Goodbye Papercuts. Hello Electronic Personnel Files.

electronic personnel files In November, we discussed records retention and how long employers need to hang on to all things having to do with hiring and retaining employees. As promised, we’ll now delve into best practices for storing that same information electronically. Take that, papercut monster!
Know the Basics It likely goes without saying that your electronic records should be stored in a safe and accessible place and in such a way that they can be easily examined (by auditors or employees, if permissible in your state). The electronic files need to be convertible into readable paper copies to satisfy reporting and disclosure requirements.
Make Security as Tight as Fort Knox Arguably the most important consideration when storing personnel records is security. You wouldn’t leave sensitive documents in an unlocked file cabinet and should follow the same thought process when storing documents electronically. Secure computers, documents, servers and networks are all crucial. Because employee records contain sensitive information such as health history, employee addresses, and Social Security account information, a breach can be catastrophic and have long-term effects on employees and your business. A best practice when setting up a secure electronic storage solution is to work with your IT team or an outside technology expert with a proven track record. Finally, ensure that the servers where personnel records are stored are routinely backed up to prevent data loss.
Divide to Conquer Just as you would with hard copies, you should keep electronic files separated as follows:
  • Personnel file — employment application, resume, job description, offer letter, status change forms, acknowledgement of company handbook, code of conduct and other policies, emergency contacts, address change forms, disciplinary action, evaluations, certifications, course completions, and accommodations.
  • Benefits file — enrollment/waiver forms, enrollment change forms, medical forms, workers’ compensation information.
  • Reference checks and pre-employment screening — reference checks, verifications of employment requests, drug tests and background checks.
  • Payroll file— compensation changes, W-4 and state tax withholding forms, direct deposit forms.
  • I-9 file with right to work in the U.S. verification documents.
In addition, you may need to create additional files and keep them separate from personnel, payroll, and benefits files. These may include:
  • Wage garnishment file.
  • FMLA file and/or ADA accommodations file.
A good rule of thumb is to begin with the end in mind. Think about someone wanting access to your personnel files. What would they need to see? For example, if your company were the subject of an ICE audit, you would be required to produce I-9s for your employees (remember, you need to keep I-9s for three years after the date of hire or one year after the date of termination, whichever is longer). The auditors should not have access to other personnel documents that might contain pay, benefits, medical, leave, or other sensitive information. Having I-9s separated from other documents means you could provide access to those documents alone.
Bring on the Shredder The most common question businesses have when converting to electronic recordkeeping is what to do with the paper records. After you have securely transferred paper records to an electronic storage system, dispose of the paper copies by shredding them.
The one caveat to the shredding advice is if there is an investigation or lawsuit pending against your company (or you suspect one may be coming). In that case, documents should be kept in their original format until the legal issues are resolved.
Stay Current Once you convert your records to electronic storage, it’s important to keep on top of technology and new solutions that may arise. The last thing you’d want is for your records to be trapped in obsolete technology. Your IT team and vendors will be your best resources in this endeavor.Accurate, thorough personnel records are your company’s best defense should an employment-related lawsuit arise. For that reason, it’s a great idea to work with outside counsel as you contemplate a move to electronic storage.

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