Good Personnel Records—An Employer Must

Keeping employee records is a chore a lot of employers don't like to do. It costs money rather than making any, and it's detailed, demanding, tedious work. But good personnel records can be an employer's front line in many sorts of legal action an employee could bring against the company. Let’s say an employees sues your company for discrimination, saying that he or she was fired because of religion (or race or gender or age, etc.) instead of, as you insist, because of poor performance. If you have the person's personnel records and they were kept properly, you can prove your story. But if they've never been made or were disposed of, you have no backup at all. And courts will, by law, accept employees’ allegations if employers do not have records supporting their defense.

For example, in a recent U.S. 2nd Circuit Court of Appeals case, an employee claimed she was fired on the basis of her sex and age. The employer, on the other hand, said she was a poor performer. But as soon as she had been fired, the employer had tossed her records—so how could the employer make its case? The jury was permitted by law to believe that the destroyed records would have supported the employee's case and awarded her more than $200,000 in compensatory damages, and punitive damages as well.

Generally employers know about maintaining records tied to federal or state statutes, but may not be so sure about miscellaneous ones—hiring materials, notes about interviews, reference checks, evaluations, and documentation of disciplinary discussions. Although there are no laws requiring employers to make many of these records, they need to do so for their own protection, and they need to maintain them well. Records can be discarded periodically, as long as they are kept for the period during which discrimination complaints may be made. Check your state laws about these time frames. (Subscribers to BLR’s What to Do about Personnel Problems can look up this information in the state RECORDS section of their book.)

Ads and Applications.
Employers should keep advertisements for all jobs they advertise and all applications they receive—even those from persons not hired. They should keep resumes and notes about interviews. If the person they hired is a better choice for the qualifications, or those not hired don't meet the qualifications, they are far less vulnerable to complaints of prejudice or bias.

The Personnel File.
All job-related documents should be kept in an employee's personnel file. These include:
• A job description, with details about tasks and criteria
• The job application and resume
• The offer letter
• Performance evaluations
• Notes about disciplinary actions and reasons behind them
• Awards, bonus records, letters of commendation
• Complaints
• Contracts and any agreements (e.g., loan repayment agreements)
• Payroll records

What should not be in a personnel file.
Whatever is not job-related should not be in the file. Do not include (or keep anywhere) notes about an employee's personality, appearance, friends, social life, politics, or religious preferences. Skip rumors. In other words, don't put in the personnel file anything you wouldn't want a juror to see—if that should ever happen.

Testing notes.
Any record of employment testing that is used to make a decision about an employee should be maintained. Records must be kept for all employees that take employment-related tests. Also, it is critical that the employer have documentation regarding the validity of the test in terms of measuring ability to do the job—i.e., that the test really does what it's purported to do.

Layoffs.
Employers planning a reduction in force should keep good records, documenting the reasons for the layoff and reasons that particular employees are chosen to be let go. The selection should be based on job-related criteria that can be supported if the employer wants to avoid discrimination lawsuits. There should be records for each employee chosen to remain, or be laid off, assessing them against the job-related criteria.

Confidential records.
It would be convenient to keep all employee records together, but there are laws requiring certain records to be held separately. Medical records, records of exposure to toxic materials, family leave information, and disability records must be kept separately from other personnel records and from each other. Although I-9s are not required to be held separately by law, it is always best to do so.

How to keep them.
These days, personnel records may be kept in any form, including paper or electronic form. But it is very important that the integrity and confidentiality of the records is maintained, and only those with a supportable "need to know" may be allowed to review them. On the other hand, in almost all states, an employee may review his or her own records, so however the records are maintained, the employee must be provided the equipment to review (and sometimes copy) them. If the records are on computer files, the employer must develop a fail-safe backup plan for access and review of the electronic files.

Tips for employers.
• Keep notes factual. Destroy subjective notes.
• If an employee wants to see his or her file, don't remove anything from it before honoring the request.
• If possible, give one employee or department the responsibility for employee files.
• Allow as few people as possible to see a file.
• Train supervisors in properly keeping personnel records.
• Establish very tight security

From Business and Legal Reports