Presented by Kevin West at the 2015 Parsons Behle & Latimer Idaho Employment Law Seminar

1. Parsons Behle & Latimer IDAHO EMPLOYMENT LAW SEMINAR
THE ELECTRONIC PERSONNEL FILE:
LEGAL RULES FOR THE
PAPERLESS HR OFFICE
J. Kevin West
kwest@parsonsbehle.com
WEDNESDAY, OCTOBER 21, 2015 | BOISE CENTRE
parsonsbehle.com

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 Electronic records reduce the need for
physical storage space.
 Documents can be retrieved instantly.
 Multiple people can view the same
document from different locations and
devices at the same time.
Pros of Going Paperless

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Cons of Going Paperless
 New security threats from both inside and
outside the office.
 Portable devices generally come with very
little security.
 Costs of maintaining and storing electronic
records.

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Generally, so long as your office ensures
security for electronic records and systems,
the pros of going paperless highly outweigh
the cons.

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General Requirements for
Electronic Storage Systems
1. Must have an accurate and complete
scanning/conversion of hardcopies (i.e.
paper) to electronic storage systems.
2. Must be able to index, store, preserve,
retrieve, and reproduce the electronic
records.

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3. Must include a retrieval system that
includes an indexing system.
4. Must have the ability to reproduce legible
and readable hardcopies of electronic
records.
General Requirements for
Electronic Storage Systems

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General Requirements for
Electronic Storage Systems
5. Must have controls to ensure the integrity,
accuracy, and readability of the electronic
storage system.
6. Must have controls to prevent and detect
the unauthorized creation of, addition to,
alteration of, deletion of, or deterioration of
electronically stored records.

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Specific Laws Regarding
Retention of Electronic Records
 There are a number of federal laws and
regulations laying out specific requirements for
the retention and storing of electronic
employment records.
 These laws include:
1. Electronic Signatures in Global and National Commerce Act
2. Family and Medical Leave Act (FMLA)
3. Employee Retirement Income Security Act (ERISA)
4. Americans with Disabilities Act (ADA)
5. Fair Labor Standards Act (FLSA)
6. Occupational Safety and Health Administration (OSHA)
7. I-9 Form Requirements
8. HIPAA

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1. Electronic Signatures in Global
and National Commerce Act
 Applies to all electronic transactions.
 States that electronic signatures and
contracts are valid, legally binding, and
enforceable.
15 U.S.C. § 7001

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Electronic Signatures in Global
and National Commerce Act
 Consumer must consent to the use of an
electronic record.
 Consumer must be provided with a “clear and
conspicuous” statement informing the consumer:
– (1) They have the option of having the document
made available for them electronically or on paper.
– (2) They have the right to withdraw consent for the
use of an electronic record.
– (3) Must describe how the consumer may withdraw
consent.
– (4) Must inform consumer how he can obtain a paper
copy of an electronic record and whether he will be
charged a fee for the copy.
15 U.S.C. § 7001

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Electronic Signatures in Global
and National Commerce Act
 Must inform consumer that the consent
only applies to that particular transaction
or “to identified categories of records that
may be provided or made available during
the course of the parties’ relationship.”
15 U.S.C. § 7001

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2. Family and Medical Leave Act
 Covered employers must keep FMLA
records for at least three years.
 Records kept in the computer must be
made readily available for transaction or
copying.
29 C.F.R. 825.500

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 Covered employers must maintain records that
disclose the following:
– Basic payroll and identifying employee data.
– Dates FMLA leave is taken by FMLA eligible
employees.
– The hours of FMLA leave if leave is taken in
increments of less than one full day.
– Copies of employee notices of leave furnished to
employer.
Family and Medical Leave Act
29 C.F.R. 825.500

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 Covered employers must maintain records that disclose
the following:
– Any documents describing employee benefits or
employer policies and practices regarding the taking
of paid and unpaid leave.
– Premium payments of employee benefits.
– Records of any dispute between the employer and an
eligible employee regarding the designation of leave
as FMLA leave.
Family and Medical Leave Act
29 C.F.R. 825.500

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 Records and documents relating to
certifications, recertifications, or medical
histories of employees and employees’
family members:
– Must be kept confidential.
– Must be kept in separate files from the
“regular” personnel files.
Family and Medical Leave Act
29 C.F.R. 825.500

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3. Employee Retirement Income
Security Act (ERISA)
 Employers must maintain sufficient
records to explain, verify, and clarify what
is in a government filing and to determine
the benefits due or which may become
due.
 Must keep these records for at least six
years after the filing date.
29 U.S.C. § 1027, 29 U.S.C. § 1059

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 Electronic recordkeeping systems must
have reasonable controls to ensure the
integrity, accuracy, authenticity, and
reliability of the records.
 Records must be maintained in
reasonable order, and in such a manner
that they may be readily examined.
Employee Retirement Income
Security Act (ERISA)
29 C.F.R. 2520.107-1

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 The electronic system must be capable of
indexing, retrieving and reproducing the
electronic records.
 Records must be readily convertible into
legible paper copy.
Employee Retirement Income
Security Act (ERISA)
29 C.F.R. 2520.107-1

