• If an employee on his last day says he wants to be paid for his unused vacation, how long would it take you to show he'd already taken that time off?
• If an employee filed a harassment suit, could you provide evidence that not only was he aware of the company's anti- harassment policy, but that he attended a training session on the subject at the shop?
• How easy would it be for an administrative assistant in your shop office to get hold of another employee's drug testing report, I-9 employment eligibility form or performance appraisal?
Your answers to these questions aren't just an indication of how well organized your shop office is. They also indicate how well you are complying with strict state and federal guidelines related to personnel files. Perhaps most importantly, they could actually make the key difference in your ability to defend yourself against a devastating lawsuit.
Two things to know
Cory King said there are two primary things shop owners need to know about personnel files: what needs to be in them and what should not be in them.
King is an attorney with the firm of Fine, Boggs, Cope & Perkins LLP, in Carlsbad, California, and a frequent trainer at automotive industry events. He said that while state regulations on personnel files vary somewhat, there are some general guidelines that can help employers comply with the law and better protect themselves in the event of a lawsuit.
"There may be more restrictive rules in your state that require you to have or not have certain documents in the personnel file," he cautioned. The information presented here is not a replacement for seeking legal advice about regulations in your state.
But first and foremost, King said, it's important that personnel files be stored properly.
"I can't express strongly enough: Personnel files should be kept in an office, locked up, so that only certain people have access to them," King said. "Part of the reason is legal: They contain private information that you don't want everybody having access to. However, from a much more practical perspective, you don't want somebody to be able to get their hands on their own personnel file."
King said he's seen instances where a disgruntled employee has removed - or had another employee remove - key documents from personnel files in an effort to keep the employer from having those records to support their side in a dispute.
One business, for example, had called King's office prior to firing an employee. Among the items that the business confirmed was in the employee's personnel file was the arbitration agreement the employee signed when he was hired. But when that dismissed employee later filed suit against the business, that form - which would have required the dispute be resolved through arbitration rather than the courts - was no longer in the file, indicating the business hadn't done enough to safeguard the files.
What doesn't belong
Before looking at what should be in your company's personnel files, there are some important restrictions on what should not be in the files - including some items that are definitely "personnel-related." It seems intuitive that they should be stored with other documents related to that worker's employment. But federal regulations, for example, prohibit employers from keeping I-9 records - the forms used to confirm that new hires are authorized to work in the United States - in personnel files.
"They must be kept in a separate file and locked," King said. "They're a private record you're not supposed to allow anybody access to. If you get audited by the Department of Labor and they find those in a personnel file or mixed in with other papers, you will be fined. Create a separate I-9 file and keep it in a separate locked file away from personnel files."
Medical records or information about an employee's medical situation also should not be stored in the employee's personnel file. This includes drug testing reports, life or health insurance application forms, requests for a medical leave of absence, or workers' compensation reports of injury or illness. Again, store this information in a separate file that is locked and only accessible to those few people in the company on a need-to-know basis.
Personnel files also should be free from anything that doesn't directly relate to the employee's job performance and qualifications - including references to an employee's private life or political beliefs, or unsubstantiated criticisms or comments about the employee's race, sex or religion.
A final category of information that should not be stored in personnel files are investigation materials.
"This includes reference letters you receive when you hire a person," King said. "You don't want those in the personnel file, because employees are not supposed to be seeing those if they review their personnel files."
Similarly, a background check report should not be in the employee's personnel file.
"They are entitled to see it under certain laws, but it should not be in a personnel file because it contains very private information," King said.
Records regarding investigations of an employee's violation of the company's harassment or other policies also should be filed separately from the personnel files.
In short, King said, any document that contains private, sensitive personal information about the employee does not belong in the personnel file.
"Think about it as if it's a document about yourself," King suggests. "You wouldn't want a secretary or an assistant who is helping keep the files up-to-date stumbling across that. Keep it in a separate locked cabinet that only senior people - the owner or general manager or personnel or office manager - has access to."
Employee review of the file
Among the most common questions from employers is how to handle requests from an employee to see his or her personnel file.
"That raises a bunch of issues," King said., "In most states, you have to let them see it, usually within a certain amount of time. But you also in most states don't have to do it on demand. They can't walk in and say, 'I want to see it now.' You have to let them see it, but make an appointment. Say, 'I'm busy right now,' or 'Right now is not a good time. But let's make an appointment and you can come back this afternoon or tomorrow morning.' Buy yourself a little time."
Such requests, King said, are generally an indication that an employee is unhappy about something and may be preparing to quit or even to file a lawsuit against you. That's when having a well-maintained personnel file can really pay off by helping protect you.
"If they ask to see their personnel file, a little bell should go off inside your head that you need to make sure you're very careful," King said. "By setting up an appointment for them to look at the file, it gives you a chance to do a review and to make sure you have things looking the way they're supposed to look."
Future issue: What should be in personnel files.
John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.