HR Solutions: Departed Employee Files

Should an employer combine an employee’s personnel files after he or she leaves the company?

No. Many employers believe that once an employee leaves the organization, the guidelines for separating employee personnel files no longer apply. But that’s not the case: Personal information must remain confidential.

Various federal and state laws provide guidelines on this. The U.S. Equal Employment Opportunity Commission’s technical guidance for the Americans with Disabilities Act states that “All information obtained from post-offer medical examinations and inquiries must be collected and maintained on separate forms, in separate medical files and must be treated as a confidential medical record. Therefore, an employer should not place any medical-related material in an employee’s personnel file.” The guidelines don’t state that those requirements cease after an employee leaves.

The federal Health Insurance Portability and Accountability Act (HIPAA) protects information such as medical records and other data that contain identifiable health information. Medical records can include pre-employment medical exams, workers’ compensation history and documentation of a disability. HIPAA doesn’t distinguish between active and terminated employees.

Immigration forms contain information, such as national origin and citizenship status, that could be used in a discriminatory manner and shouldn’t be accessible to supervisors. In addition, if an employer is audited, company representatives must produce these forms for both terminated and current employees. If such forms are kept separate from other employee files, it is less likely that the auditing agency will find other possible employment violations and share them with other agencies.

Any forms that contain information regarding protected classes (such as age, race, sex, national origin, color, religion, disability or veteran status) or Social Security numbers should continue to be kept separate after termination. Combining files makes it easier for someone to access the information and use it inappropriately. For example, if an employee is interested in being rehired, the hiring manager would be able to access the combined file, which could contain information used to discriminate against the applicant. Combined files also are more vulnerable to identity theft because all personal information is in one place and might not be monitored as frequently.

Employers can minimize risk by applying the same guidelines to files of both current and past employees.

—Yvette Lee, SHRM-SCP

How frequently should employees be paid?

Many state laws detail when employees must be paid for the hours they have worked. These state wage-payment laws might dictate the employer’s pay frequency. Employers may choose to pay workers more often than their state law requires, but not less frequently.

Employees are generally paid weekly, biweekly, semimonthly or monthly. Employers should consider the pros and cons of each to decide which is best for them.

Weekly or biweekly. While employees generally like being paid more often, it costs employers more to do so. Payroll companies typically charge based on each payroll that is run. If the payroll is processed internally, employers need more staff and more hours to issue paychecks weekly. There also is more potential for errors. On the plus side, it’s easier to calculate overtime when nonexempt employees are paid weekly or every other week.

Semimonthly. Employees paid semimonthly receive checks two times a month on specific dates—for example, the 15th and the last day of the month. Accountants usually like that the end of the pay cycle coincides with the end of the month, which is aligned with month-end and year-end accounting processes.

However, overtime calculations can be confusing with semimonthly pay. For example, some of the overtime in a given workweek may fall in a different pay period. In addition, employees may find it harder to remember when to turn in their time sheets or when to expect their paychecks.

Monthly. When employees are paid on one set date each month, both employees and employers may experience cash flow problems. While overtime calculations are more difficult when figured over a longer period, employers will save in transaction costs by issuing paychecks 12 times a year.

Some employers have two different payroll systems. For example, an employer may run a biweekly payroll for nonexempt hourly employees and a semimonthly payroll for exempt salary employees.

Whatever the pay frequency, employers should clearly define the workweek, pay periods and corresponding pay dates in advance so that employees understand what hours they are being paid for and when.

—Lesa Albright, SHRM-SCP