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Start the new year with new system for employee records

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in Centerpiece,HR Management,Human Resources,Office Management,Records Retention

by Gail Bisbee

The next time you start to slide a document about an em­­ployee into an overstuffed folder, ask yourself: Do I need to create a new file? It’s not because the folder is filled to the gills. It’s because federal and state laws require businesses to keep separate files for a variety of employee records.

Too many HR files consist of fat folders organized just as they always have been: one per employee, with the most recent documentation at the front and every other piece of paper relating to that employee from day one behind it.

New year, new system

Make a fresh start in 2012 by creating a new employee record-keeping system. Whether you’re going to stick with paper files, create computer-based folders or go high-tech and store your records in the cloud, you need to create at least four separate sets of records for each employee:

•    A personnel file that outlines basic information: name, address, phone number, emergency contacts, Social Security number and anything else that’s specific to the employee.

•    A payroll file containing salary information, benefits, pay rate changes and other legal documentation that affects the employee’s paycheck.

•    A medical file. HIPAA requires employee medical information to be maintained and kept confidentially. Information about health insurance, life insurance, medical leave or other documents containing private medical information goes in this file.

•    An I-9 form file. You must have an I-9 form on file for every employee you hire. It’s the document that verifies the employee is legally authorized to work in the United States. I-9 files must be kept separately from all other confidential employee files.

Separating and maintaining employees’ files helps ensure that you’re in compliance with federal regulations and that files are secure and will be managed appropriately. A good records-management system can also protect your organization in the event of an audit or litigation. Plus, it keeps employee information from getting into the wrong hands.

6 tips for a filing makeover

Here are six tips that might help you get your employee records into good, legal shape:

1. Keep track—in writing—of any decisions related to an employee’s hiring, initial training, ongoing training and disciplinary action. If you find that what you’re doing doesn’t jibe with the policies in your employee handbook, align them ASAP.

2. Know how long you must legally hang on to each document you put in an employee file. Often, it’s seven years.

3. Create a checklist—either electronic or on paper—that shows HR colleagues what they need to record and keep; how to document that information; and how long to hold onto it.

4. Choose an electronic format that you know you’ll have access to in seven years. That ensures you will be able to retrieve those records when you need them. Any­­thing currently saved to floppy discs or CDs is outdated. Word-processing programs are updated so frequently that a document you create today might be irretrievable in seven years. Best bet: Convert documents to pictures (formats like .jpg or .tif) or to .pdf files.

5. Keep it confidential. Store files so that managers or HR pros who need access to payroll or personnel information don’t have access to medical information.

6. Develop a secure system for destroying employee records once you do not have to legally retain them. Consider not only paper files or even computer-based records, but the hard drives of computers you take out of service and any copies that employees might have saved to mobile devices, home-office computers or even a copy machine with a memory.

There’s an old management saying: “If it’s not documented, it’s not done.” That’s the premise of the law. If you don’t have the documentation and you haven’t trained your staff about documentation, then you won’t have what you need when you need it—during an audit or a legal action.


Author: Gail Bisbee is president of Confidential Records Management Co. in New Bern, N.C. Contact her at (866) 490-4372.

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{ 1 comment… read it below or add one }

Larry January 12, 2012 at 10:46 am

In the article you state:
“It’s because federal and state laws require businesses to keep separate files for a variety of employee records.” and “Separating and maintaining employees’ files helps ensure that you’re in compliance with federal regulations…”

Can you provide citations of the laws that require the separation of data as outlined in the article? Personnel, Payroll, Medical (including life insurance) and I-9?

I understand this the stated information may be a desired practice, but I’m unaware of any requirement to separate this information (except the I-9) as long as ALL information is protected to the highest level of any requirement, which is likely associated with HIPAA or PII.


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