Personnel history: What to keep -- and what to keep out

After terminating an employee a couple of years ago, a human resources staff member at Minnesota Gastroenterology sent information from the employee's personnel file to the state unemployment office. The information included meticulous notes regarding mistakes, such as how the employee repeatedly scheduled patients for the wrong medical tests.

The notes clearly justified why the staff member was dismissed. But the notes also clearly violated HIPAA regulations.

"When the employee went to apply for unemployment, one of our clerks responded and sent the information. The clerk didn't immediately notice that patient information was in the employee's personnel file," says Marit Brock, chief human resources officer at the 53-physician practice based in Minneapolis.

Because the practice quickly realized it had sent out information that should have been kept confidential, it was able to rectify the situation.

This experience, however, illustrates just why keeping and maintaining personnel files can be problematic for physicians.

On the one hand, physician practices need to maintain personnel files and populate them with the information and documentation that can help the group with employee development, operational efficiency and legal risk minimization. On the other hand, physician practices need to make sure that files do not include information that could invite or exacerbate legal problems.

Before addressing all the details associated with personnel files, medical group practices -- even small practices with only a few employees -- need to realize that personnel files are a necessity, not an option, experts say.

"Simply put, any business -- including medical practices -- need to keep personnel files simply for organizational purposes," says Bill Truesdell, president of Management Advantage, a consulting company based in Walnut Creek, Calif.

In addition, personnel files can help employee development efforts, according to Kari Potter, human resources services director with the University of Wisconsin Medical Foundation, a Madison-based academic practice with 973 physicians.

"The files provide us with an easy, at-a-glance look at work performance and employee development," Potter says. "By having employee information in personnel files, we have a structured, standardized format -- and can easily find what we are looking for."

Perhaps the most pressing reason to keep personnel files, however, is because doing so can help protect a medical group from employment-related legal claims, says Cathy S. Beyda, senior counsel for knowledge management at Littler Mendelson, a San Francisco-based law firm.

"Certainly, the information in a personnel file can help to protect a medical group in the case of a wrongful termination law suit," Beyda says.

The key to shielding practices from legal risks, however, rests in housing only the right information in the personnel files, while keeping potentially troublesome documents stored elsewhere, according to Philip L. Dickey, human resources services director and COO of Doctors Management, a consulting company in Knoxville, Tenn.

Although there is no one standardized set of documents that needs to be included in all personnel files, human resources experts recommend that medical groups keep one personnel file that contains employee hiring and performance data and another separate file with information such as health and Family Medical Leave Act forms. Similarly, while employers must keep I-9 forms, which verify employees' employment eligibility, these forms also identify age and race, so they must be housed separately from the personnel file.

At University of Wisconsin Medical Foundation, for example, each personnel file contains the employee application, confidential references obtained in consideration of employment, documentation of employment, salary history, evaluation, leave of absence documents, records of disciplinary action, necessary licensure for clinical staff, and other pertinent employment records.

Medical information, FMLA information and I-9 forms are stored in a separate file.

Separating the types of information is important because only employment-related documents should be considered when making hiring, firing and promotion decisions.

"Let's say you have someone up for a promotion and the supervisor comes in and views the medical information in the personnel file. This medical information should not be considered when making the decision to promote someone," Beyda says.

Determining where to file documents is only half of the battle. Practice leaders also need to monitor the content of these documents.

To protect medical groups from legal risk, experts advise:

Don't invite scrutiny

Although personnel files should include the initial job applications, practice leaders need to make sure notations made by hiring managers during job interviews do not open up any type of legal Pandora's box, according to Joan Roediger, an attorney with Obermayer Rebmann Maxwell & Hippel LLP, Philadelphia.

"If you write something on the application like, 'The employee is eight months pregnant,' then you are subjecting your practice to legal risk. You have to use common sense," Roediger says.

More is often better

Records of negative and positive conversations with employees, commendations and disciplinary action documentation should all be kept in the personnel file, says Truesdell, the management consultant.

"If it is not written down, it did not happen," he says. "Regardless of how much credibility the boss or manager has, if there is no written document about what took place, then the credibility is jeopardized."

Gino Benedetti, an attorney with Dillworth Paxson LLP, Philadelphia, agrees that employers should keep as much information as possible about performance in personnel files.

"You can never have too much in a personnel file. If you are being honest and candid about the employee's performance and noting that in the record, how can that hurt you?" Benedetti says.

Stick to the facts

Although practice leaders need to include ample performance information, all of the notes must be objective and fact-based.

"You need to leave opinions out of the personnel record. You can leave facts, observation and descriptions of behavior in but opinions should never be entered in the personnel record," Truesdell says. "Opinions can be the smoking gun in discrimination lawsuits."

Don't soft-pedal evaluations

Although it's important to keep opinions out, it's equally important to make sure all employee performance information is properly documented and included. As such, employers need to make sure that all sub-par performance evaluations and disciplinary action is, indeed, part of the personnel record.

"Many times, I find myself dealing with employers who are far too nice. You have to have a track record of all performance and disciplinary action in the personnel file," Roediger says. "Employers really don't want to be kindergarten teachers. But the fact of the matter is that there is a fine line between being an employer and being a kindergarten teacher."

In the same vein, Benedetti advises employers to stay away from unwarranted praise.

"You don't want to go overboard and put things in there just because you are trying to be nice. You need to be objective -- and, if someone is doing a good job, say so. But don't be overly flowery," he says. "You have to be able to document that it was a business decision when the practice decided to terminate an employee. If you have too much soft information in the reviews, then the employee will be able to argue that is was discrimination."

Indeed, if leaders fail to document performance and disciplinary action, when the group wants to terminate the employee, problems could arise.

"If you want to fire an employee -- especially someone who is in a protected class, either over 40, disabled or minority -- and you have a thin personnel file, then you are going to run into trouble," Roediger says.

"If you have an employee who was late every day but you have no record of it, you never wrote the employee up, then when you go to fire them, they are going to claim that you are discriminating,"

Keep files up-to-date

When maintaining personnel files for a medical practice, it's especially important to make sure that information on clinical staff members' licensing and credentialing is current.

Minnesota Gastroenterology, for example, keeps medical licenses, cardiopulmonary resuscitation certifications and background checks on file for all clinical employees -- and has a formal schedule in place to make sure this information stays up-to-date.

"For example, every August, we update the TB skin test results, and all background checks are updated in November," Brock says. "By having the schedule organized, it becomes a priority to do the updates, and nothing slips away."

Control access

Physicians and medical group leaders also need to monitor who has access to personnel files, experts say. Deciding what could -- and should -- be shared with whom, however, is sometimes difficult. To start, practices should check state regulations to determine exactly what information employees have a right to see.

Even with such guidelines spelled out, it can be difficult to determine exactly what to share with employees.

For example, if a nurse at UW Madison is questioning compensation levels and asks to see her personnel file, the human resources department would share information regarding their market analysis on the nurse compensation trends in the state but would not share any information on the internal review of nursing salaries.

Similarly, the practice is especially careful about sharing information with third parties, such as other employers or credit agencies. As such, the practice never sends out information from a personnel file unless the employee has expressly authorized the release in writing.