Do you have to comply? When can you say “no”? Can you reveal some of the contents while denying access to other parts?
The problem with coming up with answers is that there’s little or no federal law governing an employee’s files. Most of the rules about files come under state law.
In general, though, you’re on safe ground if you follow these practices:
If an employee wants to see the entire file: Review the file first and determine whether there’s anything in the there that might involve someone else’s privacy or confidentiality. In most states, you can remove all such documents before granting the employee access to the file. One example of the type of document that would be removed: a reference letter from a third party who assumed the reference was being given confidentially.
Once you remove all confidential documents, you can allow the employee to inspect the file with you or someone from HR present during the inspection. Do not allow the employee to access the file alone or take the file off the premises.
If an employee wants copies of documents in the file: Again, after you’ve determined what can be accessed without violating confidentiality, ask the employee for a list of documents to be copied, and then make the copies yourself. Do not allow the employee to make the copies.