Federal Laws

• Forms required by federal law are the Employee's Withholding Allowance Certificate (W-4) for tax purposes, or Request for Taxpayer Identification Number and Certification (W-9) for independent-contractor tax reporting, and the Employment Eligibility Verification (I-9) verifying legal U.S. residency or citizenship.
  
  The Privacy Act (5 U.S.C. section 552a) restricts what kind of information is put into the personnel file for federal, military and government employers. Otherwise, private sector companies have a broad scope of what they can collect so long as it is "business-related information."
  
  Key federal legislation that affects employers: Title VII of the Civil Rights Act of 1964, as amended in 1972, non-discrimination laws; Age Discrimination in Employment Act of 1967; Federal Fair Labor Standards Act, which sets the standard for federal minimum wage; Americans with Disabilities Act; Family and Medical Leave Act, which protects the jobs of employees on leave for family matters; Occupational Safety and Health; and the National Labor Relations Act. Employers generally can choose whether to compile documentation in employee files in case of federal claims against them involving these laws, unless the state has additional requirements.
  
  The Patriot Act, intended to protect U.S. citizens against international terrorism, allows federal agents with a court order access to employee records. Also, the Sarbanes-Oxley Act of 2002, which focuses on publicly traded companies and accounting firms, affects how employee files are kept "under lock and key," especially with regards to whistle-blower protection.
  
  

Best Practices

• Personnel files must have at least basic information such as the employee's full name, address, birth date, Social Security number, job title and pay rate. "Best practices in personnel files are to establish two employee files, the "main" file and the "confidential" file, according to Clark. The "main" file comprises documents such as the employment application, resume, cover letters and correspondence, offer letter signed by the company and the applicant, new-hire orientation checklist, equipment/key issue documentation, signed employee-handbook acknowledgment, and documentation regarding ending employment. The "confidential" file consists of the I-9 information, benefits, payroll, workers' compensation and confidential investigations, if any. Having two files protects employers from unauthorized access to information.
  
  

File Retention

• Employers are affected by federal regulations on retention of employee files. Employee records related to federal taxes must be retained for at least four years, according to federal law. This includes name, address, Social Security number, birth date and job classification, according to the Society of Human Resource Management, or SHRM. Three to seven years are given as best practices, if not legally required, for documents pertaining to the Social Security Act; the Immigration Reform and Control Act of 1986 (immigration status); the Employee Retirement Income Security Act (covering retirement plans); and the Federal Fair Labor Standards Act, also known as the Fair Pay Act; the Americans with Disabilities Act; and the Age Discrimination in Employment Act.
  
  Federal laws on retaining personnel files also might apply to federal contractors and subcontractors, according to the SHRM. Laws that require employee demographic information and compensation records to be kept for three years are the Davis-Bacon Act (for construction), Walsh-Healy Public Contracts Act (for supplies) and Service Contract Act (for services).