You’ve decided to make the transition to an electronic document management system!
There will be many benefits to switching, but so will the questions you have in regards to how to properly setup an electronic document management system (EDMS), including:
- How will you organize your HR files to meet both the needs of your company and governmental Human Resource (HR) compliance requirements?
- How should you organize your numerous folders on each employee?
- Should you keep medical and EEO information separate that may require additional privacy?
- Who should have access to the employee data?
- How can you disclose the electronic files if they are required for court?
How you answer these questions can have big implications about how you will go about your work and about what type of EDMS will be able to meet your organization’s needs.
Unfortunately, with EDMS, it’s not one size fits all.
And regardless of your specific needs, you naturally need to ensure you’re staying legally compliant no matter which methods you choose.
Luckily, we will discuss in-depth the various questions you may have and help determine what is the best way for your organization to setup an EDMS.
Naturally you’ll need to ensure you’re staying legally compliant no matter which method you choose, and you’ll also want to think about the practical ways the documents will need to be accessed by HR Managers, Executives, Supervisors and Employee Managers.
Let’s first look at some of the various functions of HR and the related legal aspects to consider.
Human Resources: Definition Explanations
Human Resources (HR) are the human capital (people) who make up the workforce of an organization, business sector or economy. A human resource (HR) department oversees various aspects of employment within an organization as outlined in the ‘Functions of HR’.
Human Resource Management (HRM) is the management of human resources.
HRM is most often referred to as simply HR.
Then let’s talk about the best ways to use an Electronic Document Management System.
Functions of HR
A common question we often hear among employees is “What does human resources do?”.
The reality is that HR responsibilities can vary greatly from day to day. One day a manager of human resources may be hiring new employees to help the organization grow while the next, they may be dealing with employee issues that arise due to personal or work related incidents.
Some common HR functions and HR duties include:
- Recruiting employees
- Hiring and onboarding employees
- Firing employees / termination of employees
- Conducting performance reviews or performance appraisals
- Managing employee relations
- Maximizing employee performance
- Administering employee benefits
- Dealing with employee rights by fully understanding the Employee Rights Act (ERA) *
- Understanding local, state, and federal employment laws
- Advising the organization of employment law updates and new HR legislation
- Discussing HR trends with executives to ensure competitive hiring processes
What is the EEOC?
The Equal Employment Opportunity Commission (EEOC) is a Federal agency in the United States which enforces employment laws that prohibit discrimination in the workplace.
What is ICE?
The Immigration & Customs Enforcement (ICE) is responsible for enforcing I-9 requirements.
According to the National Law Review, ICE imposed over $80 million in fines as a result of 7,500+ I-9 audits between 2009 and 2012.
~ see below for more information on I-9 audits and compliance.
What is the FMLA?
The Family and Medical Leave Act (FMLA) is a federal law that guarantees certain employees up to 12 weeks of unpaid leave per year without fear of losing their job.
Health benefits must also be maintained for eligible workers even during unpaid leave.
It also provides up to 26 weeks of unpaid leave to care for a covered service member with a serious injury or illness.
- Working with state and federal agencies such as the EEOC, FMLA and ICE to ensure compliance with labor law and employment standards
* To date, the Employee Rights Act is not law and has been referred to the United States House Committee on Education and the Workforce.
Compliance: HR Policies and Procedures
HR documentation often contains sensitive and confidential information.
From a legal standpoint, there are several points to consider to ensure HR compliance.
At a minimum, your organization’s HR Policies and Procedures should include details on the following:
- Employee privacy: medical and other sensitive information
- HR audit process and procedures
- Electronic Discovery (eDiscovery)
- Document maintenance schedules & HR record retention
What is eDiscovery
eDiscovery is a process where electronic data is searched for, obtained and secured for the purpose of using the information for civil litigation, criminal charges or further investigations.
HR will often see Electronic Discovery take place when allegations are made by employees against the organization.
Source: EDRM – Duke Law
Whether you are the Director of Human Resources, the Head of HR, a HR Business Partner (HRBP) or a Manager of Human Resources, you will want to ensure your HR department is compliant.
The cost of non-compliance could be personal liability in a lawsuit.
In 2016, the US Second Circuit Court of Appeals ruled employees can be held personally liable under the FMLA. Even before this ruling, supervisors have been held liable in previous legal cases within the United States.
In 2002, two supervisors were held personally liable to each pay $450,000 after almost $12 million was awarded to a fired employee.
According to Villanova University, the EEOC handled 88,778 charges of workplace discrimination in 2014.
This resulted in the EEOC filing 133 lawsuits and $22.5 million in monetary relief for the victims.
The #1 recommendation by Villanova University to avoid HR Lawsuits is:
“Document, Document, Document”
So how should you organize your Human Resource files to help ensure compliance and proper documentation?
