What Should You Include in an Employee File? | Payroll Records & More
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What Should Be in an Employee File?

As an employer, you need to be vigilant about storing employee records in an employee file. As long as you have had at least one employee at your small business, you must maintain employee, or personnel, files during and after their employment. What should be in an employee file?

What should be in an employee file?

Keeping employee files is important for staying organized, meeting legal requirements, and making employer decisions. But, you can’t keep all of an employee’s documents in one file. There are some requirements for separating information by personnel file. And, you need to know how long to store employee files.

what should be in an employee file?

What should be kept in a main employee file?

You must have different files for each employee. The employee’s main file should have information like payroll records. You need to know what records go into the main file and what records go in a confidential file.

The main employee file can be broken down more to help you remember the types of records you need. Take a look at the following records that should be kept in the main employee personnel file:

Pre-hire information

Before you even hire an employee, you collect records from them. You will need to maintain the following from each candidate:

  • Job application
  • Resume
  • Interview notes
  • References
  • Letters of recommendation
  • Test results (if applicable)

Personal information

You also need to store an employee’s personal, but not confidential, information in their main employee file. Make sure you store:

  • Employee contact information
  • Emergency contacts

Payroll-related information

The Internal Revenue Service (IRS) and Fair Labor Standards Act (FLSA) require you to store payroll-related information in an employee’s main file. Keep the following employee payroll records to comply with federal rules:

  • Wages and other compensation
  • Payroll authorization forms
  • IRS Form W-4 for federal income tax withholding
  • State or local tax withholding forms
  • Wage garnishments


Keep all forms that your employee has signed in your records:

  • Employee handbook receipt
  • Signed contracts or agreements between employee and employer

Job performance

To help you gauge your employees’ performances, you must keep the following records:

  • Job description
  • Performance reviews
  • Attendance records
  • Discipline and warnings
  • Job changes and promotions
  • Training information
  • Exit interviews/termination paperwork

What should be kept in a confidential employee file?

In order to comply with federal laws, do not keep confidential information with the employee’s main file. Instead, separate the records. There should be no chance that just anyone can view them.

You can further break down the records you must keep in an employee’s confidential file by category. Take a look at what should be kept in a confidential employee file:

Benefits file

If you offer your small business employees benefits, you need to store the records in a confidential file. For your convenience, separate the benefits information from the rest of the confidential files.

  • Health, dental, and vision insurance enrollment forms
  • Benefits declination forms
  • Other insurance enrollment forms

Medical records file

You need to store the following documents in a confidential file separate from the employee’s main file:

  • Family Medical Leave Act (FMLA) forms and other records
  • Doctor slips
  • Leaves of absence
  • Workers’ compensation claims
  • Disability claims
  • Drug test results

Other confidential files

The last confidential file should contain the following records:

  • Background checks
  • Direct deposit authorization
  • Investigation records

Form I-9 file

You also must store completed Forms I-9 at your small business. The U.S. Citizenship and Immigration Services (UCIS) recommends you keep these forms separate from the main file and confidential file.

Keep all your employees’ Form I-9s in one file so you have easy access to all of them in the case of an inspection.

Why do you have to keep employee records?

You keep all sorts of records as a small business owner. Employee documents are one type of record you are required to maintain. Take a look at the following reasons you need to keep employee records.

1. Help with decision-making

Employers need to make decisions like promotions, raises, and demotions. Having employee records like performance reviews, time and attendance records, and similar information helps make those decisions easier.

2. Comply with federal, state, and local laws

You are required to comply with regulations as a small business owner. The IRS and FLSA require you to keep payroll-related information for a designated amount of time.

Keep information like tax withholding, wage information, and other related forms on hand to comply with laws.

3. Stay organized with records

Generally speaking, you must keep employee records to stay organized. Your employees sign off on a lot of different forms during the onboarding process and open enrollment.

If you lose these records, you no longer have proof that your employees acknowledged agreements. If there is a lawsuit or IRS audit, you could face penalties, fines, and court fees without proof of employee acknowledgments.

How to store personnel files

You can have paper or paperless personnel files. Regardless of how you store the files, they should be protected.

Keep paper files in a safe location, like a locked filing cabinet. Also, make sure that each employee has their own file. And, separate the main employee files from the confidential files.

You can keep paperless employee files by scanning and uploading paper documents to an electronic system. If you use HR software, the service saves physical storage space, secures your employee files, and automatically backs them up so you do not lose data.

Can employees access their own files?

At some point, your employees might want access to their files. Most states have specific laws regarding the employee’s legal rights to access their files and make copies of documents.

For the most part, employees are allowed access to their files if they make a request. Check with your state’s labor department for specific rules.

How long do you need to keep employee files?

You are required to keep employee files for a specific amount of time. But, requirements vary based on the type of file and your state’s recordkeeping requirements. Here are the federal time periods you must follow for storing employee files:

Pre-hire records

Keep pre-hire records for one year after you hire someone for the job. Under federal anti-discrimination laws, you must keep pre-hire records for the candidates that you do not hire. That way, you have proof to explain why you did not hire candidates in case you are accused of discriminating.

If you require potential employees to get drug tested, you must maintain those results for one year as well.

Payroll records

You are required by the FLSA to maintain payroll records for at least three years. And, the FLSA requires you to keep records like time cards, schedules, and wage deduction records for two years.

It might be a good idea to keep payroll records longer than the three years the FLSA recommends. If you have special tax-filing situations, maintain records for six or seven years. For more information, refer to the IRS.

Medical information and benefits

Store medical information and benefits records for at least one year after the employee is terminated.

Form I-9

You will need to keep Form I-9 three years after an employee is hired or one year after their employment ends, depending on which is later.

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This article was updated from its original publish date of 11/25/2015.

This is not intended as legal advice; for more information, please click here.

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