In our September 22, 2021, webinar, a participant asked if employers may maintain “electronic only” personnel documents. In other words, is it legal to eliminate paper personnel records altogether? The answer? It should be. But, beware.
California law explicitly recognizes that employees may maintain some personnel records only in electronic format. For example, employee paystubs (referred to as “itemized wage statements” in Labor Code section 226) may be stored electronically, so long as employees agree not to receive paper stubs, they can access and print the records from home or work 24/7, the storage system is secure, and the employer meets certain other requirements. (See https://www.dir.ca.gov/dlse/opinions/2006-07-06.pdf)
Similarly, employers may disseminate electronically the “Wage Theft Prevention Act Notices” (which must be provided to all non-exempt employees under Labor Code section 2810.5), provided the employer has a implemented a system through which employees may acknowledge receipt of the notice and print out a copy. (See https://www.dir.ca.gov/dlse/faqs-noticetoemployee.html)
However, maintaining electronic-only versions of workplace documents can create potential liability. For example, one California Court of Appeal refused to enforce an arbitration agreement where the employer could not show that: (1) the employee’s e-signature could only have been placed on the agreement using the employee’s unique username and password; (2) the date and time printed next to the electronic signature indicated the actual date and time when the electronic signature was made; and (3) all employees were required to use their unique usernames and passwords when they logged into the HR system and signed electronic forms and agreements.
The bottom line? Although many vendors profess to offer compliant electronic personnel record systems, employers seeking to maintain electronic-only personnel records should work with their employment law counsel to ensure they meet their legal obligations.