Over the past few days, I've discussed employment issues with several small business owners. In particular, one of the owners debated the type of information and documents he needed to keep in his employees' files.
My simple answer was, "everything." I've always erred on the side of an over-abundance of information, rather than a "necessary" amount of information. Too often, I find that the document or note I thought I wouldn't need, became more important or crucial over time.
This is especially true for business owners who wish to protect themselves after the "lovely" employment relationship ends. If you have any employees, you need to be documenting and "CYA-ing" your actions.
Here's a simple list of some of the documents to keep in a secure and locked location:
Employee contact information with emergency numbers
Payroll information (Timesheets, W-9s and copies of W-2s)
Job Description - Regardless of whether you have 1 employee, or 100 employees, each employee should have a written job description, including basic requirements for the job, like a valid drivers license. You should give your employees a copy of this job description, and periodically review the job description with your employees to make sure the description accurately reflects their tasks. Remember: communication is a key component of your business's success.
Employment Application – Each employee should fill out an employment application prior to starting their career with you. Preferably, the applicant should hand write the information, but a typed application with their signature, works too. Most importantly, your application must contain a statement that the applicant verifies the truthfulness of the information contained in the application, and any untruthfulness is cause for immediate termination.
All Documents Submitted During the Application Process – Whatever you ask for, you had better keep. If the applicant submits their resume or a letter, keep it.
Written Offers of Employment – If you're not writing formal offers to your new hires, begin immediately. A telephone call is good, but a call plus a letter is better. Your offer should outline the basic terms of the employment, such as working hours, pay, bonuses, health insurance eligibility, and standard operating procedures. You should also include any concessions that either party makes, as a condition for employment.
Employee Performance Evaluations – Giving monthly, semi-annual, or annual performance reviews just makes sense. Effective evaluations are crucial to building morale or changing behavior. Encourage your employees to set goals, comment on you and their performance, and suggestions for improvement. You should keep copies of each evaluation that you make, and any statements that the employee makes regarding the evaluation.
Formal Write-ups or Other Memorandums – You must document any disruptive employee disruptive behavior. You should discuss serious violations with your employee, and document the discussion by having the employee sign and date your memo. You should also keep documentation of an employee's good behavior. Sometimes, deciding who to promote is a coin flip made easier by substantive (but often forgotten) small acts that show dedication to you and your business. Finally, if your employee writes anything to you, keep the documents. It'll be hard to argue you're a bad boss, when you have handwritten notes praising you and your business.
I think far too many people become worried about the "come back and bite me in the butt" factor of keeping some of this paperwork. These people are the ones who easily forget that being a good manager is half of the battle to finding good employees.
If you need to review your employment procedures, don't hesitate to contact our firm. We help employers and employees resolve their labor and employment issues.