From the May 1998 issue of Entrepreneur

They may not be as exciting as the X-Files, but employee personnel files deserve some serious attention. Properly maintained files can protect you in the event of litigation; give you guidance in making promotion, compensation and other management decisions; and, in general, help you run a more efficient organization. In contrast, careless record-keeping can get you in trouble in these same situations.

So what should be kept in an employee's personnel file? Laura M. Smith, an attorney with Wessels & Pautsch PC in St. Charles, Illinois, suggests keeping the following documents in each employee's general file:

  • employment application
  • pre-employment nonmedical testing materials
  • performance evaluations
  • records of payroll changes
  • records of promotions and demotions
  • attendance record
  • records of disciplinary actions

To protect employees' privacy, medical information must be maintained in a separate, confidential file. Smith says access to these files should be restricted to supervisors and managers who need to be informed of work-related restrictions or the need for disability accommodations, medical and safety personnel who need access in appropriate circumstances, government agencies investigating charges of disability discrimination, and state agencies or insurance companies investigating claims for workers' compensation benefits.

Because personnel files contain information that can have a tremendous impact on an individual's future, both with your company and elsewhere, most states have enacted legislation that gives employees the right to review the contents of their files. Although you may place some restrictions on this process, it's a good idea to check with an employment-law attorney to make sure you aren't violating any laws in doing so. Also, before providing any information from a personnel file to a third party, have the employee sign a release stating that no legal action will be taken against you or your company for releasing the documents.

Contact Sources

Wessel & Pautsch PC, (630) 377-1554, http://www.w-p.com