Having employees is not only critical to the operations and success of your business, but they also add compliance and record-keeping requirements that are sometimes overlooked.  Many small and medium-sized companies do not have the need or financial resources to hire a human resource professional; therefore, those duties normally fall on the controller, bookkeeper, or owner.

Obtaining the required and necessary documents related to the hiring, compensation, evaluation, and termination of employees is critical to verify compliance with laws established by the Department of Labor and federal and state taxing authorities.

Below is a list of recommended items to include in your employees’ personnel files*:

  1. Resume or signed job application
  2. Emergency contact information
  3. Federal Form W-4
  4. State Form W-4
  5. Form I-9
  6. Employee benefit applications or waivers
  7. Garnishment notices
  8. Payrate or salary information (a historical record of raises and effective date)
  9. Background checks and drug test documents
  10. Performance evaluations
  11. Performance warnings or reprimands
  12. Exit interview and/or termination documentation

These files should be locked in a secure cabinet and accessible only by those with the appropriate authority.  They should be filed in a logical manner with current and past employees segregated.  If these records are maintained electronically, measures should be taken to protect them from cyber-attacks or identity theft.

The length of time required to retain these documents will vary.  In general, keeping them for at least three years is a good rule of thumb.

If you have specific questions or concerns about your company’s personnel files, give your contact at TDT CPAs and Advisors a call; we’d love to help you.

*Some may not be applicable to your employees