Here are a few things to consider:
Employee Privacy Rights: Medical Information and Other Sensitive Data or Details
One of the biggest legal issues related to document organization is keeping an employee’s private information confidential and secure.
This includes medical information, social security numbers, and any other information that might indicate the employee’s inclusion in a protected class.
This type of information should all be kept separate from other employee records so that it is not accessed by someone who does not have a need to see it.
In most cases, this includes the employee’s direct supervisor, who may have reasons to see a lot of the employee’s file, but typically has no reason to see their private medical information.
For medical information and other sensitive details, you should store those files separately from other employee information.
This will ensure that confidentiality can be maintained.
Depending on your location, you also may have a legalduty to do so.
In a paper-based filing system, this would likely require a separate filing area for medical information and other private employee information.
In an electronic document management system, this means using tools like access controls and/or passwords to ensure that only approved individuals have access to the digital folders containing sensitive information.
By limiting potential exposure to sensitive information, you can protect your organization from inadvertently making decisions that might appear discriminatory and thus help defend against alleged employee claims of discrimination.
With the above in mind, most organizations decide to keep the following types of files separate from other employee files:
This may include things like:
- Information collected as part of a health insurance benefit
- Wellness program participation and program details
- FMLA leave application or certification
- Workers’ compensation information as it relates to injury or illness
- Disability information, including any requests for accommodation if such requests include medical information
- Drug test results
What is a Protected Class?
A Protected Class is a group of people who are protected legally from discrimination based on a particular characteristic.
The following are considered protected characteristics within the United States (USA):
- Age (40 and over)
Age Discrimination in Employment Act of 1967
Immigration Reform and Control Act
Title VII of the Civil Rights Act
- Disability status
Rehabilitation Act of 1973 and Americans with Disabilities Act of 1990
- Familial status
Civil Rights Act of 1968 Title VIII: Housing cannot discriminate for having children, with an exception for senior housing
- Genetic information
Genetic Information Nondiscrimination Act
Title VII of the Civil Rights Act
Title VII of the Civil Rights Act
- National origin
Title VII of the Civil Rights Act
Pregnancy Discrimination Act
Equal Pay Act of 1963 and Title VII of the Civil Rights Act
- Veteran status
Vietnam Era Veterans’ Readjustment Assistance Act of 1974 and Uniformed Services Employment and Reemployment Rights Act
Note: Each state can add additional characteristics that are protected under state law.
The Civil Rights Act of 1964 is commonly referred to as “Title VII” or “Title VII of the Civil Rights Act” because it was that section of the Civil Rights Act that dealt with these protected classes.
The “Pregnancy Discrimination Act” is an amendment to the Civil Rights Act of 1964 which prohibits discrimination on the basis of pregnancy, childbirth and other related medical conditions.
Record of Employment (ROE) / HR Hiring Records
Record of Employment forms may contain the following information:
- Birth date (divulging the employee’s age)
- Social security number (which should be kept private)
- Inclusion in a protected class (which may come up as part of background screening)
You’ll want to keep all record of employment forms to be able to PROVE fair and non-discriminatory hiring practices.
You will also want to consider keeping ROE’s separate so that the organization can reduce the risk of claims that a manager subsequently used the information in a discriminatory way.
Equal Employment Opportunity (EEO) Records
Equal Employment Opportunity (EEO) records should be kept separate from other files, inaccessible to anyone who is not involved in EEO reporting.
A key reason for this is that the information contained in EEO records cannot legally be used in hiring decisions.
Therefore, anyone involved in employment decisions, especially individuals such as hiring managers, should be prevented from accessing this information to protect against accusations that this information influenced a hiring decision.
Employees can file a complaint with the Equal Employment Opportunity Commission (EEOC) for different discriminatory reasons, including retaliation for making an EEOC claim.
Ensuring that this information is protected and secured is essential in helping to PROVE that retaliation did not occur.
The confidentiality of payroll information is important to ensuring your employees privacy.
Payroll information includes anything related to payroll decisions and benefits.
Although you may not be legally required to keep payroll information separate, it’s generally a good idea to do so.
This includes paperwork such as:
- W2 forms
- Time sheets
Wage deductions or garnishments
Some employers decide to keep payroll information separate for other reasons as well, such as simplifying payroll record maintenance and making it easier to audit or disclose such records in the case of disputes or complaints.
What is a W2 Form?
A W2 Form, also known as a W2 Tax Form, is a form that US organizations must send yearly for each employee to the Internal Revenue Services (IRS).
The W2 Form reports on each employee’s salary and taxes withheld by the organization.
