The Hidden Risks of Managers Keeping Their Own Employee Files
In hospitality, managers often juggle many responsibilities. They write schedules, coach their teams, respond to guest issues, and keep the department running during busy shifts. With so much activity, many managers begin keeping their own personal employee files without realizing the serious risks involved.
It usually starts with good intentions. A manager wants to track attendance, document coaching conversations, or keep notes about performance concerns. Over time, these private notes turn into a separate file that HR never sees. While this may seem harmless, it creates significant compliance, legal, and operational exposure for the entire property.
This article explains why managers should never keep their own employee files, the risks involved, and how to train leaders to follow a proper documentation process that protects both the organization and the employee.
Why Managers Keep Their Own Files
Managers often create personal files for reasons such as the following:
• They want to stay organized
• They do not understand what belongs in an official file
• They lack confidence in HR systems or processes
• They want quick access to notes without contacting HR
• They think it helps them build a case for future discipline
• They do not know the legal consequences of private files
These reasons are understandable, but they lead to significant problems. What feels convenient to a manager can create major risk for the organization.
Risk One: Incomplete or Inaccurate Employee Records
When managers store documentation privately, HR receives only part of the story. Important details may be missing or inconsistent.
This results in the following issues:
• HR cannot see patterns of behavior
• Progressive discipline may not match the actual timeline
• Terminations may lack supporting evidence
• Policy violations may go unreported
• Investigations may be incomplete or inaccurate
Financial Impact
Incomplete records can lead to wrongful termination claims, unemployment claims awarded in the employee’s favor, reinstatement costs, or costly settlements. Even one poorly documented termination can result in thousands of dollars in preventable exposure.
Risk Two: Claims of Retaliation or Unfair Treatment
When documentation is kept privately, it is easy for employees or attorneys to argue that the notes were created after the fact or selectively kept.
This can create the following issues:
• Claims of retaliation
• Claims of discrimination
• Claims of inconsistent treatment
• Challenges to the fairness of the disciplinary process
Financial Impact
These claims often lead to legal fees, settlements, or lost cases at the administrative level. When documentation looks suspicious or incomplete, the employer loses credibility and cases become harder to defend.
Risk Three: Privacy Violations and Sensitive Information Exposure
Managers frequently store private notes in unlocked drawers, shared office spaces, backpacks, personal vehicles, or even personal email.
This exposes information such as the following:
• Social security numbers
• Medical notes
• Corrective action
• Background checks
• Investigation details
• Personal employee information
Financial Impact
Unauthorized access to sensitive information can result in compliance violations, data breach claims, reputational damage, and regulatory fines. Hospitality employers are particularly vulnerable due to high turnover and shared workspaces.
Risk Four: Incorrect Record Retention
Managers often do not know how long documents must be retained. They may throw away paperwork too early or hold on to documents that should be destroyed.
Examples include the following:
• Discarded interview notes needed for EEO retention
• Old corrective actions kept beyond retention limits
• Missing documents required for audits
• Expired certifications not tracked
Financial Impact
Improper retention can lead to regulatory penalties and weaken the organization’s ability to defend itself in legal disputes. Missing records often result in unfavorable outcomes and increased claim costs.
Risk Five: HR Cannot Provide Guidance or Support
When HR is unaware of performance concerns, safety issues, or coaching conversations, they cannot support managers or employees effectively.
This leads to the following problems:
• Issues escalate unnecessarily
• Discipline is inconsistent
• Coaching is handled informally
• HR learns about problems too late
• Employees feel unsupported or blindsided
Financial Impact
Escalated issues often result in higher turnover, increased unemployment costs, productivity loss, and greater risk of legal claims.
Risk Six: Inconsistent Practices Across Departments
If every manager keeps their own system, there is no consistency.
Some managers may document everything. Others document nothing. Others keep personal notebooks with unfiltered comments that should never be written down.
This inconsistency creates the following risks:
• Unequal treatment of employees
• Confusion about expectations
• Inconsistent discipline
• Disparate impact claims
• Weak legal defensibility
Financial Impact
Inconsistent documentation increases the likelihood of discrimination or retaliation claims, each of which can lead to costly settlements or legal fees.
How to Train Managers Not to Keep Their Own Files
Managers do not stop keeping private files simply because they are told to. They stop when they understand the risks, know the correct process, and have the right tools. Training is essential.
Here is how to guide them.
Step One: Explain the Risks Clearly
Use real world examples to help managers understand how private files create legal and operational problems. Help them see how these risks affect their own departments, not just HR.
Step Two: Teach What Belongs in the Official HR File
Managers need a clear list of what should go in the official employee file.
Examples include the following:
• Corrective action
• Performance documentation
• Attendance concerns
• Coaching records
• Certifications and training
• Signed handbook acknowledgments
Make this list simple and easy to reference.
Step Three: Teach What Should Never Be Documented
This is equally important.
Managers should never create notes that include the following:
• Medical information
• Personal opinions
• Emotional statements
• Gossip or rumors
• Protected class information
• Informal comments or frustrations
Teach them what appropriate documentation looks like and how to keep it factual, job related, and professional.
Step Four: Provide Templates and Tools
Managers keep private files because they do not have an approved process.
Give them the following:
• Documentation templates
• Investigation forms
• Coaching conversation guides
• Performance note forms
• Report to HR forms
• Digital upload instructions
Tools eliminate the need for workarounds.
Step Five: Show Them the Correct Documentation Workflow
Walk managers through the exact steps they should take when they need to report an issue or document an event. The simpler the workflow, the more likely they are to follow it.
Step Six: Reinforce Expectations Regularly
Documentation expectations should be discussed in the following places:
• Manager meetings
• Leadership training
• Performance reviews
• Department huddles
• New manager orientation
Repetition builds confidence and consistency.
Step Seven: Hold Managers Accountable
If managers continue keeping private files, corrective action may be required. Accountability protects the organization and ensures fairness across departments.
Final Thoughts
Managers rarely keep private employee files out of bad intentions. Most do it because they believe it helps them stay organized or more prepared. The reality is that these private files create risk, weaken legal defensibility, and prevent HR from supporting both managers and employees properly.
The solution is not simply to tell managers to stop. It is to train them, equip them, support them, and hold them accountable in a consistent and professional way.
We can help you build proper documentation systems, train managers on effective documentation practices, and assess your current HR processes to reduce compliance risk.
Contact us today to learn how our training and compliance support can strengthen your documentation practices and protect your organization.