On and Off the Paperless Trail

Why paper recordkeeping has nine lives.

By James B. Thelen Mar 1, 2009
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March 2009 CoverMore than three decades ago, the late George Pake, then head of the Xerox Corp.’s Palo Alto, Calif., Research Center, pictured the "paperless office" of the future.

In a June 30, 1975, article for BusinessWeek, "The Office of the Future," Pake foresaw a "TV-display terminal with keyboard" sitting on every employee’s desk. Pake expected he would "call up documents from my files on the screen, or by pressing a button." Pake added, "I don’t know how much hard copy I’ll want."

It doesn’t take a rocket scientist to see how prescient Pake was. As workplaces go paperless, the question remains: To what extent will employers continue to use paper? It’s a particularly relevant question for HR professionals and recordkeeping.

Despite cost and environmental reasons to reduce paper use, for most the completely paperless office has yet to arrive. In 2007, according to research firm IDC, U.S. companies printed 1.5 trillion pages.

One reason employers hold on to paper records: legal recordkeeping requirements. In the once-thought-inevitable transition from paper records to e-HR records, sometimes the law has gotten in the way, leaving employers and HR professionals little choice but to keep paper records.

But laws are becoming more forward-looking and pushing further toward digital recordkeeping.

Paper, Paper, Paper

Remember the children’s game of rock-paper-scissors? In the workplace, paper often has been treated as though it trumps everything else.

One recognized function of an HR department is to manage employment records. For a long time, the records have been paper. Issuing a documented verbal warning to an employee meant a hard-copy paper notice that went into the employee’s personnel file. So did termination notices and employment applications. The same could be said for many other employment records.

HR professionals often held on to these and myriad other records because of recordkeeping mandates in federal employment laws and many state laws. But these laws have never required employers to keep paper records per se. Long before digital technology gave employers the ability to create and maintain paperless electronic records, or even to create paper records and convert and store them as electronic records, record retention laws focused simply on the creation, retention and substance of the records required—not on the form or medium for creation or storage.

Microfilm?

Take the Fair Labor Standards Act (FLSA), for example. Passed in 1938, it states simply that employers subject to the FLSA are to "make, keep and preserve such records" of an employee’s wages, hours and other conditions and practices of employment for such periods of time as the Department of Labor (DOL) prescribes by regulation. Of course, the digital technology to "make, keep and preserve" anything other than paper records was still decades away.

DOL regulations issued in 1987 avoided the issue, stating that "no particular order or form of records is prescribed."

To be sure, the regulations noted that records could be "maintained and preserved on microfilm or other basic source document of an automatic word or data-processing memory." But this was permitted only if the employer had "projection or viewing equipment … available"—in other words, a microfilm reader—and then only if transcriptions of such records were made available on request and any necessary reproduction of such records were clear and identifiable.

At the same time, another section of the 1987 regulations provides that employers are to "keep the records required by this part safe and accessible at the place or places of employment, or at one or more established central recordkeeping offices where such records are customarily maintained." The regulation goes on to give employers 72 hours to make the records available for inspection upon notice from the DOL if the records are maintained at a central recordkeeping office or someplace other than in the place or places of employment.

DOL officials practically assumed employers would keep paper records as a default, with begrudging acknowledgment that records kept in "data-processing memory" would be acceptable as long as they could be viewed on-site or printed on paper for inspection.

Family and Medical Leave Act recordkeeping regulations are similar to the FLSA regs. However, they reflect DOL officials’ growing recognition of commonly available workplace technologies at the time of their issuance in 1995, and specifically acknowledge that employers may keep records "in computer form." There still is no mandate for any one form of record over another, although records kept on computers "must be made available for transcription or copying."

Other laws—such as the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (ADEA)—and their implementing regulations are simply silent about whether employment records may be created or retained electronically. The ADEA recordkeeping regulations do note that no particular form of records is required.

Seals of Approval

The dawn of the 21st century brought more specific legal recognition of e-HR recordkeeping.

