When a new employee starts work, either the human resources
or payroll staff should create a personnel folder in which all employee-related
documents are stored. This folder should be capable of holding several hundred
pages of documents and have multiple dividers so that information can be
logically divided and easily accessed. Information can be grouped in a variety
of ways within the folder; here are some common subsets of information to
consider:
Deduction information. One block of
information will be the deductions related to all types of benefits, such as
medical, life, and dental insurance. This means that the sign-up or waiver
sheets for each type of insurance should be included in the folder.
Employee correspondence. Employees may
communicate with the payroll or human resources departments from time to time,
perhaps to make complaints, to notify the company of time off for various
reasons (such as jury duty), or to ask for special treatment in some manner. If
these communications are in writing, they should be included in the folder. If
they are verbal, the person receiving the information may include them in a
memo, if the matter appears sufficiently important, and store the memo in the
folder.
Employee reviews. All employee reviews
should be kept in the folder. They are particularly important if employees later
file suit against the company in the event of a termination, since the company
must be able to prove that an employee was terminated for cause. Also, note whether both the reviewer and
the employee have signed a review; if either one is missing, obtain these
signatures if possible, so that additional proof of employee receipt is
made.
Garnishment information. If there are
court orders for garnishing an employee's pay for any reason (e.g., tax levies,
creditor levies, child support, or alimony) include a copy of each one in the
folder.
Tax-related information. Tax
deductions can only be made from an employee's wages if prior written
authorization has been made by the employee. The employer should retain proof of
these requests (nearly always in the form of a W-4 form) in the
folder.
It is absolutely essential that the entire set of personnel
files for all employees be kept under the strictest security at all times. These
files contain potentially damaging information about employees, such as job
reviews, medical information, or court orders that could be embarrassing or
job-threatening if the information were to become public-knowledge. Employees
rely on the employer to keep this information confidential, and the employer
should meet this expectation.
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