How to Maintain Employee Files

Employee files can be stored in folders such as these.

Employers must lawfully collect and maintain all employee information and store the data in files. These files consist of personal information, employment wages, tax and payroll data and pay periods for the year. The United States Department of Labor requires that these files are kept on hand by the employer at all times. Employers are subject to random audits, so it is imperative that files are maintained properly. They can use paper files, electronic data entries or both.

Things You'll Need

• File cabinets
• Computer

Instructions

1. Gather the information necessary to maintain the employee files. Collect the personal information from the employees, such as name, address, phone number, date of birth, gender and Social Security number.

2. Collect the employment wages information, which includes the hire date, rate of pay, additions and deductions to pay, number of hours worked and forms I-9 and 4070, which are employment-eligibility verification and report of tips to employer, respectively.

3. Collect employee information regarding tax and payroll data. Gather the W4 form, which is the employer's allowance certificate, and any allowances.

4. Keep on hand the pay periods for the calendar year, which include total wages subject to federal, state and local taxes, total compensation, and total federal, state and local taxes withheld.

5. Store the four necessary employee files as hard copies in separate files under each employee's name. Keep the files in alphabetical order. Place the files in a locked cabinet to prevent personal information from being stolen or tampered with.

6. Enter the information using a computer with data entry software. The software should have security features, such as passwords, to prevent information from being stolen or tampered with. Store the information on the computer's database in case the hard copies are lost or destroyed.

7. Maintain the files of each employee by updating them with hard copies and computer data entries. For example, update the files each year or during promotions in case the employee changes residences or receives a raise.

Tips & Warnings

• Hire an office assistant to maintain the files of employees of larger companies that have high turnover. This reduces errors and lost information that causes problems with the Department of Labor.

• Keep files for all past and current employees for four years to avoid being hit with a fine and/or imprisonment.

References

• Business Know How: Employee Recordkeeping Requirements
• Spaan Jaars: Storing Uploaded Files in a Database or in the File System