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The Importance of Maintaining Temporary Employee Files

There is a general consensus that temporary employee files are maintained just as regular, full-time employee files. The only difference is who is responsible for maintaining such files – the supervising worksite or the staffing agency? The short answer is both. Supervisors at a workplace assignment may need to keep certain records for temporary employees based on the type of job duties performed. Staffing agencies must maintain personnel files on all temporary employees who sign up to work for the agencies.

Why Maintain Temporary Employee Files?

Few people enjoy shuffling paperwork, but it is essential to create and maintain temporary employee files properly. Doing so will pay off in the long run if the company faces an audit or wrongful termination lawsuit. In the worst-case scenario, temporary employee files might become evidence in resolving legal matters.

Making decisions about promotions, filing tax returns, etc. can be handled without incident. All important documents related to each employee are in an easy place to retrieve when needed.

What to Keep in Temporary Employee Files

Typically, the employee file begins when a candidate applies for work with the staffing agency. Most documents are job/skill related. These include:

  • Application
  • Resume
  • Signed acknowledgement of temporary employee handbook
  • Acknowledgement of safety expectations while at a work site
  • Employee benefits forms
  • Next of kin and emergency contact information
  • References
  • Degree verification

As the temporary employee works for the agency, other documents are usually added such as: • List of assignments • Form W-4 IRS Withholding Allowance Certificate • Awards or citations • Client complaints • Any disciplinary actions • Completion of training programs • Contract agreements between temp and agency • Documents about the temp employee's departure (i.e., reason for leaving, date of termination, unemployment documents

What Not to Keep in Temporary Employee Files

Just as there is a litany of things staffing agencies must keep, there are documents that should not go in personnel files. Each one is connected to compliance with federal employment laws that temporary and permanent employers must follow.

Medical Records

Medical records do not belong in personnel files. If a temporary employee has a disability, the agency is legally required to keep medical information in a separate file with limited access by others. The same practice is true for employees who do not have a disability. Under HIPAA, employers are legally obligated to keep information about health plans private. Additionally, the Genetic Information Discrimination Act requires employers to keep medical records confidential.

I-9 Forms

Staffing agencies should not keep I-9 forms, which are provided by the U.S. Citizenship and Immigration Services to verify a temp's legal right to work in the U.S. A representative of the staffing agency should verify and fill in details of documentation that the temporary employee provides.

Forms from all applicants, even if they are never assigned a temporary job, belong in a separate folder. At any time, the federal government is entitled to inspect the forms along with copies of documentation supporting information listed on the forms. Keeping the forms in individual personnel files violates employee rights to privacy.

In addition to federal requirements, staffing agencies should not make it a practice to keep unnecessary documents in temporary employee files. Generally, a temporary employee's file may contain any job-related documents. Nevertheless, staffing agencies should keep in mind that temporary employees have the same rights as regular employees to view their personnel files.

Indiscreet entries not directly related to qualifications or job performance on temporary assignments could raise legal problems. References to private life situations, political leanings or unsubstantiated criticisms about the temporary employee's religion, gender or race should not go in the files.

In other words, should discard anything that is not a legal basis for an employment-related decision. As a rule of thumb, staffing agencies should not put anything in an employee's personnel file that they would not want a jury to see.

Records Retention Schedule

Knowing what to keep in temporary employee files is just the beginning. Staffing agencies also need to know how long to retain certain documents. Adopting a records retention schedule will help agencies keep records that are necessary for fiscal, operational and/or legal reasons. Once records are no longer useful, there should also be a system for destroying them in a manner that protects employees' rights.

Generally speaking, staffing agencies can develop a records retention schedule based on historical experience or best practices in the industry. Schedules should also comply with legal mandates. For instance, federal employment laws recommend employers keep payroll records for at least four years.

Some agencies might choose to keep records for up to seven years for tax-related purposes. Whatever method is chosen, it should be considered a guide subject to changes. Some records need to be kept longer for government investigations, litigations or audits.

