When I conduct human resources (HR) systems audits for clients, as part of the audit process I identify problems with personnel records and documentation, and recommend improvements. Here are some of the most common problems I’ve found:
Insecurely stored records of former employees
Most companies in my experience do a good job of keeping records secure for current employees. I find personnel files, payroll files and medical information maintained in locked file cabinets in HR offices with locking doors. However, files for ex-employees tend to be treated with less consideration. I’ve found them in cardboard boxes sitting on the floor or in closets in unsecured offices. These files contain Social Security Numbers, birth dates and other information sought by identity thieves. In fact, the leading source of identity theft is from records of former employees carelessly handled by their employers.
Incomplete/inaccurate I-9 forms
Form I-9 is used to verify the identity and employment authorization of anyone hired to work in the US. Audits of I-9s typically turn up these errors:
- Missing dates to accompany the employee signature.
- Missing employer information—name of company, address, employer signature and date.
- Missing photocopies of verification documents that should be attached.
- Old versions of I-9 used for new hires after a more current version has gone into effect.
Inappropriate material in personnel files of current employees
Date of birth, marital status, dependents, immigration status, country of origin, disability—information revealing status in a protected group can be found in W-4s, I-9s, workers comp claims, benefits enrollment forms and other documents. But none of this information should be considered in a personnel decision such as a promotion or corrective action. To prevent any inference that a personnel decision was biased by discrimination, documents containing information revealing status in a protected group should be filed separately from an employee’s personnel file. To address this, many employers create three separate sets of files for each employee: personnel, payroll and medical.
Missing records from personnel files of current and former employees
- Job description: If the file doesn’t hold a record of the different positions an employee has held within the company over time, where would you keep this information?
- Resignation notice: Sometimes resignation notes are scrawled on a blank piece of paper, but sometimes there isn’t even that much documentation. Instead, have a standard resignation form which employees sign and date.
- Internal application: When employees announce their interest in an open position, a simple, standardized questionnaire can assemble useful information all in one place, and also give all internal applicants a level playing field. Putting this form in the personnel files documents the employee’s interest in advancement whether or not they get the job.
- Reasons for separation: The documentation in the personnel file of ex-employees should make clear why the employee is no longer working for the company. I think reasons for separation boil down to three:
- Resignation: The employee left of their own volition, (with or without adequate notice.)
- Involuntary Termination: The employer ended the employment relationship due to unsatisfactory work performance, misconduct, or some combination of the two factors.
- Layoff: The employer eliminated the employee’s position and did not rehire for that position, and there was no other position available for the employee.
- Eligibility for rehire: Time passes, and the ex-employee’s supervisor is no longer around. If the ex-employee reapplies, who will remember the circumstances around their departure?
Insecurely stored records, incomplete forms, missing information, inappropriate information—these errors can creep into systems over time. An HR systems audit every few years, whether conducted internally or externally, can help ensure that your record-keeping practices are legal, fair, efficient and secure.
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