From the moment an applicant submits a resume, you begin building a file
It's filled with paperwork including background checks, applications, W-4s, and I-9s. If you're lucky, your office is paperless, and the clutter is merely bogging down your storage capacity. But if you're not entirely paperless yet, you might have file cabinets full of documents on every applicant and employee to ever grace the inside of your office's four walls. How long do you have to hold onto them?
What's in the Record?
Several documents make up an employee file. Some companies tend to keep all records together in one location, but it is best if specific reports are in one file, others in another, and a few stragglers in a third. This is because of sensitive information and who can have access to it when requested. For instance, if a supervisor is interested in reviewing performance evals, they shouldn't also be able to see medical records, because that is much more sensitive information.
Main File
- Documents related to recruitment and onboarding (resumes, applications, transcripts, job description, the job offer)
- Paperwork regarding employee's contracts with the company (compensation, commission rates, promotions/demotions, transfers, and continued education or professional license records, acknowledgment of company policies and procedures, etc.)
- Documentation surrounding performance (reviews, goals, letters of praise or recognition, disciplinary actions, peer evaluations)
- Termination records whether voluntary or involuntary (letters of resignation, notice of termination, severance materials, exit interview)
Higher Security File
- Information regarding employee work history (reference checks, employment or payroll verification requests, investigations into the employee)
- Personal information (background checks, drug test results, medical information, insurance records, benefits enrollment paperwork, worker's compensation claims, and doctor's notes)
- Additional sensitive information (EEO forms, I-9, garnishments, and litigation files)
Final File
Recordkeeping in this file should contain any additional documents such as I-9 audits and should be readily available for presentation upon request by someone with clearance.
If your company pulls credit reports on applicants or employees, it is required by law that those records are not stored, but rather destroyed via shredding, according to the Fair and Accurate Credit Transactions (FACT) Act.
Remember, this separation is designed for the safekeeping of personnel records to ensure adequate privacy and nondiscrimination of any employee or applicant. Regardless of your office's file system, it is crucial to protect these documents from access by just anyone.
Note: While the minimum required time to keep employee files is listed below, if at any point there is a lawsuit, event, or case regarding an employee, it would be wise to maintain the archives for a few years post-case.
Federal Requirements
Generally speaking, Federal Law requires employee personnel records to remain with the company for three years post-termination. There are a few specific forms that can have shorter or longer suggested hold times, however, three years is the safe bet. Be sure to include time records are stored elsewhere (storage unit, with an attorney, etc.) in your total time stored.
Documents with Longer Hold Times:
If there is anything to hold onto longer, it would be health/pension/benefits information. Retain these files for six years post-term.
Records of workplace injuries should be kept for five years post-term.
Documentation surrounding any illness or injury due to work environment (OSHA claims), is a minimum 30 years post-term!
State Requirements:
Each state has separate requirements for minimum length of time to maintain records. The state requirements tend to be more stringent, so do verify your state's requirements.
In Georgia, variances included maintaining background checks for seven years, and ten years for health/pension/benefits information.
In South Carolina, the minimum requirement for maintaining personnel records is 15 years! Talk about CYA...
In Tennessee, however, the state does not dictate a minimum requirement and therefore, defaults to the federal requirements.
Neighboring states at opposite ends of the spectrum!
To find your state's requirements, visit the website of the Secretary of State. Usually, you can type sos.ST.gov, where ST is your state's abbreviation, and navigate to recordkeeping requirements, or use your favorite search engine.
Destruction of Files
Depending on the size of your company, schedule annual, semi-annual or quarterly dates for file destruction, to ensure compliance, cut down on storage cost, and relieve your responsibilities of recordkeeping. Paper documents should be shredded by a third party company that complies with approved record destruction regulations. Electronic files should be erased and the hard drive reformatted according to the Department of Defense. For assistance, please contact your IT professional.
It is always best to hold onto essential documents for as long as you can, but the sheer volume can be overwhelming, and at some point, you've just got to let it go. If you need help automating personnel files, definitely look into electronic storage for peace of mind without the clutter, and ask your HCM provider how they can help with electronic recordkeeping.
Disclaimer: The information contained in this document has been compiled from trusted resources and is being presented as a guide for best practices. It does not replace consultation with a professional in the tax or legal field, and it is highly recommended that you seek professional assistance should you have any questions regarding tax or legal matters.
