Over the years, I have spoken to hundreds of small business owners. I have been surprised how many of them do not have adequate personnel files for their employees. Some have an application, many do not even have that!
Why Have A Personnel File? This file is a track record of important paperwork for your employees. These records can be subpoenaed in case of a wrongful termination lawsuit. I recently had an insured who fired Susan for poor job performance. The owner had given Susan three performance reviews in the last year, all of which were poor. He fired her and gave her two weeks severance pay. Suddenly he received a letter from Susan’s attorney stating that Susan was fired because of age discrimination. When the business owner went to the personnel file, he found he neglected to put the negative reviews in her file. This became a “he said, she said” situation. Clear records would have helped defend the owner’s actions. We have seen a rise in worker compensation claims. Many could be avoided or reduced if proper records had been maintained.
What Should Go In The Personnel File?
• Job description
• References and/or background check
• Emergency contact information
• IRS tax withholding form
• Payroll information and hire date
• Any forms relating to employees benefits
• I-9 forms. Professionals differ on whether they should be kept in the individual’s file
• Performance evaluations good and bad
• Disciplinary actions
• Complaints and compliments received about the employee
• Salary records as well as attendance record
Experts suggest the following items should NOT be kept in the personnel file: Medical information and payroll records. They are referring to your entire payroll information, for all employees, should be kept elsewhere. In addition, these personnel files should only include FACTS. Not your thoughts. Paper trails are important, but they must be substantiated.
Recreate Personnel Files. Now is the time to look at your personnel files for your current employees. I know it probably seems like a mammoth task but it is doable. Take an inventory of each file. If you don’t have a file, start now. See what is in the files. The next step is checking to see what is missing. Make a list for each employee. You can customize your own checklist or go online and you will find a checklist already available to you (www.fitssmallbusiness.com/personnel-file)
Hold a meeting with your employees and explain how important it is to update their files. Give each employee a list of what you need – emergency contact information, etc. Follow up with your employees if they do not give the missing information to you.
With new employees, set up the file as indicated above. It will become easier as you go on but this is an invaluable tool for your business. And of course, store these records in a secure location.