The never-ending responsibility of ensuring compliant personnel records may be one of the most tedious yet critical responsibilities for an employer. There are many federal, state, and local laws and regulations that address personnel records management and employers may face penalties and/or criminal liabilities when records are not kept in compliance. Since the onset of electronic communication, employers have been living with a combination of both paper files and electronic record-keeping, as they try to keep up with the prevalence of emails, electronic documents, and the growing normality of e-signatures. Due to the complexities involved and a desire to ease the time-intensive burden of record-keeping, more and more employers are considering whether the transition to electronic personnel records management makes sense for their organization.
The Positives and Negatives to Implementing an Electronic Personnel Records Management System
There are many well-developed cloud-based or software-as-a-service (SAAS) personnel records management systems available, if an employer doesn’t want to, or have the capability to develop their own system. Whatever system is used, there are multiple benefits, including the reduction of physical storage space and time-saving efficiency and accessibility. These systems may also:
- Save the organization money, after the preliminary set-up and implementation of the system.
- Provide storage in one system that extends access to multiple people from many locations worldwide.
- Afford a safer means of designating which employees may have access to certain records.
- Track documents electronically that must be updated on a regular basis.
- Provide backed-up documents, ensuring less likelihood in losing or damaging records.
- Offer a means for simpler time-saving human resources processes, such as onboarding.
- Demonstrate a desire for sustainability and managing economic and environmental resources well.
There are also several negative reasons which may make an employer hesitate in a decision to transition from a physical records-keeping system to a paperless system. Beyond the always-present ability for human error that exists in any record-keeping system, whether paper or electronic, an organization must consider:
- The significant initial expense for labor and equipment in setting up and transitioning to the system.
- The amount of work hours needed to train employees how to use the system.
- The risk to employees and the organization due to potential security breaches, which may have legal ramifications. These breaches are magnified as records are often accessible on personal computers, mobile devices, personal cloud storage, social media, etc.
- Litigation requirements that include extra verification for electronic employee records.
Legal Requirements Associated with Electronic Personnel Records Management
It’s important to understand the concept of metadata preservation, when considering electronic personnel records management. According to Wikipedia, metadata is “information that provides information about other data”. It then defines types of metadata including descriptive metadata which “describes a resource for purposes such as discovering and identification and can include elements such as title, abstract, author, and keywords”, structural metadata which “is about containers of data and describes the types, versions, relationships, and other characteristics of digital materials”, and administrative metadata which “provides information to help manage a resource such as when and how it was created, file type, and other technical information, and who can access it”. (https://en.wikipedia.org/wiki/Metadata).
Multiple federal, state, and local laws have specific requirements pertaining to the preservation of data and metadata in electronic personnel records management. Federal laws that address this include, but are not limited to the Electronic Signatures in Global and National Commerce Act, the Employee Retirement Income Safety Act (ERISA), the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act and its Amendments Act (ADAAA), the Health Insurance Portability and Accountability Act (HIPAA), the Fair Labor Standards Act (FLSA), the Occupational Safety and Health Administration (OSHA) Guidelines, and the I-9 Form Requirements of the United States Citizenship and Immigration Services (USCIS). While a comprehensive list of legal requirements for preservation of data and metadata is beyond the scope of this article, a few requirements are listed below, with the recognition that variations of these requirements may be discovered in multiple laws.
- The system should have “reasonable controls to ensure the integrity, accuracy, and reliability of the electronic generation or storage system”. (www.uscis.gov/i-9-central/103-electronic-retention-form-i-9)
- The system should be “capable of retaining, preserving, retrieving, and reproducing the electronic records”; and be “able to readily convert paper originals stored in electronic format back into legible and readable paper copies”. (www.dol.gov/ofccp/regs/compliance/faqs/dir279faqs.htm#Q1GI)
- “Adequate records management practices must be established and implemented to include labeling electronically maintained records, providing secure storage of electronic data, creating back-up electronic file copies, and observing quality assurance for electronic recordkeeping through regular evaluations of the system.” (www.dol.gov/ofccp/regs/compliance/faqs/dir279faqs.htm)
- The system must have “reasonable controls designed to prevent and detect the unauthorized or accidental creation of, addition to, alteration of, or deletion or deterioration of electronic forms”. (www.uscis.gov/i-9-central/103-electronic-retention-form-i-9)
- The system must retain “paper copies of records that cannot be accurately or completely transferred to an electronic record-keeping system.” (www.dol.gov/ofccp/regs/compliance/faqs/dir279faqs.htm)
Given that an employer researches the requirements in order to comply with federal, state, and local laws and regulations, it is possible to have a safe and efficient electronic personnel records management system. However, employers should remember that they may never be completely free of paper files. In addition to the final bullet point mentioned above, there may be certain items that need to be preserved in their original state. Employers may also need to provide paper copies of documents required by law to employees who do not have access to electronic versions.
Finally, employers should keep in mind that a transition from a physical record-keeping system to a paperless system may be more complicated than anticipated. For the best outcome, the Human Resources (HR) department should work with the Information Technology (IT) department, which may be able to provide valuable information on the types of record-keeping storage options, vendors, which employees have access and how to document who has accessed any record, confidentiality and disclosure requirements, back-up requirements, internal and external security threats to data, and the retention and destruction of data. Whether the process is as simple as scanning paper documents into an electronic personnel file and making them searchable or there is a major change to new software and systems, the IT department may also provide guidance in developing a realistic transition plan prior to beginning the process.
This article is intended as a general overview for employers who are considering the transfer from a physical record-keeping system to an electronic personnel records management system and is solely for informational purposes. It does not cover the many nuances unique to each organization and, as such, should not be construed as professional advice. For additional information on personnel records compliance, please contact New Focus HR, LLC at www.newfocushr.com.
Written by: Kathi Walker, SHRM-SCP, PHR
Sr. HR Consultant