Michael is a prolific author in business and B2B tech, whose articles can be found on Business Insider, Entrepreneur, TechRadar Pro, IT Pro Portal, Toms Guide, and more, covering everything from international tech regulations to corporate finance and emerging tech brands and markets. A successful copywriter and entrepreneur, Michael has worked with dozens of SaaS and tech companies, and has his finger firmly on the pulse of B2B tech, finance and business.
Michael is a prolific author in business and B2B tech, whose articles can be found on Business Insider, Entrepreneur, TechRadar Pro, IT Pro Portal, Toms Guide, and more, covering everything from international tech regulations to corporate finance and emerging tech brands and markets. A successful copywriter and entrepreneur, Michael has worked with dozens of SaaS and tech companies, and has his finger firmly on the pulse of B2B tech, finance and business.
Proper organization is the key to accurate, compliant personnel files that are easy to manage, protect, and access. In this article, we look at how to organize employee personnel files and why a document management system is an essential tool for all businesses. Table of contents
Employee personnel files contain important information about your employees such as tax documents, performance reviews, employment contracts, and more.
Without a clear organizational structure for personnel files, important data can be lost or misplaced. That makes it more difficult for human resources (HR) workers, payroll administrators, and managers to find the information they need. In addition, losing track of employee data could leave your company out of compliance with state and federal labor laws. It also makes it harder to know when documents need to be updated or replaced.
In this guide, we’ll explain what’s included in an employee personnel file and offer five tips for how to organize employee personnel files.
As a business owner, properly organizing and managing employee personnel files is a crucial task. These files contain sensitive documents with important information about your staff members, such as resumes, contracts, performance reviews, disciplinary records, and more. Having an organized system makes it easy to access employee information when needed, while also ensuring confidentiality.
In this comprehensive guide, we provide key steps and tips on how to organize both physical and digital personnel files for your small business.
Why Proper Personnel File Organization Matters
Maintaining orderly personnel files brings many benefits:
-
Quick access: Retrieving employee information and records is fast and efficient.
-
Legal compliance Complies with data privacy anti-discrimination labor laws.
-
Reduced liability: Minimizes legal risks related to improper record-keeping.
-
HR efficiency: Streamlines HR processes like onboarding, payroll, promotions.
-
Organizational consistency: Standardizes filing for all employees.
-
Data security: Important documents are kept confidential.
-
Disaster recovery: Files are accessible and backed-up if systems fail.
-
Employee transparency: Workers can reasonably access their own records.
-
Peace of mind: You can instantly locate any required employee information.
What to Include in Personnel Files
A standard personnel file may contain:
- Employment application and resume
- Job offer letter and signed contract
- W-4 and I-9 tax forms
- Direct deposit authorization
- Background check consent and results
- Emergency contact details
- Performance reviews and disciplinary records
- Pay raise information
- Signed policy acknowledgements
- Attendance records
- Training certificates
- Benefits enrollment paperwork
- Termination records
Maintain medical records, such as doctor’s notes and workers’ compensation documents, in a separate confidential file. Comply with all federal, state and local document retention laws.
Physical File Organization Tips
For physical documents, follow these tips:
Use consistent folder types: Opt for letter or legal-size file folders. Choose durable pressboard or plastic over flimsy manila.
Uniform labeling: Adhere pre-printed labels listing contents and employee name on the folder tabs.
Include ID numbers: Write each employee’s unique ID number on the folders.
Index alphabetically: Arrange folders in alphabetical order for easy lookup.
Use filing cabinets: Store folders in locking fireproof filing cabinets, preferably 5-drawer for added capacity. Require sign-out for removing files.
Limit access: Only authorized HR staff should access the cabinets. Keep them in a secure area.
Back up records: Scan documents and back up files to guard against physical damage or disasters.
Add new documents: Insert new forms and records in appropriate folders immediately after handling relevant personnel matters.
Remove obsolete records: Take out and shred documents based on your retention schedule guidelines.
Review annually: Set a reminder to audit the filing method, document any issues, update employee folders and dispose of outdated records each year.
Digital Personnel File Tips
For electronic documents and databases, consider these tips:
Use HR software: Maintain digital personnel files using cloud-based HR Information System (HRIS) software. It centralizes employee data and includes access permissions.
Standard file formats: Convert forms to PDFs and ensure consistent formats across employee files. This streamlines online searches.