Most organizations keep I-9 documents separate from other employee files for two specific reasons:
- I-9 Documents can divulge an employee’s inclusion in a protected class
- I-9 Audits will be easier to manage (more on I-9 audits below)
Per Title VII of the Civil Rights Act, employers cannot make employment decisions based upon national origin, race, sex, color, or religion. I-9 Documents may contain information that divulges several of these characteristics.
Therefore, I-9 Documents should be protected and only accessible to select individuals in the organization to help protect against lawsuits.
What is an I-9 Form?
An I-9 Form MUST be properly filled out by all U.S. employers for each individual employee they hire to work within the United States. This includes both citizens and non-citizen individuals.
The Form I-9 is meant to verify the identity and employment authorization of each individual working within the United States.
As part of the I-9 verification process, Employees must:
- Attest to his or her authorization to be employed within the United States
- Provide acceptable legal documentation to prove identity and employment authorization (see I-9 Documents below)
Each Employer must:
- Ensure that the I-9 Form is properly completed for each Employee
- Retain the I-9 Form for a designated period
- Make available the I-9 Form for inspection (see HR Audit section below)
What is an I-9 Document?
For the purpose of this article, an I-9 Document simply refers to the completed I-9 Form.
However, when discussing I-9 Documentation, it could refer to the different types of legal documentation that is acceptable to establish identity, Employment Authorization or both.
I-9 Documents are broken down into:
- List A Documents
Documents that establish both Identity and Employment Authorization
- List B Documents
Documents that establish Identity
- List C Documents
Documents that only establish Employment Authorization
View & Download I-9 Form
Workplace Investigations – Information About Multiple Employees
If a workplace investigation is conducted, it is essential to ensure that employee information about one individual is not entered in another employee’s file due to their association in the same investigation.
Again, this is not legally mandated, but it’s a smart move to keep materials related to the investigation separate from other employee files.
An exception here is that the results of any disciplinary procedure could become part of an employee’s personnel record at the conclusion of the investigation.
If you plan to fire an employee for just cause, I suggest you read “Termination for Just Cause” written by one of the top employment lawyers in North America.
Stuart Rudner details the steps you need to take to help ensure the process is successful.
What is the Department of Labor (DOL)?
The Department of Labor (DOL) has a missionto “foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights”.
The DOL conducts audits related to labor law compliance, such as wage and hour issues, occupational safety, unemployment insurance benefits, Fair Labor Standards Act compliance, FMLA compliance, and more.
HR Legal Compliance – Document Disclosure of HR Information
If there is a legal dispute or an allegation of wrongdoing by an employee, a company should never destroy a Human Resource document or file related to that matter.
To help ensure HR compliance, your HR department should have a way to mark files and documents for disclosure so that they do not get altered or deleted once legal proceedings have been initiated.
If your organization is subject to an HR audit by the Department of Labor (DOL) or EEOC, it would be helpful to have your Human Resource documents organized in a way that makes it simple to comply with the HR audit requirements—while ensuring that no unnecessary information gets included in the audit.
This is key for I-9 Documents. I-9 Documents are often the subject of HR audits known as I-9 Audits, carried out by ICE.
For this reason, many employers opt to keep I-9 Documents separate from other employee documents.
While you’re not legally required to keep the I-9 paperwork separate, it will make the I-9 audit process simpler.
Due to the potential costs associated with I-9 Audit penalties, many organizations opt to conduct an I-9 self-audit.
Here is a useful internal I-9 self-audit checklist for your organization.
FMLA self-audits are also used to ensure FMLA compliance prior to any potential investigation being started by the DOL. FMLA issues can result in high-priced penalties by the DOL if they discover systemic problems within your organization.
I-9 Fines and penalties can range from $178 to $1,782 per violation for Committing Document Abuse and up to $21,563 per unauthorized alien employed by an organization for a 3rd infraction.
Fully understanding how the inspection process works will quickly make you realize how important proper documentation is to ensuring your organization is compliant and able to successful navigate any future HR Audits.
For example, organizations are often fined for simple mistakes such as not entering an employee’s name correctly or fully completing a section before a particular date.
If your HR system is difficult to use or maintain, simple mistakes that go unnoticed could result in significant fines as a result of multiple I-9 infractions.
Document Maintenance Schedules
One aspect of legal compliance in HR is keeping your documentation up-to-date.
Ensuring that your files are organized properly will assist your document maintenance efforts and keep those files current, while keeping private information secure. As an example, updating employee personnel files, such as handbook acknowledgements, should be simple and efficient, but you’ll still want to protect or limit access to other private information in the file.
How you organize your files can also have an impact on complying with legally mandated retention periods.
How long you must keep employees’ files (including documents for former employees) varies by file type and by State.
