The paperwork associated with having employees carries legal, operational, fiscal and historical implications for a business. Human resource records maintenance must consider file content, location and access to minimize a company's risk of employee litigation and noncompliance with federal and state mandates. Although employers can use paper or electronic formats, they must adhere to state- and federal retention requirements. HR needs to have at least two files per employee plus three general workforce files.

Personnel File

HR should keep a main file on each employee for orientation and employment information. Documents related to a worker's hiring, employment and future employment go in this folder. Hiring records to retain include his resume, application, offer agreement or contract, handbook receipt acknowledgment and original job description; those relating to employment and future employment document performance evaluations, promotions, benefits participation, recognitions or complaints, disciplinary actions and training. Each employee file should also contain emergency contact information and an IRS form W-4. When employment terminates, the exit interview, separation package and related paperwork go into this personnel file.

Confidential Medical File

Anything related to an employee's health history, pre-employment physical or disability belongs in a separate, confidential file to comply with the Americans with Disabilities Act and the Health Insurance Portability and Accountability Act. ADA concerns all businesses that employ at least 15 workers for 20 calendar weeks. HIPAA's privacy protection requirement applies to your business unless you have fewer than 50 participants in a self-insured group plan. These confidential records should be kept in a locked cabinet, and HR must limit access to a "need to know" basis. Although drug tests and background checks don't fall under ADA, an employee's results can find a home in his medical file, along with Family and Medical Leave Act and worker's compensation documents. The Society for Human Resource Management suggests using this file to hold anything containing protected information such as marital status, religious beliefs and birth date.

Optional Safety File

HR can opt to keep OSHA training and worker's compensation injury documents in a third, separate file, or include them in the employee's confidential medical file. Only companies with 10 or more employees at any time during a calendar year meet the size-based exemption that makes OSHA illness and injury record maintenance unnecessary. Nonetheless, OSHA considers keeping safety training and violation records to be evidence of an employer's "good faith and compliance."

I-9 Files

The U.S. Citizens and Immigration Service under the Department of Homeland Security requires every employer to complete an I-9 form to verify employment eligibility for each worker hired. Whether a business decides to use a paper or electronic system for this record, it must limit access by keeping all copies under lock and key. The USCIS can inspect your I-9 records unannounced, which makes using a three-ring binder a convenient way to maintain a master file that readily can be handed over. The binder method makes updating easy and, by virtue of serving as a central location, ensures that inspectors cannot see other personnel data or compromise worker privacy.

The Fair Labor Standards Act requires employers to retain accurate compensation records. Timekeeping documentation such as time sheets, work schedules and time cards belong in this file as does wage-supporting paperwork such as rate tables, piecework tickets and garnishments. Time-off records indicating sick, vacation and other paid-not-worked hours should be included. Retention requirements vary from two to three years.

Recruitment and EEO Files

Any information gathered for diversity tracking must be kept separate from all other employee information. However, HR should retain applications, job postings and requisitions, interview notes and ads for each position to comply with Title VII of the Civil Rights Act of 1964, especially if the company has more than 15 employees. Candidate information, including reference checks and testing results, also belongs in this limited-access file.