Personnel Files

Accurate and complete personnel records are not only nice, they are a legal necessity. The Department of Labor has auditors who come to employers without an appointment and demand to see the personnel files. If the employer’s records are incomplete or inaccurate, the DoL can levy significant fines and fees. Churches are not exempt from these spot inspections and fees. Thus, churches must have good personnel files for that reason alone. However, churches must have good records so that as an employer it is following its employees’ requests when it comes to payroll deductions. If an employer’s Finance Office does not do what the employee wants, the employee may have a legal case against the employer

The legal minimums in a personnel file are:

  • W-4 – this documents the employees name, address, and number of deductions for tax purposes
  • I-9 – this documents that the employee is legally eligible to work in the US. The I-9 also requires additional identification forms. The most common are a US passport or a driver’s license plus a social security card.
  • For states with income tax, a state version of the Federal W-4

The employer minimums for a personnel file are:

  • An Employee Information Form which lists the employee’s personal info (name, address, phone numbers, emergency contact, birthdate, etc.) and wage information (salary or hourly rate).
  • Annual sheets listing changes in wages
  • Every document related to an employee’s payroll deductions for health & dental insurance, retirement, long-term and short-term disability, etc.
  • Anything else related to an employee and his or her work at the employer

Annual Reviews:

  • Employee evaluations should be kept in a confidential file, usually with the supervisor. Sometimes those evaluations are kept with the Finance Office’s employee files and that is acceptable.
  • When an employee leaves, then all files related to that employee should be merged into one file and kept with the Finance Office’s permanent files.

Record Retention:

  • The US government requires employee files to be kept for at least three years after termination. I usually recommend keeping the files for at least 10 years.
  • Sometimes an employee will call and ask questions about his or her employment and these records can provide specific data that the employee may not have.
  • Sometimes a prospective employer will call, too. Having the employment records, even the evaluations at that time, enables the former employer to answer questions better. By the way, it is ALWAYS best if a former employer will tell a prospective employer ONLY the dates of employment of a former employee.
  • Many employers will include in the employee’s file a note stating whether or not the employee is eligible for re-hire. That is helpful especially for the future as memories fade.

Make sure your files are in order. Go do a self-audit today and see if you’d pass an inspection by the Department of Labor. It is better for you to do your own checkup than get fines and fees.


Lead On!