Going Paperless? Legal Guidelines for the Electronic Retention of Personnel Documents

In today’s high-tech business environment, it is commonplace for employers to digitize personnel documents. Maintaining these documents in electronic form has obvious benefits, including ease of accessibility and storage efficiency. Although electronic storage of personnel records is permissible under federal employment laws, employers must be mindful of specific document retention periods to avoid compliance pitfalls. In addition, depending on the U.S. state where you have operations and employees, you will also need to consider state requirements. This article focuses on federal requirements only, as it serves as a good base to illustrate retention considerations. To that end, if your company is considering implementing a paperless human resources department, read on for legal guidelines and tips to ensure a smooth transition.

We begin with a brief overview of the legislation that enables paperless retention, followed by a look at sample retention requirements for some of the most commonly occurring human resources record types at any organization: general personnel files, medical records, EEO-1 forms, payroll, I-9 forms, OSHA documents, and employee benefits. We conclude with helpful tips for managing paperless retention of these record types, including a link to a free 90-day trial of the Virgo Retention Starter Kit that includes all Federal employment and other back office retention regulations plus the state of California’s, along with a template “Big Bucket” retention schedule, over 400 record examples, over 20 repository examples and privacy regulations.

General Requirements for Electronic Document Storage Systems

The record maintenance requirements of federal employment laws are generally satisfied when using electronic media if:

• 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 copies 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.
• Adequate records management practices are established and implemented (e., providing a secure storage environment, creating back-up electronic copies and selecting an off-site storage location, observing a quality assurance program evidenced by regular evaluations of the electronic recordkeeping system including periodic checks of electronically maintained or retained records, and retaining paper copies of records that cannot be clearly, accurately or completely transferred to an electronic recordkeeping system).

On the whole, if this electronic document policy and these processes are followed, organizations will be poised to justify and defend their paperless retention program. Ideally, if your organization has the resources, most of the above noted requirements can be outsourced to records and information storage vendors that specialize in ensuring these imaging and retention protocols.

Common HR Record Types

Personnel records and application materials

The Equal Employment Opportunity Commission (EEOC) requires that general personnel and application records be preserved for the following periods:

• As to private employers, they must retain records for one year from the date of making the record or the personnel action involved, whichever occurs later. But in the case of involuntary termination of an employee, they must retain the terminated employee’s personnel or employment records for one year from the date of termination. Examples of personnel documents include: performance evaluations; attendance records; disciplinary records; handbook receipts; requests for employment verification; education certifications; applications; and resumes.
• As to educational institutions, state and local governments, they must retain such records for two years from the date of the making of the record or the personnel action involved, whichever occurs later. But in the case of involuntary termination of an employee, they must retain the terminated employee’s personnel or employment records for two years from the date of termination.

Please note that some states have laws which govern retention periods for personnel files which differ from the EEOC regulations. Further, record retention periods may be longer if the employer has affirmative action obligations or is otherwise required by state regulatory agencies to maintain records for a longer period of time.

Medical records

Medical information (including documents related to a disability accommodation request or Family Medical Leave Act (FMLA) requests) must be kept confidential and separate from an employee’s basic personnel file. One way to address this concern is to house electronic medical data in its own separate database with its own separate access protocol.

The Americans with Disabilities Act (ADA) requires that covered employers keep all ADA-related files for at least one year from the date the file was created. The FMLA requires covered employers to keep FMLA-related files for at least three years. As a best practice, medical records of terminated employees should be retained for at least four years from the date of termination. Please note that medical records related to workers’ compensation claims have a different retention period, and also that hazardous exposure medical records have a much longer retention period of up to 40 years from the date of termination.

EEO-1 personnel form policies

The EEOC recommends that race and ethnicity identification forms be kept separate from an employee’s basic personnel file. Again, it may be prudent to house electronic race/ethnicity data in its own separate database with its own separate access protocol. In the absence of specified retention periods for EEO-1 records, refer to the retention periods of general personnel records noted above.

Employee payroll documentation

Because the Fair Labor Standards Act (FLSA) does not require a particular order or form of records, wage records may be maintained electronically. If records are stored electronically, records must be available for copying and transcription upon request by representatives of the Department of Labor (DOL). Reproductions must be clear and identifiable.

The FLSA requires employers to keep payroll records for at least three years. Further, employers must keep all records (including wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements) that explain the basis for paying different wages to employees of opposite sexes in the same establishment for at least two years. Please note that state wage laws (e.g., Arizona) may require longer retention periods.

OSHA records

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 needed and the system meets specific regulatory requirements. Access to injury and illness records must be limited.

When an authorized government representative asks for certain records (i.e., an OSHA 300 Log which lists all injuries and illnesses at worksites) copies of the records must be provided within four (4) business hours. Finally, X-rays must be preserved in their original state (i.e., if X-rays were received as hard copies, then they must be retained in hard copy form).

I-9 Forms

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 I-9 Form, including the electronic signature, if it is 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 is used;
• A retrieval system that includes an indexing system that permits searches by any data element; and
• The ability to reproduce legible paper copies.

Paper copies of I-9 Forms do not have to be retained if stored electronically, provided the storage system complies with the latter standards. Employers must retain I-9 Forms for three years after the date employment begins or one year after the date the person’s employment is terminated, whichever is later. If you are an agricultural association, agricultural employer, or farm labor contractor, you must retain the I-9 Form for three years after the date employment begins for persons you recruit or refer for a fee.

Beware: copies of I-9 Forms must be available on three days’ notice of inspection by U.S. Immigration and Customs Enforcement (ICE).

Employee benefits documents

The Employee Retirement Income Security Act (ERISA) has two record retention provisions, which apply to all ERISA employee benefit plans (i.e., retirement, health and welfare plans):

• ERISA 107: Requires anyone who files or certifies certain information (such as a Form 5500) to maintain sufficient records (g., spreadsheets, email correspondence, plan documents, amendments, work records) to explain, corroborate, substantiate, and clarify what is in the filing or certification.  Under ERISA 107, an employer must maintain these records for six years after the filing date (or from the date of any extended date for filing).
• ERISA 209: Requires an employer to maintain all such information for “as long as a possibility exists that they [the records] might be relevant to a determination of the benefit entitlements of a participant or beneficiary.” This is essentially an indefinite duration. ERISA 209 applies to documents such as plan notices and service records used to determine eligibility.

Helpful Tips for Creating Electronic Document Policy

• If a lawsuit is filed against your company, 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. Although documents may be scanned into electronic form at this time, paper copies should not be destroyed during the pendency of the lawsuit.
• Account for ease of retrieval and searches when designing and implementing electronic document creation and storage protocols. Put time and effort in up front to design detailed metadata to improve searchability.
• 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 consistent with the retention policy for hard copies.
• If technology does not self-audit or contain compliance monitoring, consider 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 (e., performance documents that include notations in pencil or light ink).

On the whole, it is clear that there is no one size fits all when it comes to retention periods, such as the urban legend that seven years is all it takes to meet record retention requirements. Besides federal retention requirements, states also have their own requirements, some of which may exceed the federal retention requirements. This means that organizations need to only create processes and protocols for properly imaging records when they wish to go paperless, but they must also stay current on often dynamic retention requirements.

If imaging processes, protocols and retention requirements are in place, then you a ready to make your move to paperless document management and record keeping. In the interim, feel free to download our 90-day trial of the Virgo Retention Starter Kit, which includes all federal employment and back office retention regulations plus the state of California’s, along with a template “Big Bucket” retention schedule, over 400 commonly occurring record inventory examples, over 20 repository examples, plus federal and California privacy regulations.