Page 48 - Essentials of Payroll: Management and Accounting

Cr eating a Payr oll System
more original documents, as previously noted and as described in more
detail on the second page of the exhibit. The reviewing person must
then sign at the bottom of Section 2. Section 3 of the form is used only
to update the information if an employee subsequently changed names,
or quit and was rehired within three years of the original completion of

the form, or has obtained a new work authorization.

Creating the Personnel File
When a new employee starts work, either the human resources or pay-
roll staff should create a personnel folder in which all employee-related
documents are stored. This folder should be capable of holding several

hundred pages of documents and have multiple dividers so that infor-
mation can be logically divided and easily accessed. Information can be
grouped in a variety of ways within the folder; here are some common
subsets of information to consider:
• Deduction information. One block of information will be the
deductions related to all types of benefits, such as medical, life,
and dental insurance.This means that the sign-up or waiver sheets
for each type of insurance should be included in the folder.
• Employee correspondence. Employees may communicate with
the payroll or human resources departments from time to
time, perhaps to make complaints, to notify the company of
time off for various reasons (such as jury duty), or to ask for
special treatment in some manner. If these communications
are in writing, they should be included in the folder. If they
are verbal, the person receiving the information may include
them in a memo, if the matter appears sufficiently important,
and store the memo in the folder.
• Employee reviews. All employee reviews should be kept in the
folder. They are particularly important if employees later file
suit against the company in the event of a termination, since
the company must be able to prove that an employee was

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