You will also need a way to ensure that documents are not deleted if they are subject to legal proceedings—even if they would otherwise be eligible for deletion.
HR Record System & Ease of Use
An HR Record System must ensure that records are available quickly to those fulfilling the various duties of HR, while meeting compliance standards and protecting private information.
It must also be easy to use, because if it’s too difficult to use, people will look for shortcuts.
This also speaks to the need to properly train the employees who will be using the system to ensure they understand how it works and what security systems are in place.
This will greatly increase the system acceptance, usability, and productivity.
Keeping in mind the legal issues outlined previously, the organization of HR files comes down to the organization’s preferences.
This might mean that Company A opts to create folders for each employee, and create sub folders for each type of document.
Company B may opt to create folders for each type of document (such as hiring records or I-9 files) and create a sub folder for each employee in each section.
At the end of the day, as long as you have the proper safeguards in place to ensure that access is controlled, the details of the file organization is up to you.
Which is the best for you may depend on the size and complexity of your organization, how frequently you conduct audits, how closely you maintain a document maintenance/purging schedule, and how you will search for and access the documents in the future.
HR Management Software Solution
Utilizing a Forensic Electronic Document Management System (FEDMS) to organize HR files is an excellent HR management software solution.
Keeping everything separate (in terms of secure access), yet organized in an efficient manner, is much easier if you have a FEDMS.
Having a FEDMS means the ability to keep things stored together – since they’re stored digitally – yet still keep private documents separate through electronic security features that allow passwords and access controls.
You’ll have the efficiency associated with keeping things all in one place, without sacrificing security and confidentiality.
You’ll maintain the ability to turn over records in an audit or disclose the appropriate documents during legal proceedings.
Forensic Notes is currently the only FEDMS on the market ensuring that your HR documents meet the high standards of digital forensic evidence within the courts.
Forensic Notes offers features and solutions that simply don’t exist in other HR Software products.
Forensic Notes is designed to act like a legal Notebook in electronic form.
What this means is that you can present all employee documents as one court-verifiable PDF or electronic package making disclosure quick and easy.
This serves as a benefit for you legally, as it provides an efficient method to disclose electronic information you have about an employee while being able to verify the integrity of the documents.
As a result, the use of a FEDMS improves the legal credibility of your organization by helping you PROVE that the documents have not been altered and that documents that may have been pertinent to the case have not been destroyed.
Forensic Notes is also safe & secure.
We proudly discuss how we secure and encrypt your data in transit and at rest.
In addition, every note saved uses a different encryption key to further safeguard your organization data and help ensure it meets compliance requirements.
For details, please review how we secure your data.
Just like legal notebooks which are trusted by the courts in high profile criminal investigations, all evidence and information related to the case is available.
Of course, your organization always has the option to delete a Forensic Notebook and all associated documents if it is no longer required.
In this way, it’s similar to a physical legal notebook which can be shredded once it is no longer required.
Being thorough with the disclosure can help you avoid court sanctions that may come about for non-compliance with disclosure obligations.
In other words, simply having a system that helps you maintain organization and PROVE you’re complying can assist your credibility in legal proceedings which will save your organization both time and money.
Small & Medium Sized Businesses (SMB’s)
For small and medium sized businesses (SMB’s), Forensic Notes is the only HR Software solution you need.
It provides your HR staff the means to document their actions efficiently as they carry out their duties; while also helping to protect your organization from employee lawsuits and government agency audits.
For large organizations, Forensic Notes will not be your only HR solution, but rather it can be used as a forensically-sound, secure vault for HR Performance Management Systems (PMS) documents.
The reality is that even large scale PMS’s are not designed to be forensically-sound.
Continue using your current PMS software, while storing sensitive information with Forensic Notes to forensically timestamp the document and protect the integrity of those document in the event of audits or lawsuits.
If you want to ensure your most important HR documents, such as I-9 Documents, are forensically verifiable and court-ready, integrate Forensic Notes to give your organization an advantage for any future court proceedings.
I-9 Completed Form
Below is an I-9 Completed Form saved within Forensic Notes as an attachment to a note.
This allows both the note and attachment to be Digitally Signed and Time Stamped by an Independent 3rd Party Timestamping Authority (TSA).
The Date, Time and Authenticity of the I-9 Form can then be confirmed and validated using the Forensic Notes Validation Tool.
This is accomplished by simply dragging and dropping the files onto the validation tool webpage.
Start organizing your HR Files in Forensic Notes, a Forensic Electronic Document Management Systems (FEDMS).
Be more organized, more compliant, and safe-guard your organization from future lawsuits.
Start a free 7-Day Trial right now.
We offer up-front and clear pricing. If you have any questions, please email firstname.lastname@example.org
Are you ready to ensure your organization is creating credible evidence?