What is an employee ID number?

An employee ID number code is a unique code assigned by employers to individual employees. This identification code can also simply be called an employee number, employee code, employee ID or any other similar term.

Because employee IDs represent a unique individual, it also represents their personal details and other information important to the business. This can include their address, SSN, payroll details and more.

While assigning employee IDs isn’t necessary, the advantages become more obvious as an organization grows and employs more individuals. Employee IDs aren’t required for tax purposes but can help a business better manage its record-keeping.

Employee ID vs SSN

Employee IDs are not the same thing as a Social Security number (SSN). While SSNs are a valid form of identifying individuals, this is sensitive personal information that may make individuals vulnerable to identity theft if used as an employee ID. Identity thieves can use SSNs to create fraudulent documents and cause other kinds of significant damage to the individual’s ID and the business’s security. As such, employee IDs should be used for day-to-day and internal identification, and SSNs should be used confidentially and only as necessary.

It’s also important to distinguish employee ID from payroll ID. While an employee ID is unique to that individual, a payroll ID is usually assigned to the specific role or position rather than individual. That means that if another employee takes over that job, they take over the payroll ID and its associated information but have their own employee ID.

Employee ID vs Employer ID

Employee ID is also easy to confuse with Employer ID (EIN). Your EIN is a nine-digit number assigned by the IRS. Similarly to SSN, a business’s EIN is its unique federal identification and is used for tax, reporting and regulation purposes.

Who is responsible for assigning and managing employee IDs?

Depending on the size of the organization, its human resources (HR) department, accountants or payroll clerks are typically responsible for assigning and managing employee IDs. They generally set up employees with their respective IDs as part of the onboarding process after hiring.

Related: Starting an HR Department

Formatting employee ID numbers

There’s no specific template or format for employee ID codes. Organizations can choose any format for individual codes but generally create a single template for generating and assigning new IDs. It can be a mix of numbers and letters at random or it can follow a template that relates to details about the employee such as their job or start date. Consider the following employee ID examples:

• Employee ID example A: M028
• Employee ID example B: S067

In these examples, the beginning letters represent departments, and the numbers represent the order in which they were hired to the business. Example A denotes an employee hired to the marketing department, and example B refers to an employee hired to the sales department later on.

Regardless of how you choose to format employee ID numbers, it’s important to not include any personal or sensitive information. Don’t include any part of the individual’s SSN or other confidential details in their employee ID.

Benefits of employee ID numbers

Multipurpose use

Depending on the business, employee IDs can be used in many ways. For example, an employee ID might be required to access till or inventory systems in a retail business. They may also be required to use them for employee perks, such as using their employee discount to purchase items. In an office setting, employees might have different clearance levels that allow them to use their IDs to login to certain databases. This also can provide a digital history of employee IDs in case you or your HR or accounting teams need to audit information.

Manage information access and security

Managing access to certain information, applications and even rooms can be important for your business. You can use employee IDs to determine individual levels of access or security. For instance, a salesperson may have access to the CRM database but be denied access to applications or information that doesn’t relate to their task. You can also temporarily assign IDs to guests, such as contractors or clients, who need access to certain parts of the building.

Organize large business databases

An employee ID system can help keep records and databases streamlined and well-maintained. With a single ID attached to all of the employee’s information, it’s easy to look up, view and organize information.

Maintain identity accuracy

If your business is small, you likely won’t need to worry about names creating confusion in employee records. As businesses grow, however, some employees may have the same name and cause issues in record-keeping. This can potentially breach confidentiality or mix up payroll. You can avoid these issues by implementing an employee ID system so that each employee is unique within your business’s records.

Improved identity security

By using unique employee IDs, you can avoid using otherwise personal information. An employee ID code is an internal code that is essentially an encryption of that employee’s identity. It’s important that employee IDs are unique and don’t include any confidential information like SSNs that may threaten employee identity.

By using unique employee IDs, you can avoid using otherwise personal information. An employee ID code is an internal code that is essentially an encryption of that employee’s identity. It’s important that employee IDs are unique and don’t include any confidential information like SSNs that may threaten employee identity.