In planning a record retention schedule, staffing agencies should include any state or local statutes that might apply. Some states have specific requirements based on the industry type for which agencies hire temporary workers. Furthermore, unemployment, workers compensation and business taxes can influence the requirements for keeping employee records. An additional safeguard for staffing agencies is to have an employment law attorney review a proposed retention timetable before it is put into practice.

Standard for employment records based on federal requirements that temporary agencies can follow are:

  • Hiring records (applications, resumes, job postings) – one year
  • Biographical data, employment contracts – three years
  • Payroll records, including name, SSN, DOB, job classification, compensation dates, pay rate, hours worked – four years
  • Employment actions (layoffs, terminations, recalls, test results, promotions) – one year from the date action took place

Generally, the retention schedule will vary based on the hiring practices of different staffing agencies. When establishing a schedule, all agencies should follow a few important guidelines such as avoiding the instinct to hoard unnecessary documents. Records that are not directly related to the temporary employee's job or for legal issues should not be kept in the files.

Temporary materials such as reminder notes, drafts or extra copies are time and space wasters. Keeping documents for public relations or sentimental reasons may increase legal liabilities. Segmenting records is a good practice to following a systematic schedule for destroying old or useless documents.

What to Do When No File Retention Requirements Exist

It is easy to follow guidelines when state or federal laws have set criteria for staffing agencies. However, what should representatives do when no requirements exist for specific retention periods? In some cases, there are no stated legal requirements for whether particular documents must be maintained.

In other cases, no retention period exists when it is clear that certain records should be kept on file. Even after a thorough search, some statutes and regulations imply permanent retention because no permission is given to destroy the records. This is not an uncommon scenario for temporary and permanent employers.

A best practice for dealing with this quandary is the Uniform Preservation of Private Business Records Act. Under UPPBRA, employers should keep records for three years whenever a retention period is not specified. Destroying the records sooner could jeopardize a legal issue in the worst case scenario. Currently, only eight states recognize this Act or something similar for employers to follow for regulatory compliance purposes.

Federal vs. State

There are instances where federal guidelines conflict with retention guidelines of the stat in which the agency does business. Following the most conservative procedures is the safest route for temporary agencies.

Staffing agencies can adopt a voluntary record destruction program to balance conflicts between federal and state guidelines. After all, a key purpose for keeping employee records is to show proof against claims of employer mishaps. For example, contractual documents should remain on file for at least two years past the contract termination date.

The Lilly Ledbetter Fair Pay Act changed the way employers must retain compensation information. Now, every paycheck could constitute a claim of discrimination, which extends the potential time period for the date of expiration for EEOC claims. As a result, employers should document and retain information regarding pay decisions, hiring offers and merit increases to justify actions that could become questionable in future discrimination claims.

Co-Employment Responsibilities Between Temp Agencies and Clients

Maintenance of temporary employee files has slightly different rules when temp agencies and worksite employers share employment responsibilities. Because co-employment responsibilities may also vary from one state to the next, a safe practice for both is to understand the rules and regulations.

Typically, the contract between the temp agency and employer will outline who is the employer of record. There are some instances, however, when worksite employers choose to maintain records on temporary employees for training, absences and other employee-related issues. If the agency has copies of these documents, some employers may choose not to retain their own files.

That being said, if the worksite employer made any employment decisions that directly affected the temporary employee, they should keep records the same length of time as regular employee files. The more a worksite employer did in terms of scheduling requests for religious reasons, for instance, the more a potential for liability exists.

This includes disciplinary actions, background checks or pay decisions on how much the temporary employee should receive. Pay decisions for temporary employees are different from the pay rate to the agency.

Conclusion

Maintaining temporary employee files is just as important as what is done for regular full-time employees. Having records of all past employment information is essential because employers – temporary and permanent – never know when certain details must be recalled. An annual review of all records will help to ensure that information is up-to-date and no unnecessary documents are in the files.