The Question of Personnel Files What Should You Keep, and for How Long?

Medical and dental practices are continually reminded of patient chart documentation and retention requirements. Personnel files, however, typically do not receive the attention they should. What many employers do not realize is that the contents of a personnel file are subject to various laws and regulations’ regarding what is to be maintained, for how long, and in what format.

Some examples of these laws include:

• Title VII of the Civil Rights Act of 1964, which requires all employment records to be maintained for a period of one year.
• The Fair Labor Standards Act, which requires all payroll records, such as hour and wage support, to be maintained for three years after the date of the last entry.
• The Employee Retirement Income Security Act, which requires health and welfare benefit plan records to be maintained for six years from the date filed with the Secretary of Labor.
• The Immigration Reform and Control Act, which requires I-9 forms to be maintained for three years from date of hire or one year from date of termination, whichever is later.

Other laws with jurisdiction over personnel file documents include the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act, and the Family and Medical Leave Act.
Additionally, there are times when an employee or other agency may file suit against your practice. In these instances, it is imperative, and required, that the related records are maintained until the matter is completely resolved.

Massachusetts Laws

Many states also have laws and regulations regarding personnel file records. In Massachusetts, for example, Chapters 149 and 151 of the General Laws both contain language on the maintenance of employee records.

Chapter 149, Section 52C first requires that all employers of 20 or more employees are to keep personnel records containing information such as the employee’s name, title, pay rate, dates of birth and hire, evaluations, and other similar documents. All of this information is required to be maintained in typewritten or printed form, or may be handwritten in indelible ink. Accordingly, computer files are not sufficient to satisfy the requirements of the law.

These records are to be maintained until at least three years after the termination of employment. However, many legal experts agree that six years after termination of employment is preferred in Massachusetts to be consistent with the statute of limitations on contract suits.

One additional provision of this law is that employees are granted the right to review their own records. This review must be granted within five business days, at the place of employment and during normal business hours. At the completion of this review, any changes to the record must be mutually agreed upon. If not, employees are allowed to attach statements to their record explaining their position, which must be provided to third parties.

Chapter 151, Section 15 requires that records of amounts paid and hours worked for each employee are to be maintained for at least two years after the entry date of the record. Additionally, each employee is allowed the opportunity to review these records, similar to the provisions in Chapter 149.

Beyond what to maintain and for how long, as described above, employers should also be aware that there are other provisions of these laws that require how these records are to be maintained. Specifically, as required by the Americans with Disabilities Act and the Family and Medical Leave Act, all records related to the health of an employee are required to be maintained in a separate file. This helps to ensure that the information is only available to those on a need to know basis, and is not mixed in with other records that may impact decisions of employment, such as advancement.

Accordingly, at least two separate files should be maintained for each employee: one for health and medical files and a second for all other employee information. It is strongly advised that these files be locked in a secure area with access restricted to appropriate personnel.

Separate files are also recommended for payroll records and I-9 forms. A separate payroll file ensures that certain administrative employees are not afforded access to employees’ medical records. Separate I-9 folders ensure that, given a request for information from a governmental agency, you are not offering up more information than is required.

You’re Fired

One final consideration regarding the maintenance of personnel files is in relation to the termination of an employee. Most experts agree that while you should keep records to support the dismissal of an employee, these records should not include opinions that are not based on fact or are discriminatory in nature.

Periodic performance reports, reprimands, and warnings relative to poor work product, inappropriate behavior, or other job-threatening issues should be documented in the personnel file. It is advisable to have the employee sign the written report, acknowledging that he or she was spoken to, whether or not the employee disputes the report.

Additionally, so as not to appear that you are out to ‘get’ the employee, ensure that each file also includes items of a positive nature, such as letters from clients and supervisors.

In the event that an employee disagrees with a document of a negative nature, such as a poor evaluation, ensure that your discussion with the employee is witnessed and documented by a third party. If the employee writes a rebuttal, it should be added to the personnel file along with the report.

While properly organized personnel files are often taken for granted, they can save your medical or dental practice significant legal fees and other costs many times over in the event of litigation. Employer organizations such as the Employers Association of the North East can be a valuable resource in the human resources area.

Always keep in mind, however, that there are various federal and state laws that govern the maintenance of these often-overlooked records. If you are ever in doubt, consult with an attorney.

James Krupienski, CPA, is manager of the Health Care Services Division of Meyers Brothers Kalicka, P.C., certified public accountants and business consultants, in Holyoke; (413) 536-8510.