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 Adequate records management practices must
be implemented by employers. For example:
– Providing a secure storage environment.
– Creating back-up electronic copies.
– Selecting an off-site storage location.
– Retaining paper copies of records that cannot
be clearly and accurately transferred to
electronic form.
Employee Retirement Income
Security Act (ERISA)
29 C.F.R. 2520.107-1

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 Original paper records may be disposed of
after they are converted to electronic form.
 Original records may not be discarded if
the electronic record would not constitute
a duplicate or substitute record.
Employee Retirement Income
Security Act (ERISA)
29 C.F.R. 2520.107-1

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 Tomlinson v. El Paso Corporation
42 Emp. Benefits Cases 1429 (U.S. District Court Colorado 2007)
 Employees sued company and asked for
pension plan records in discovery.
 Company said that Mercer kept the
records, that it did not “control” the records
and that Mercer’s electronic system was
proprietary.
A Case In Point

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 The Court disagreed:
ERISA imposes upon the Defendants the duty to ensure that the
“recordkeeping system has reasonable controls” such that its employee
benefits records are “accessible…in such a manner as they may be
readily inspected or examined.” While the Defendants claim they have
no control over information concerning the “computerized
infrastructure” (recordkeeping system) Mercer uses to administer the
Plan and maintain its benefit records, such claim is contradicted by the
plain language of §2520.107-1(b)(1). Defendants cannot delegate their
duties to a third party under ERISA… Consequently, Defendants are in
possession, custody or control over the requested data, within the
meaning of Fed. R. Civ. P. 26(a)(1)(B), such that they have, or should
have, the authority and ability to obtain the requested data.
A Case In Point

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 Any request for reasonable accommodation must be
preserved for one year after the date of making the
record or the personal action involved, whichever is later.
 Where a discrimination charge is filed, the employer
must preserve all personnel records relevant to the
charge or action until the action is settled.
 Employee medical records must be kept confidential and
separate from personnel files.
4. Americans With Disabilities
Act (ADA)
29 C.F.R. 1602.14

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 Reproductions must be clear and identifiable by
date or pay period.
 Payroll records and other records containing
employee information and data must be
preserved for three years.
 Collective bargaining agreements, plans,
employment contracts, and similar documents
must be preserved for three years.
5. Fair Labor Standards Act (FLSA) –
Records to be Preserved for Three Years
29 C.F.R. 516.1, 29 C.F.R. 516.5

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 Basic employment and earning records, such as
time cards, must be preserved for two years.
 All tables and schedules of the employer which
provide the rates used in computing earnings,
wages, salaries, or overtime compensation shall
be preserved for two years.
Fair Labor Standards Act (FLSA) –
Records to be Preserved for Two Years
29 C.F.R. 516.6

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 Employers must keep records of fatalities,
injuries, and illnesses that are work
related.
 Must save the OSHA 300 Log, the privacy
case list, the annual summary, and the
OSHA 301 Incident Report forms for five
years following that end of the calendar
year that the records cover.
6. Occupational Safety and
Health Administration
29 C.F.R. 1904.4, 29 C.F.R. 1904.33

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 Electronic storage system must have
reasonable controls to ensure the integrity,
accuracy, and reliability of the system.
 Storage system must have controls
designed to prevent and detect the
unauthorized or accidental creation of,
addition to, alteration of, or deletion of
electronic I-9 forms.
7. I-9 Requirements
8 C.F.R. 274a.2

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 Storage retrieval system must have an
indexing system that permits searches by
any data element.
 Must be able to produce legible paper
copies.
I-9 Requirements
8 C.F.R. 274a.2

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 Forms must be retained for three years
after the date employment begins, or one
year after the date employment is
terminated, whichever is later.
 Copies of I-9 forms must be made
available on three days’ notice for
inspection by U.S. Immigration and
Customs Enforcement.
I-9 Requirements
8 C.F.R. 274a.2

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 Requires most employer-sponsored health
plans to implement comprehensive
safeguards for employee health
information maintained, created or
transmitted in electronic form.
 “Protected Health Information”: individually
identifiable information that is created or
maintained as part of an employee health
benefits program.
8. HIPAA

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 Cloud storage and computing systems
– Costs
– Security
 Choosing an electronic record keeping
vendor
 Preservation of document metadata
– Identity of author, when the file was created,
and information in calendar-keeping software
could all be crucial to litigation.
Other Issues to Consider

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 Security, both internal and external.
– Systems need to be secure from outside
intruders through use of passwords, firewalls,
and encryption
– Systems need to be secure from insiders who
shouldn’t have access to certain documents
 Just as with paper personnel files, electronic
personnel files must have separate folders with
access granted on a “need to know” basis.
Other Issues to Consider

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 Readability and accessibility of data over
time.
 Saving data permanently –
– Maintenance of databases
– How secure is the database long term?
– What if it crashes?
– Is there a backup?
– Does the company know how to retrieve data
from backup?
Other Issues to Consider

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 Yes, you can get rid of all your paper
records if it is done correctly.
Conclusion

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 J. Kevin West
208.562.4908
kwest@parsonsbehle.com
Thank You