Contributed Column

Personnel Points

Personnel files — a necessary evil

by Dave Mount, Westaff

One of the most mundane areas of company management is the maintenance of any kind of files on a consistent basis, and personnel files are no different.

I was recently helping a friend through some of the minefields of setting up a new 401(k) plan for his employees, and we moved on to the subject of personnel files. Like many other small businesses, my friend did not have any files on his employees, just one big folder that the bookkeeper kept with the necessary forms for payroll.

In our increasingly litigious society, personnel files are becoming more and more important — so much so that there are legal mandates as to some of the items that should (and should not) go into the files.

A basic personnel file should contain the following:

• The individual’s resume and/or employment application

• The latest W-4 and any previous W-4s

• Information on benefits — beneficiaries; benefits selected and rejected

• Any information on a 401(k) or 403(b), such as deduction amounts and investment selections; if a person chooses not to participate in a salary-deferral plan, there should be a written and signed document in the file

• Performance and salary review information

• Any record of awards

• Any record of disciplinary action

• Any record of additional education or certifications

In addition to the items suggested above are a few optional items. If your company does background or credit checks, you may want to include the results of the checks in the files. Be careful, though, because if you include the results of such a background check on one employee, you should include them in all employee files.

Some companies do drug testing before employment. I am not a particular fan of drug testing in Vermont because state law makes it complicated, but some companies are able to work with those complications quite adequately. If your company does pre-employment drug testing, you might include the results in the file, but follow the rule above and do it for everyone or for no one.

There is one item that should never appear in a person’s personnel file: the form I-9. This is the Department of Homeland Security form that employers must have on every employee hired after 1987. It proves an employee’s right to work in the United States. The employee does this by submitting certain documents proving the right to work — either documents proving U.S. citizenship or proving that the employee has resident alien status.

The I-9 form requires a date of birth and might also reveal a person’s national origin. Both of these pieces of information could lead to discrimination. To satisfy the law, we keep our I-9 forms in a filing system that is separate from the personnel files.

I received an alert in mid-July that the Department of Homeland Security was stepping up audits of employers to be sure employees have a legal right to work in the United States. If every employer conscientiously had new employees complete the Form I-9, we would have very few illegal employees working in this country.

I want to encourage the inclusion of items relating to discipline in your personnel files. The court dockets are full of lawsuits alleging unjustified termination. The employer’s paper trail is a key to success in these suits. I have seen so many instances where an employee receives a glowing review just months before termination. This is a call for candor in our reviews.

The contents of the file should contain evidence of a firm series of corrective actions taken about behavior the employer considers egregious. A series of increasingly stern warnings, starting with verbal, should be recorded in a personnel file. Whenever a warning is written, a copy signed by the employee should be in the file.

Now, all you need is a safe place to keep these files. I know that space is limited, but there must be someplace .... •

Dave Mount is the owner of Westaff in Burlington.

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