An article in last month's issue outlined why maintaining personnel files is so critical - and explained some of the items that should not be kept in the files. 

But business attorney Cory King of the firm of Fine, Boggs, Cope & Perkins, in Carlsbad, California, and a frequent trainer at automotive industry events, said there are a number of key documents that should be part of your personnel files.

King reminds employers that state regulations on personnel files vary somewhat, and the information presented here is not a replacement for seeking legal advice about regulations in your state. But these are some general guidelines that can help employers comply with the law and better protect themselves in the event of a lawsuit.

What belongs in the file

King's list of what should be included in personnel files includes:

• The employment application. It's important that the application be complete and signed by the applicant prior to hiring. "If it's not complete and it's not signed, it's really not worth much to you," King explained.

• An at-will arbitration agreement. King said that although your application form and employee policy handbook may spell out some key agreements between the company and employees, he recommends having some of the most critical agreements on stand-alone forms signed by the employee and stored in the personnel file. One such document is a comprehensive at-will arbitration agreement, which makes it clear that at-will employees understand they can quit or be terminated at any time, with or without cause or notice. This form can also spell out how disputes will be handled (i.e. through arbitration rather than the courts).

• An acknowledgment of receipt of an employee handbook. The employees signature indicates he or she received an employee handbook and agrees to abide by company policies.

• An acknowledgment of the company's policy against harassment. "Again, a lot of these things will already appear in your handbook, but it's a good idea to have them as stand-alone documents," King said. A signature on such a form will further protect you if the employee later claims he wasn't aware of the company's harassment policy.

• Fair Credit Reporting Act (FCRA) forms. If you conduct background checks of an applicant prior to hiring - something King recommends - you need to have the proper FCRA forms related to such checks.

Background checks advised

"Background checks can cost you anywhere from $20 to $50," King said. "It's one of the best things you can do to make sure you're getting quality employees. When you do a background check, you get to find out what their credit is like, if they've been in jail because they embezzled a whole lot of money from their last employer, if they've been convicted of fraud, if they've been sued, if they've sued anyone.

"All of this is good information that's public record and that you can have through a background check. If you're not doing background checks, you need to do them. If you're going to do them, make sure you're filling out the proper FCRA forms."

• Drivers' license records. "If you have anybody getting behind the wheel of a vehicle, even if it doesn't leave your shop or your lot and stays on your property, you should have a driver's license record on them," King said. "I would be shocked if your insurance company isn't requiring you to do this. I guarantee they're pulling a DMV report on your people. You should have it as well, and keep a copy of it in the personnel file."