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The basic management of personnel files used to be pretty simple: Collect some basic information and stick the files on a shelf somewhere. Today, the matter of collecting and storing private employee information is not as simple, even with the available option of going digital.
For example, today’s employers and human resources managers have to track immigration forms, Equal Opportunity Employment records, hiring records (including interview notes), payroll and tax records, medical records, investigation or litigation records. Those have to be separated from job descriptions and records related to promotions, demotions, discipline and termination, as well as performance evaluations, education and training documents and letters of recognition. That adds up to a mass of files and hundreds of hours of storing, sorting and tracking.
So companies have to be on the lookout to ensure they are following the law and to avoid the increasingly common business mistake of not including the right information or of improperly storing their personnel files. “You can create the potential for litigation if personnel files are not properly maintained — litigation against private parties; but governmental entities could also bring adverse actions in some circumstances,” says Samuel Coffman of Dickinson Wright law firm in Phoenix. “The issue can get more complicated as companies move toward electronic storage.”
Sherry Downer of Fennemore Craig law firm, which has offices in Phoenix, Tucson and Nogales, represents companies on employment matters and helps them understand how critical it is to properly maintain files — from documenting employee performance to making sure that documentation is filed in the proper place and is accessed by the right people. “Documenting personnel matters, first of all, is especially critical. And once you’ve documented what’s going on, employers need to make sure that that documentation is properly maintained,” Downer says. “So the actual documentation and the maintaining of the personnel file is important because it impacts the employer’s ability to manage and discipline employees. Also, it affects their ability to make personnel decisions and can affect audits and employee claims.”
So it follows that if an employer fires someone, he’d better have documented a record of poor performance and properly stored the file. Downer notes that juries aren’t typically sympathetic to companies whose personnel file management isn’t up to snuff. “I’m aware of past studies showing that 90 percent of jurors believe the company’s negligent if it does not properly document performance problems,” she says.
One of the more common mistakes made by employers, according to Downer, is the improper storage of medical and confidential files and restricting who has access to that information. “Some medical and confidential files should be kept separately from the regular personnel file, and then access to that medical confidential file should be restricted to those only with a need to know,” she says.
Improper security, maintenance and storage of medical files can be rife with potential legal nightmares. Coffman points out a potential discrimination claim could come from an employee whose employer had private medical information in a file and allowed a supervisor to access to it. The supervisor, acting on that medical information, might take adverse action against the employee as a result, opening the possibility of a legal claim by the employee.
In fact, Coffman cites the storage of medical records as the most common example of improper file storage. Smaller companies tend to “throw everything in sort of one bag,” he says. “Most problematic is the area of not keeping medical records separate. You can have problems that arise under federal regulations, which are HIPAA [Health Insurance Portability and Accountability Act]. So that’s a potential problem. If you do drug testing under Arizona law, those results are to be kept separate. So sometimes I think that people, particularly smaller companies, don’t look at the nuances of what goes in a personnel file and what doesn’t.”
How companies decide to store their files can vary. The key is being aware of and following legal requirements. Says Downer, “Employers often have their own unique file practices. It may be paper, it may electronic, it may be a combination of both — but what’s most important is not necessarily the number of people overseeing the storage system but the actual maintenance, security and access requirements that are established and followed.”
Personnel File No-Nos
The following documents should not be kept in the personnel file:
- Immigration Form (I-9) and related documentation
- Equal Employment Opportunity (EEO) records
- Hiring records, such as subjective interview notes, employment test results and
background checks - Payroll and tax records
- Medical, insurance and benefits records and workers’ compensation injury claims, such as medical questionnaires, benefit enrollment forms and claims, and doctors notes
- Investigation or litigation records and court orders — in fact, court orders relating to child support or garnishments should also be maintained separately
D. Samuel Coffman is an attorney with Dickinson Wright in Phoenix. He practices primarily in the area of employment law, including the representation of private businesses, tribal entities, including casinos and telephone companies, and municipalities. His practice emphasizes advising and defending employers in employment-related law and litigation.
Sherry Janssen Downer is a director with Fennemore Craig in Tucson. She practices in the areas of employment and labor law, commercial and business litigation, and professional liability, including representing companies in litigation before courts and administrative agencies on a variety of business and employment disputes.
