- Medical records. Most medical records should be kept for one year and stored safely and separately. However, records like accident injury records need to be kept for five years, while hazardous exposure records must be retained for up to 30 years.
- I-9 forms. As mentioned, these should be kept in a separate file. Generally, these forms should be kept for three years after the date of hire or one year after termination of employment, depending on which comes first.
Failure to keep employee records as required can result in citations and costly fines. After all, you never know when a federal agency like the IRS or USCIS will ask for documents that are supposed to be in your employee personnel files. So it's essential to adhere to the timelines specified by federal employment laws.
Not keeping employee records might also leave you vulnerable in case of a lawsuit since you'll be unable to provide the records required by the court. Since employment laws and regulations are subject to change, it's always a good idea to verify the information above with relevant experts and professionals to ensure you remain compliant throughout.
How To Set Up An Effective Employee Record Keeping System
Here are the top tips to help you figure out how to maintain employee records correctly and efficiently.
Maintain Physical Records The Right Way
Although maintaining physical records is not as common or popular due to technological advances, small and medium-sized businesses with a smaller workforce can get by without an electronic employee record keeping system. In that case, the company will keep hard copy employee records in filing cabinets.
However, things can get a little tricky if the business continues to expand, as this will mean more paperwork that's hard to keep track of. Physical records may require additional filing cabinets that take up a lot of space, and they're also easily lost or destroyed.
Use the Right Employee Record Keeping Software
The easiest way to maintain employee records is by keeping things electronic and using efficient employee record keeping software. For instance, having a centralized database where you store records means that HR doesn't have to spend much time keeping things organized.
Instead, it's much easier to locate and access documents anywhere, anytime, plus it means less paper which helps you meet your sustainability goals.
Create a Comprehensive Employee Records Management Plan
The critical thing when maintaining employee records is to be consistent and thorough. For instance, you can use an employee record keeping template or checklist to ensure you haven't missed anything from the flow of employee information that your company constantly generates.
This will go a long way towards guaranteeing legal compliance while also providing valuable insights that will help you develop more effective HR policies and practices.
Ensure That Employee Records Are Safe and Secure
According to federal law, an employer must ensure that employee information is stored safely to protect employee privacy. If your organization doesn't implement the right safeguards to protect sensitive information, there may be severe and damaging consequences, such as employee complaints and data breaches leading to identity theft.
To avoid this, be sure to develop a tried and tested plan that protects employee privacy.
Dispose of Employee Records Properly
The truth is, you can't keep all employee records forever. So you need to come up with a plan for disposing of employee records properly once you're no longer required to keep them.
Remember, you still need to make sure that the sensitive information in these records does not fall into the wrong hands. So you can't just dispose of employee records together with the rest of your trash if you want to avoid fines, lawsuits, or other negative consequences.
Instead, it's better to destroy all paper files so they're unreadable and unusable. For instance, you can shred or burn them. Similarly, employers should erase all electronic employee records they no longer need to keep.
Frequently Asked Questions About Employee Record Keeping
Here's more information that can help you with your employee record keeping efforts:
- Can I use spreadsheets for record keeping? - Yes, spreadsheets can help you manage your records more efficiently than keeping physical records. However, it's easier and quicker to use more advanced and tailored software.
- Can I keep records beyond the required retention dates? - Yes, it's better to be safe than sorry, especially if you suspect that some documents may be needed in a lawsuit, such as when an employee files a complaint.
- Do employees have access to these records? - The level of access you grant your employees depends on state laws and company policy. In most instances, employees can access some information while some details will be restricted.
- What happens if the employee disputes the information on file? - In that case, you can check if there's a state law that provides a procedure to follow or if it's up to you to establish a procedure that resolves the issue.
- Who else can have access to employee records? - Generally, this information can only be accessed by HR, supervisors, government audit investigators, the court (if involved in a lawsuit), and sometimes employees.
The Final Word On Proper Maintenance Of Employee Records
There are many things to keep in mind when maintaining employee records. First, it's crucial to have a clear idea of all the rules and regulations you have to comply with to avoid any negative consequences. In addition, the sooner you start doing this task properly, the sooner you can prevent the nightmare of dealing with complex paperwork that you can't keep track of as your organization expands.
Fortunately, managing employee records doesn't have to be complicated, especially if you note what this guide covers and choose user-friendly HR software. This will help you keep tabs on all employee record keeping matters without hindering your core administrative functions.
Learn More
Need to enhance your employee management techniques? Visit our Human Resources and Employee Management section for strategies and advice.
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