a person skimming through a record-keeping folder

5 Keys for Managing Your Employee Record Management System

By Timerack

July 18, 2022

For human resources professionals, managing the life cycle of employees often means maintaining the mountains of paperwork that come with them. Without an employee record management system, these mountains could easily crumble into a mess of administrative liabilities and lawsuits.

In addition to ensuring compliance with myriad federal and statewide laws, a successful employee record management system protects sensitive information and streamlines the processes of accessing and sharing critical documents. Once you’ve established a clear location and path for every document, you don’t have to waste precious time hunting for records or attempting to recreate lost data.

The following guidelines will help your staffing agency develop an employee record management system that maximizes administrative efficiency as well as your overall control of employee data.  

Step 1: Map Your Documents

The first step towards organizing employee records is to identify every type of document your agency collects. These documents typically include:

  • Recruiting documents: Job applications, interview notes, resumes, and hiring test results
  • Training materials: Documents and resources related to employee training
  • Hiring records: Onboarding documents, I-9 forms, and employment contracts
  • Health-care and benefits documents: Health plans, enrollment documents, health-care records
  • Personnel records: Performance reviews, compensation records, promotion documents, disciplinary records, unemployment records
  • Disability records: Disability information, requests for accommodations or leave
  • Payroll records: Attendance records, time sheets, tax forms
  • Leave records: Requests for paid time off or paid parental leave
  • Security and accident records: Incident reports, medical records, workers’ compensation, safety training documents

In addition to recruiting and training materials, many staffing agencies distribute employee handbooks, confidentiality agreements, and documentation that lays out certain HR policies to temporary employees.

Step 2: Know Your Legal Requirements

Arguably, the most important reason to implement a formal employee record management system is legal compliance. Numerous federal laws require employers to store certain employee records for certain periods of time. Below are some of the current federally-mandated retention periods for key employee records:

  • Job applications, resumes and hiring tests: 1 year
  • I-9 forms: 3 years from the date of hire or 1 year after termination (whichever is later)
  • Employment tax documents such as W-4 forms and pay stubs: 4 years
  • Performance reviews: 2 years
  • Requests for reasonable accommodation: 1 year after the document’s creation
  • Benefit plans: 1 year after the plan’s termination
  • Termination records: 1 year from the date of termination

In terms of payroll documents and timekeeping records, most U.S. states abide by the U.S. Department of Labor’s retention policy of three years. However, the states of New York, California, Illinois, and Washington have enacted their own legislation that determines which specific payroll records need to be retained as well as how long to keep them. For example, under New York’s Wage Theft Prevention Act, employers must retain payroll records for six years, instead of the DOL’s aforementioned three years.

In order to confirm how long your agency must retain employee records—especially payroll documents—research your state’s laws or consult with your tax, legal. or financial advisors.

Step 3: Assign Expiration Dates and Trigger Events

Next, you need to assign expiration dates and trigger events for different types of documents. Triggers are events that “trigger” the beginning of a certain document’s expiration clock. A common example of one such trigger event is an employee’s termination. Once an employee is terminated, numerous documents must then be retained for a full year. After a year has passed, these documents can be discarded.

Assigning expiration dates and trigger events prevents you from holding onto documents for unnecessarily long periods of time, which makes it harder to organize and access the documents you actually need to retain. Companies rely on staffing agencies for efficiency, so it’s in your best interest to maintain the efficiency of your record management system by promptly discarding expired documents. 

Step 4: Introduce HR Document Management Software

Physical records are another major roadblock towards improving a staffing agency’s overall efficiency. Even with the best management systems in place, manually organizing paper documents is a time-consuming ordeal that’s highly vulnerable to human error. Paper documents can easily get lost, which could spell serious trouble in the event of a regulatory audit.

Fortunately, HR document management software can eliminate both of these issues by allowing your agency to safely store paperwork online and access employee data in a matter of seconds. The most advanced programs can also automate tedious responsibilities such as creating the required documentation for compliance reporting and the distribution of recruiting and training materials. 

Furthermore, implementing HR document management software shows that your agency has adapted to today’s hybrid and remote work environments and can effectively meet the new industry standards for rapid service.

Step 5: Establish Security Levels

Various employee records contain confidential information, such as bank account numbers, social security numbers, and medical histories. Due to the high sensitivity of this data, only certain individuals should be able to access your agency’s document management system. It’s up to the system’s administrators to determine which colleagues at your agency should be authorized to handle critical documents.

Again, a primary advantage of HR document management software is the ability to retrieve and share employee records at a moment’s notice. For this reason, anyone with access to your agency’s document management system should be sufficiently trained to fulfill these duties in a responsible fashion. This way, your agency won’t have to depend on the availability of just one or two people in order to quickly respond to document-related requests from clients.

Final Thoughts

An effective employee record management system doesn’t just save time and spare you from administrative headaches. It strengthens the relationship between agencies and clients while simultaneously giving you the organizational and operational capabilities to seamlessly expand your client base. Should a legal challenge arise, you’ll also be fully prepared to promptly defend your agency’s competency.

When you consider the essential role of documentation in the staffing industry, these outcomes are undoubtedly worth the effort involved.



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