Starting with Section 101 of the Electronic Signatures in Global and National Commerce Act, effective in 2000, Congress for the first time provided that a company subject to a paper recordkeeping requirement could satisfy the requirement by retaining an electronic record, as long as the record accurately reflected the substance of the paper record, was accessible to people entitled to have access, and was in a form that could be reproduced accurately for later reference by transmission, printing or otherwise.

U.S. Occupational Safety and Health Act regulations noted that an employer could keep records on "computer equipment" only if the computer system was capable of producing paper copies of equivalent forms when access was needed by a government representative, an employee or former employee, or an employee representative within four business hours.

Employee Retirement Income Security Act (ERISA) regulations followed in 2002, setting specific standards for when companies create and retain ERISA-required reports, plans and disclosures electronically. The regulations require the use of an electronic retention system that "has reasonable controls to ensure the integrity, accuracy, authenticity and reliability of the records kept in electronic form." Electronically retained records must also be "in reasonable order and in a safe and accessible place" where they can be readily inspected and examined.

Though not a legally required function, the recordkeeping system "should be capable of indexing, retaining, preserving, retrieving and reproducing the electronic records," according to the regulations. The employer is required to establish and implement "adequate records management practices," such as:

  • Following procedures for labeling electronic records.
  • Providing a secure storage environment.
  • Creating backup electronic copies and selecting an off-site storage location.
  • Observing a quality assurance program with regular evaluations of the electronic recordkeeping system.
  • Retaining paper copies of records that cannot be clearly, accurately or completely transferred to an electronic recordkeeping system.

Retained electronic records "must exhibit a high degree of legibility and readability when displayed on a video-display terminal" or even when printed. Finally, the electronic retention system cannot be subject to any agreement or restriction that would conflict with any ERISA reporting and disclosure requirements.

The ERISA regulations note that employers may dispose of paper records entirely if they have electronic records and a retention system that meets the above standards, unless state or federal law or an ERISA plan provides specifically that an electronic record is not a sufficient substitute record for a paper document.

In 2004, in perhaps the most comprehensive regulation of electronic recordkeeping to date, Congress amended the Immigration Reform and Control Act (IRCA) to permit electronic generation and retention of the Employment Eligibility Verification Form I-9, provided the electronic retention system used meets rigorous regulatory standards issued in 2006, including:

  • Reasonable controls to ensure the integrity, accuracy and reliability of the electronic generation or 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 electronically completed or stored Form I-9, including the electronic signature if used.
  • An inspection and quality assurance program evidenced by regular evaluations of the electronic generation or storage system, including periodic checks of the electronically stored Form I-9, including the electronic signature if used.
  • In the case of electronically retained Forms I-9, a retrieval system that includes an indexing system that permits searches by any data element.
  • The ability to reproduce legible and readable hard copies.

In addition, employers retaining Forms I-9 electronically are required to maintain complete descriptions of the electronic generation and storage system, including all procedures relating to its use, and the indexing system used. Employers must implement and provide training on an "effective security program." The program should set appropriate standards for access, backup and recovery, prevention of accidental deletion or data loss, and a separate, permanent record of the date an electronic record is accessed, the identity of the individual who accessed the electronic record and the action taken.

Comfort Zone

Before digital technology made electronic recordkeeping possible, legal recordkeeping mandates were simpler. When the expected default record form was paper, record retention laws and regulations were short and to the point: create and retain the record for the defined period.

The specificity now seen in electronic recordkeeping mandates reflects societal uneasiness with relying solely on the availability of records that exist only as virtual "ones" and "zeros" on some wafer-thin silicon chip or in cyberspace.

Some recordkeeping laws have caught up to digital recordkeeping technologies, and more specific standards, safeguards and requirements continue to evolve.

Yet lawmakers’ comfort with paper remains, and that, perhaps more than anything else, has checked a complete transition to e-HR recordkeeping.

_________________________________________

The author is an attorney with Miller, Canfield, Paddock and Stone PLC in Lansing, Mich., and the immediate past president of the SHRM affiliate Human Resource Management Association of Mid-Michigan.

Web Extras

SHRM web page: SHRM Online Legal Issues Area home page

SHRM toolkitPaperless HR

SHRM articleE Is for Evidence (HR Magazine)

Article: The Office of the Future (BusinessWeek)

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