Do you have employees? Documents to keep on file when hiring

If you are planning on hiring employees for your small business, then you need to make sure that you keep personnel files. Not only does this allow you to keep track of employee information by keeping all of your information organized, but it also ensures that you remain compliant with federal law, which requires employers to maintain certain employee documents and information.

Federal Laws Involving Employee Documentation

The following are the  main federal laws you should know about when it comes to keeping employee files:

  • Age Discrimination in Employment Act – This requires you to keep employment applications for at least a year. However, there is some language in the act that indicates that if you know the applicant is over the age of 40, that the application should be kept for two years.
  • Civil Rights Act of 1964 – This act requires employers to keep a number of different employment records, including applications, for at least a year from the date on which the application was received.

Other federal laws, including Executive Order 11246, pertain to larger government employers and not small business owners.

Reasons to Keep Employee Personnel Files

In addition to making sure that you abide to federal laws, there are a number of other reasons why you should keep employee personnel files. You may need information about your employee when it comes time to make decisions regarding layoffs or promotions as well for filing tax returns or complying with government audits. Keeping files on your employees can also potentially protect you legally if your business is sued by a former employee.

Documents You Should Keep on File

The following are some of the documents that you should keep in your employee personnel files:

  • The employee’s job application and resume
  • A copy of your offer of employment
  • IRS form W-4
  • Employee benefit forms
  • A signed acknowledgement that the employee read the employee handbook
  • Any performance evaluations done for the employee
  • Any complaints and descriptions of the circumstances of those complaints filed by coworkers or customers against that employee
  • Any warnings given to the employee or disciplinary actions taken against the employee
  • Any awards or citations given to the employee for exceptional performance on the job
  • Records of the employee’s attendance
  • Records of the employee’s completion of any training programs
  • Documents that relate to why the employee left the company

These are all of the documents that should be kept in an employee personnel file. However, there are some employee documents that you should not keep in these files. These include medical bills and Form I-9s. Medical records are legally required to be kept in a separate file to limit access. You have a legal obligation to keep medical records private. Form I-9s verify that your employees are legally authorized to work in the U.S. All of your Form I-9s should be placed in single file for the USCIS (U.S. Citizenship and Immigration Services). This way, if the USCIS requests to see one or all of your employee’s I-9s, you aren’t forced to compromise the privacy of your employees by handing over their employee personnel files.

It’s important that you not only abide by federal laws but that your business remains organized, which is why you should keep files on your current employees. For more professional advice regarding your small business, whether it be concerning accounting or tax planning, be sure to contact us at Valezar & Associates today.