Personnel Files Can Help You or Hurt You

by Michael Haberman on June 3, 2011 · 0 comments


Frequently when I work with my small business clients one of the first areas I deal with is their personnel files. Not glamourous work, but often those files are a mess. And a messy file can hurt you, in several ways. Messy files make it difficult to know what is in them, or not in them, and not knowing can lead to some nasty discoveries by a government investigator. I once came across a file filled with applications that were dated and had written comments on the applications, including one that said “Seems like a nice little black boy.” Granted it was not a personnel file, rather it was a file that was in personnel, but some of the things you find in personnel files may be just as bad.

So when I start working with clients to get their HR house in order one of the first things I do is look at how their files are organized and what is in them. Let me describe a typical file cabinet of personnel folders. Typically everything is crammed into a hanging folder. There is no separation of paperwork, no order, nor any rhyme or reason to the organization. Frequently there are mis-filings, with a form for John Smith filed in the folder for Joan Smith. Many contain every piece of paper ever associated with that employee, even if it is an excuse for being late on a Tuesday in July of 1986. Insurance enrollments are mixed in with performance evaluations, discipline notices, doctor’s excuses, injury reports, pay records, vacation requests, etc. You get the idea. In fact you may recognize this as your filing system.

Some people try to use the preprinted files folders that have all the employee information that is considered relevant printed on the actual folder with spaces to fill in the blanks. What happens with these is usually incomplete and inconsistent records. So one of my first tasks it to get the client to think about organization.

The method I use is not one I created. I adopted it from something I read long ago, so long ago that I don’t have any idea who to attribute it to. It is the Traffic Light System. What this means it that any single personnel file is actually made up of three file folders. You have a GREEN file which contains information of a general nature, a YELLOW file that has information of a more sensitive nature and has restricted access, and finally a RED file that contains information of a very sensitive nature, to which, only “need to know” access is provided. We know that HIPAA, the ADA, and the FMLA all have restrictions on how information is handled and who it can be seen by. That type of thing would go in your RED file. Tax forms, with social security numbers, would go in the YELLOW file, and employment applications, name, address and performance appraisals would be found in the GREEN files. A more complete listing of the types of things can be found on our resources page.

As you take the time to organize your personnel files also take the time to purge your files. That absenteeism warning from 20 years ago is no longer relevant. The performance evaluation from 15 years ago does not make any difference today. Get rid of this type of paperwork. Also look for notes and comments that may indicate improper actions or make discriminatory statements. If they are recent those are things that need to be dealt with, if they are from 10 years ago and three supervisors ago then purge them. You can also consolidate records, such as pay actions, onto spreadsheets, and eliminate all the various “action” forms.

If you are converting forms management to electronic formats don’t scan EVERY form. Purge at that time as well. Although electronic space is more abundent that physical file space that doesn’t mean you need to fill it up completely with crap. With electronic formats you have to introduce additional safeguards and firewalls to provide the “lock and key” security of your personnel files.

Speaking of security, make sure you do have lockable files and that the access to those files is restricted. I would also suggest fire proof file cabinets. With electronic storage, offsite redundancy is important. And accessibility is very important, both for you and if you ever have to show it to any one from the government.

So if  you recognize your organization in this article, start now and clean up your act. You may actually be able to find that form you were looking for or prevent some investigator from finding something you do not want them to have.

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