5 Ways Companies Mishandle Employee Records

(I am going to be on a short vacation this week – New York City here I come!  This guest post was provided by Jessica Edmondson who contributes on business and leadership issues, such as human resource management, for the University Alliance, a division of Bisk Education, Inc.)

Employees rely on employers to treat their personnel records with care and to maintain their privacy, particularly with highly confidential or personal matters. Mishandling employee records can erode trust and lead to serious repercussions, including legal action.

By reviewing some of the more common and most harmful ways that employers mishandle records, you may be able to prevent the same mistakes from happening at your workplace.

Mistake 1: Giving Employees Unfettered Access

This mistake can happen in one of two basic ways: by providing certain employees with unrestricted access to review the files of others; or by failing to secure records to prevent unauthorized access. Personnel records must be kept under lock and key. Otherwise, it can prove to be too much temptation for others who have no business looking through such records. Although there are circumstances in which a manager may need to see a subordinate’s file, allowing open access might mean making the manager privy to more information than he or she is entitled to and may also constitute a breach of the employee’s right to privacy.

You should secure all employee records, including hard and soft copies, with appropriate controls, such as passwords and locks. Access should be closely monitored and recorded, and should be limited only to those who demonstrate a specific, job-related need to review the records.

Mistake 2: Consolidating Records into a Single File

Employees have several types of information on file, including IRS and payroll records, job applications, performance appraisals and medical information. By putting everything into one file, you run a higher risk of a breach of privacy. For example, a supervisor might have a legitimate need to see a performance appraisal and in the process ends up getting access to the employee’s medical records.

A better practice would be to file records separately by type, such as general employee information, compensation information, and medical or legal information. Then limit access based on specific needs. Medical and legal information typically requires the highest level of security and the most stringent review procedures. Separating records by type also helps ensure that they are retained for the appropriate amount of time.

Mistake 3: Misplacing or Discarding Files When an Employee Leaves

Various laws govern how long employers must retain employee records and failure to abide by those regulations can have significant legal consequences. Misplacing files can be worse than discarding them, as the employer has no way of knowing who has had access to private information or how to recover it.

It’s critical to have a retention policy in place that is in full compliance with all applicable state and federal laws. In addition, you should also have a well-designed filing system so that authorized personnel can access the correct files when needed.

Mistake 4: Failing to Document Important Events

If an employee or former employee files a grievance, the company’s main line of defense is all in the personnel file. The easiest way to guarantee a legal victory for the disgruntled employee in such matters is through a failure to document.

Do you and your management staff document performance issues and keep copies of written reprimands? Do you have a signed acknowledgement that the employee was notified or trained on certain company policies, such as sexual harassment, attendance requirements and the like?  If not, now is the time to start compiling information so that employees can’t say they didn’t know, and managers can demonstrate employee awareness and the company’s attempts to resolve the situation.

Mistake 5: Backfilling the File to Replace Missing Records

If you do find yourself in a legal dispute with an employee and discover that his or her file has no evidence of a history of performance issues, the worst thing you can do is to add or alter documents after the file has been reviewed. Most attorneys are skilled at evaluating the chain of custody of an employee’s personnel file and “missing” documents that are suddenly found almost always backfire on the employer. You’re better off just taking your lumps for failing to properly document issues. Even better, follow the advice in the previous step and establish a policy for employee documentation.

By learning from the errors of others, you can prevent making these same missteps and inadvertently losing the trust of your employees, as well as putting your company at risk for legal action.


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