An employee file, also known as a personnel file, is a folder of documents about an employee’s work history with your company. It should include everything from their job application and contract to their performance reviews and payment records.

Employee files can be physical or digital. The Fair Labor Standards Act (FLSA) requires employers to keep employee records, but it does not require the records to be kept in a specific form. Employee files should be kept in a secure location and should only be accessible to the employee, their direct supervisor, and HR staff.

Why should you keep employee files?

Employers are required by the Fair Labor Standards Act to keep certain information about their employees on file. Required information includes basic demographic details about your employee, their pay rate, and weekly earnings for the entirety of their employment.

Failure to keep records of this data can result in penalties from the Department of Labor or the Internal Revenue Service—if they audit your company. 

Payroll data is also important if your company faces a compensation lawsuit by a current or former employee.

The benefit of keeping employee files

Keeping employee files can be beneficial when it comes to making decisions about whether to offer an employee a raise or promotion or when deciding how best to further an employee’s professional development. This is because the employee file will have a record of the entire history of performance reviews and disciplinary actions for that employee.

What goes in an employee file?

Under the FLSA, there are specific records that are required to be in an employee file:

  • Name
  • Social security number
  • Address
  • Birthdate (if under age 19)
  • Sex
  • Occupation
  • Daily and weekly hours worked
  • Pay basis (salary or hourly)
  • Pay rate
  • Base daily or weekly earnings
  • Weekly overtime earnings
  • Bonuses and reimbursements
  • Deductions
  • Total wages each pay period and date of payment

Other data that can be kept in an employee file

You can choose to keep many more records about an employee in addition to payroll-related details. Commonly kept records include:

  • Job description
  • Job application and resume
  • Signed job offer letter
  • Employment contract
  • Onboarding documents—such as an employee handbook acknowledgment
  • Non-compete and non-disclosure agreements
  • Performance reviews
  • Records of promotions or raises
  • Disciplinary records
  • Resignation letter
  • COBRA documentation
  • Exit interview documents

Confidential records and what to keep out of an employee file

Employers typically have to keep additional records about their employees to administer group insurance plans and benefits. However, these records must be kept confidential and should not be included in an employee file. Confidential records should only be accessible to HR personnel.

Information that may be part of a confidential employee record includes:

  • Background check results
  • Reference checks
  • Child support documents
  • Wage garnishment documents
  • Benefits documents
  • Medical, dental, vision, and life insurance enrollment forms
  • Beneficiary details

In addition, any medical records that are regulated by the Health Insurance Portability and Accountability Act (HIPAA) must be kept in a separate confidential medical file. Medical records may include insurance enrollment forms, Family and Medical Leave Act (FMLA) leave requests, worker’s compensation documents, medical benefits claims, doctor’s notes, medical exam results, and accommodation requests.

Documents related to ongoing litigation should also be kept in a separate file. This file should only be accessible to your company’s legal team. 

Who can access employee files?

Employee files should be accessible only on a need-to-know basis. Whenever possible, it is good practice to anonymize personally-identifying information before sharing data.

Employee files contain private information about an employee—including their home address, compensation, and benefits. These files should be kept secure and are typically only accessible to the employee, their direct supervisor, and HR personnel. 

At many companies, only HR personnel have day-to-day access to employee files. If an employee or their supervisor wishes to access the file they must request a copy. Many states have laws requiring employers to make a copy of a current or former employee’s file available upon request.

Who can access confidential employee records?

Confidential employee records and medical records should only be accessible to your HR staff. Medical records regulated by HIPAA must be kept separate from other types of records. 

Legal records should be kept separately and be made accessible only to your company’s legal team.

Storing and maintaining employee files

Employee files can be stored as physical documents or digital records. 

Physical files

Storing physical copies of employee data requires your company to have a secure storage system and multiple keys so that employee files, confidential information, and medical records can be accessed only by relevant staff members. 

Digital records

Storing digital copies of employee data requires your company to use encryption and permissions. Encryption ensures that data cannot be accessed without an encryption key or password. Permissions ensure that employees, including HR personnel, can only access data that they are authorized to view. Most modern HR software platforms offer both encryption and permissions.

How long must employee data be stored?

You must maintain employee payroll data required under the FLSA for a minimum of 3 years after an employee leaves your company. Many companies choose to hold employee records for 6 years or longer as a precaution in case of litigation.

Conclusion

An employee file contains important information about an employee’s compensation and work history with your company. While employers are only required to record payroll data by law, many employers find it useful to record more information about an employee’s performance and history.

Employee files should be kept secure and should only be available to an employee, their direct supervisor, and HR staff. Sensitive medical information or other confidential information should be kept in separate files rather than in an employee file.