Given that labor is generally the largest expense in any business – especially a service business like health care – personnel files are integral. These days, they can be paper-based, purely electronic or a combination of both. Personnel files can contain a number of important documents but the most common are:
- Application for employment and/or resume and contact sheet with next of kin
- Copies of licenses and certifications
- Background screening and Medicare exclusion results, if required
- Verification of employment references
- Health documents: examples include pre-employment drug testing results, and COVID-19 vaccine status for healthcare businesses mandated to obtain this info or those employers whose policies require it.
- Pre-employment testing or any competency assessment documentation
- Payroll & benefits documents, such as W-4 or W-9 (for contractors), benefits election
- Immigration status (I-9)
- Appraisals and disciplinary records
In addition, many companies keep copies of onboarding materials, such as acknowledgements of orientation, job description, employee materials (e.g., handbook, uniforms, access badge, etc.) and more.
Many personnel files have a set structure but that is not always the case, especially for small companies that can tend to run informally. We’ve seen files that contain a W-4 and application, and that’s it. Others are uber-organized with sections and sub-sections. Use your judgment and avoid setting up a system that will be difficult to maintain and make information hard to find. Combining like documents into general sections (e.g., hiring, payroll, testing) will at least give some organization.
Please note that I-9s are not filed in the personnel file because they are not part of the file, per sé. Instead, keep I-9s (form and copy of required documents) in a binder, preferably with A to Z tabs. This will make information easy to produce during an audit. Additionally, health docs are usually in a sealed section or manila envelope.
The last thing we’ll touch on is audits. Most business owners want to get ahead of a regulator or auditor and personnel file reviews are crucial to that end. Set up a system to go through your files on a regular basis, and if you find outdated documents, set about obtaining the current replacements. Many HR systems are affordable and let you enter and track document expiration dates; in this way, you can set a 30-day reminder before a document expires so you can request replacement from the staff member. Depending on the size of your workforce, a simple calendar program can be a great tool as well.
If you believe ignorance is bliss and a regulator can’t hold you responsible for a mistake – say you don’t collect I-9s or check for Medicare exclusions – guess again. So really, audits are the way to lower your stress and avoid costly fines and penalties.