Organize document types: Within each employee profile, group digital documents into logical subfolders like “Contracts”, “Tax Forms”, “Performance Reviews”.
Include identifiers: Document titles should include employee name and ID number to distinguish between files.
Tag records: Add tags indicating document types so users can easily search categories.
Restrict access: Set user permission levels so only authorized personnel can view and edit specific employee folders based on their role.
Password protection: Require strong passwords and enable multi-factor authentication. Set passwords to expire every 90 days.
Back up data: Schedule daily offsite backups of personnel file data in case of technical issues.
Update in real time: Set digital folder permissions so staff can update personnel information and upload new documents immediately as needed.
Third-party sync: Integrate systems like payroll, accounting, and performance management to sync employee details.
Data encryption: Encrypt data in transit and at rest for maximum security.
Who Can Access Personnel Files?
As personnel records contain sensitive information, access should be restricted. Consider the following:
-
Employee: Can view their own basic records and request copies but not files concerning investigations.
-
HR staff: Full access to all personnel folders as needed to manage HR processes.
-
Management: Can request access to personnel files of direct reports on a need-to-know basis.
-
Owners: Access permitted on a required basis but should be limited.
-
Government agencies: Can request documents for legal reasons like discrimination investigations.
Generally, a clear documentation and approval process should be in place for anyone seeking employee file access. This helps avoid unauthorized exposure of confidential personal details. Monitor who views the records.
Personnel File Retention Policy
To comply with federal labor laws and state regulations, implement a formal policy for maintaining and destroying personnel records. Include set retention timeframes for various document types.
For example:
-
I-9 forms: 3 years after hire or 1 year after termination
-
W-4 forms: While employed plus 4 years
-
Applications and resumes: 1 year
-
Total compensation statements: 6 years
-
Performance reviews: 8 years after termination
-
Timesheets: 2 years
-
Policy handbook sign-offs: 3 years after superseded
Consult federal statutes like ERISA and FMLA along with statutes of limitations for personnel law violations to establish suitable retention periods. Stick to your predetermined destruction schedule to avoid keeping obsolete records. Shred physical documents and permanently erase digital files once retention periods expire.
Key Takeaways
Organizing personnel files properly is vital to running an efficient HR operation. Follow these best practices:
-
Use a standardized format for both physical folders and digital profiles.
-
Store documents securely, backed-up and encrypted.
-
Segment sensitive medical records in separate confidential files.
-
Allow employee access to their own basic records.
-
Restrict non-HR staff viewing of files on a need-to-know basis.
-
Label folders clearly and keep them indexed alphabetically.
-
Add new forms and update existing records in a timely manner.
-
Maintain a formal file retention schedule and stick to disposal timelines.
Streamlining your personnel file management processes reduces risk, maintains legal compliance, and gives you peace of mind knowing you can instantly access employee documents as required. Invest time in developing an orderly and secure personnel filing system. Your HR department will reap the benefits for years to come.
Standardize your filing system
Our first tip for how to organize human resource files is all about consistency. However you decide to organize your files, do so across your entire HR system.
At the level of individual files, use a standardized approach to naming documents. For example, you might name documents using the formula:
[Employee Last Name] [Employee First Name] – [Document Name] – [Year]
This naming scheme makes it easy to see who a document belongs to, what the document is, and how old it is.
At the level of employee folders, you can apply a similar standardization. For example, each employee can have a folder with their name or employee number. Within that folder, you can have sub-folders labeled “Onboarding,” “Payroll,” “Performance Reviews,” and so on. Then, put the same types of documents into each of these sub-folders for each employee.
Monitor document expiration dates
One of the trickier aspects of managing employee files is staying on top of form renewals and certification expirations. The question is how to organize employees’ personnel files in such a way that you can be sure your employee forms are always up to date.
Once again, using a document management system can help. When an HR administrator uploads a document, they can assign an expiration date to it. This might be one year from the day the form is uploaded, the date a certification expires, or the last day of the year.
Connecteam, for example, allows you to set expiration dates per document entry or per type. Assigning expiration dates by type (for example, one year or 18 months) saves you from having to do so manually for each document.
Your document management system will then automatically notify you or the employee when an expiration date is approaching. This ensures that files and forms are renewed before they expire so there’s no lapse in compliance.
