March is a great time to “spring clean” your personnel files.  It isn’t fun but it is necessary if an employer wants to ensure compliance with record retention regulations.  Annual “spring cleaning” or audit also provides an opportunity to correct any issues prior to an external audit by the government or as part of a lawsuit!  Organized and compliant personnel files will improve the overall efficiency of the department-nobody likes searching for that one document you know you filed but can’t find when you need it.  You can keep records in a paper format or electronically but you must provide appropriate security controls and access either way.  Here is a list of the documents and key issues I look for when auditing personnel files.

Hiring and on-boarding

• Is there a job application and offer letter? A resume is nice to have but even the most senior executive should be asked to complete an application.
• Is there a current job description in each employee file, and is each job description signed by the employee?  Has the job description been reviewed in the last 12 months, even if just to confirm the duties have remained the same? Does the job description provide adequate information to determine if the employee should be classified as exempt or non-exempt in accordance with the Fair Labor Standards Act and IRS regulations?
• Are the required Acknowledgement forms signed by the employee (Employee Handbook Acknowledgment, Policies)?
• Is there a signed Acknowledgment of Receipt of company equipment (for example; uniforms, tools, laptop, cell phone)
• Is there a completed checklist indicating issues covered during new hire orientation?

Performance Management

• Are completed performance appraisals signed by the appropriate individuals and are supporting documentation attached?
• Are the performance appraisals completed on time in accordance with company policy?
• Do the performance appraisals contain appropriate language and/or identify appropriate development needs that must be addressed?
• Are disciplinary actions notices (counseling sessions/written warnings, performance improvement plans) signed by the supervisor and are supporting documentation attached, if applicable? Do the notices include future expectations with deadlines and consequences for failing to meet the expectations?
• If applicable, are letters of commendation or certificates of achievement placed in the personnel file?
• Are termination letters or letters of resignation placed in the employee’s file?

Training & Development

• Is there documentation indicating compliance with mandatory training (Customer Information Security, F&I,  Red Flags Rule safety, OSHA, harassment prevention)?
• Are copies of applicable licenses available and up-to-date (sales licenses for example)?

Payroll

• Are time sheets maintained for each employee and are they completed and signed by the employee and supervisor? Consider a detailed time card that requires “in and out” for all non-exempt employees and day worked log for exempt employees.
• Have employees signed the appropriate documentation for deductions to paychecks (insurance, 401k contributions, union dues, charitable donations)

Always keep medical records or confidential records separate from the primary personnel file, including anything that has protected information such as a date of birth, medical information, marital status, religious beliefs:

Form I-9 Employment Verification (kept in separate folder or binder)

• Is there a completed Form I-9 for each employee hired after November 6, 1986?
• Is each Form I-9 completed within 3 days of the employee’s start date?
• Is the Form I-9 filled out accurately?

Medical Records/Leave Requests (kept in separate folder or binder)

• Benefit enrollment forms for current year, beneficiary forms, benefit claims
• Leave of absence documentation (FMLA and non-FMLA), disability or WC documentation

If you would like a free sample template for personnel file audits please email me at kcarlson@dealer-communications.com.