Purging and Retention
Personnel files and medical files must be kept during the duration of a person's employment and thereafter. The amount of time you keep the file is referred to as the retention. There are federal retention requirements for the Americans with Disabilities Act, the Family Medical Leave Act, and the Age Discrimination in Employment Act, and each state has its own retention schedule, too. Both federal and state laws may vary according to the number of employees a company has. You may find that you're not sure exactly how long to keep personnel files after an employee has left. Err on the side of caution and keep the files longer than you think you are required just to be safe. If a discrimination suit is brought against the company, it is important to be prepared by having the correct records. This is the basis for some of the retention requirements.
Personnel files and medical files for released employees should be kept under lock and key in the same way that current employee files are kept. For your convenience, keep them in a different drawer. Privacy issues are still in effect and forms that you no longer need, like direct deposit authorizations, should be shredded.
If the company has fifteen or more employees, ADA and Title VII of the 1964 Civil Rights Act requirements apply, and files must be kept for one year after separation. If there are twenty or more employees, ADEA regulations come into effect, and there is also a one-year retention requirement. The FMLA requires that all medical documentation and other paperwork related to the leave are kept for three years. These are just federal laws; your state discrimination laws may supersede the federal requirements. In the event of a workers' compensation claim or litigation, the files may need to be kept indefinitely.
To purge a file means to remove it from your inventory. Once it has been determined that it's safe to purge a file, it should be shredded. You can shred it yourself with a high-quality paper shredder or hire a shredding company to do the job for you.