Sea Bright Enterprises, Inc.

Every employer, at one time or another, has asked several questions regarding records and files of employees. What records must be kept? How long must we keep the files? Who is entitled to see or review the files? Having the correct answers to these questions can be of great assistance if your company is audited by a regulatory agency or when your employee reviews his or her file.

What must be kept?

The easy answer to this question is “everything that applies to that employee”. This includes applications for employment, pay records, advancement or promotion documentation, attendance records, performance appraisals, disciplinary warnings or actions etc. However, be careful and pay close attention to what goes into the files, they’re not as private as you might think. Employees have the right to inspect their own personnel files. Don’t put unsubstantiated derogatory comments or unnecessary information in the files. Any comments about performance, including performance appraisals or warnings should show evidence that a discussion regarding the appraisals or warnings occurred with the employee. One cardinal rule – do not make any notations on the employee’s application.

How long must files be kept?
 
The Department of Labor [DOL] in the Code of Federal Regulations sets forth the guidelines and general requirements concerning the contents of personnel files and the length of time they must be kept. The code is very specific with regard to what records an employer must keep and for what length of time. For example, basic employment and earnings records, which includes ‘time and earning cards”, wage rate tables, and records of additions to or deductions from wages paid, need be kept only two years. Payroll records, employment contracts and written agreements or memoranda summarizing the terms of oral agreements must be kept for three years. In a recent discussion with the Wage and Hour Division of the DOL, we were advised that a three-year holding period would satisfy their requirements. Before destroying any records, we would recommend checking with counsel to make certain that you are meeting the requirements of other agencies, EEOC, DOT etc.

Who is entitled to see the files?
 
The answer to this question may vary depending on the state in which business is located. Federal laws and state statutes govern the amount of access an employee may have to their own personnel files including time and place of access, whether the employee has the right to make copies of documents in the file, and if the employee can make corrections to the file or seek removal of certain documents and/or insert explanations. In California, for example, employees can inspect the records and take notes but the employer can require an appointment and advance notice for any review. It may be more practical to allow the employee to have copies of records, especially those, which include the employee’s signature, rather than allow a lengthy period of note taking. We would recommend that you do not show or pass on any personnel files to job applicants, employee relatives, union representatives or lawyers unless the request is accompanied by a subpoena. This issue is of such importance that at least sixteen states have laws on the subject including, in several states, the employee’s right to insert rebuttal information into the file if they feel that anything is not accurate.

Conclusion

Institute a process for establishing and maintaining personnel files which, of course, should be kept in a secure location. Each employer should consult with their counsel for assistance to make certain that the appropriate statutes and laws are being followed.