Employers are increasingly looking at the feasibility of scanning hard copies of various types of employment documents and retaining only the electronic copies in the routine course of business. Generally speaking, you are allowed to do that if you ensure that your electronic record maintenance systems are secure, accurate, reliable, and accessible (in that they permit rapid electronic retrieval and hard-copy production). However, certain legal regulations impose more detailed requirements for some types of documents, and evidentiary considerations may affect how you design your electronic document maintenance systems.
Here’s a look at the legal considerations relevant to various documents as well as some things to think about to ensure your electronic record retention system serves your needs in the event of employment litigation.
EEOC regulations (employment records generally). Several documents frequently maintained in hard copy form, including performance evaluations, attendance records, disciplinary records, employee announcements, handbook receipts, requests for employment verification, education certifications, applications, resumes, and orientation information, must be “preserved” in accordance with Equal Employment Opportunity Commission (EEOC) regulations. The regulations don’t require a particular form of preservation.
The EEOC “recommends” that race and ethnicity identification forms be kept separate from an employee’s basic personnel file because the personnel file is typically available to those who are responsible for personnel decisions. In addition, medical information, which can include documentation required by the Family and Medical Leave Act (FMLA), must be kept confidential and separate from an employee’s other personnel records. One way to address this concern is to house electronic race/ethnicity data and medical data in their own separate databases with their own separate access protocols.
- There are reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records kept in electronic form.
- The electronic records are maintained in reasonable order, in a safe and accessible place, and in a manner that they may be readily inspected or examined.
- The electronic records are readily convertible into legible and readable paper copy as may be needed to satisfy reporting and disclosure requirements.
- The electronic recordkeeping system is not subject, in whole or in part, to any agreement or restriction that would directly or indirectly compromise or limit a person’s ability to comply with any reporting and disclosure requirement or any other obligation under Title I of ERISA.
- Adequate records management practices are established and implemented.
IRS regulations (payroll records, tax returns, W-2s, 1099s, and supporting records). While the IRS permits the electronic retention of records (see Revenue Procedure 98-25), the U.S. Tax Court has ruled that “taxpayers are not relieved from the responsibility of retaining the hardcopy records from which the computer records were derived.” Accordingly, you shouldn’t rely exclusively on electronic copies of any records that may be needed in an audit directed at employment tax compliance. Kraus v. C.I.R., 85 T.C.M. (CCH) 750, 2003 WL 76111, at *7 (2003).
DOL regulations (FMLA and payroll documentation). Neither the FMLA nor the Fair Labor Standards Act (FLSA) requires a particular order or form of records. However, if they are stored electronically, records must be available for copying and transcription upon request by representatives of the U.S. Department of Labor (DOL), and reproductions must be clear and identifiable. To the extent that FMLA documentation contains medical information, it must be maintained separately from other records in accordance with EEOC regulations.
OSHA regulations (medical records and injury reports). Records required by the Occupational Safety and Health Administration (OSHA) may be kept electronically provided the computer they are stored on can produce forms equivalent to OSHA’s forms when they are needed and the system meets specific regulatory requirements. First, employees and their representatives must have limited access to injury and illness records.
Second, “[w]hen an authorized government representative asks for the records . . . [,] copies of the records [must be provided] within four (4) business hours.” X-rays must be preserved in their original state, however.
USCIS guidelines (I-9s). The U.S. Citizenship and Immigration Services (USCIS) requires that electronic systems used for storing I-9 documentation have:
- reasonable controls to ensure the integrity, accuracy, and reliability of the electronic storage system;
- reasonable controls designed to prevent and detect the unauthorized or accidental creation of, addition to, alteration of, deletion of, or deterioration of an electronic Form I-9, including the electronic signature, if it’s used;
- an inspection and quality assurance program that regularly evaluates the electronic generation or storage system and includes periodic checks of electronically stored I-9s, including the electronic signature, if it’s used;
- a retrieval system that includes an indexing system that permits searches by any data element; and
- the ability to reproduce legible paper copies.
State-by-state comparison of 50 laws in 50 states, including personnel files
Before implementing an electronic document retention policy, employers must consider several issues beyond the specific agency regulations identified. For example, you should:
- Consider scanning original documents into electronic form in color to retain as much information about the document as possible.
- Establish a procedure under which the scanning of relevant documents ceases immediately if a lawsuit is filed. You will have a legal duty to maintain relevant documents in their original form and suspend their destruction or alteration as soon as you learn that litigation is imminent and until the lawsuit is resolved.
- Account for ease of retrieval and searches when designing and implementing electronic document creation and storage protocols. For instance, the ability to search both content and metadata will be highly useful, and a uniform file-naming and -foldering convention should be adopted.
- Establish security protocols so that only authorized individuals can access each electronically maintained file. That includes creating a secure and reliable electronic storage environment, including off-site backup, and complete and secure destruction protocols for unneeded hard copies.
- Consider creating a quality assurance program that includes regular evaluations and checks of the electronic record-keeping system.
- Retain paper copies of any records that cannot be clearly, accurately, or completely transferred to an electronic record-keeping system (not just workers’ compensation and I-9 documentation).
Audit your document retention policies and procedures with the Employment Practices Self-Audit Workbook
Whether your motivation is to go green, save money, improve efficiency, or reclaim valuable storage space, maintaining most personnel documents in an electronic format is generally acceptable. However, you should carefully examine each type of document commonly found in employee files and ensure it can be electronically maintained in compliance with various agency regulations. In addition, you should account for the need to recreate as much information about a hard-copy original as possible and suspend document scanning in the event of litigation.
HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including documentation requirements for major federal employment laws