Document Management Improves HR Record Retention

Record retention is a critical component of human resources (HR) compliance management. Federal agencies such as the U.S. Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC), the Internal Revenue Service (IRS), and the Occupational Safety and Health Administration (OSHA) along with state agencies have strict HR record retention requirements teams must meet. Violations can result in hefty fines, legal repercussions, and criminal charges.

But compliance isn’t the only factor to consider here. Poor record retention can also significantly hinder operations. When employee files are disorganized – or worse, not maintained to begin with – HR teams cannot easily find and access them, resulting in poor response times, delayed problem resolution, and complicated audit processes.

This article explains how effective HR document management can help you improve record retention and, therefore, ensure compliance as well as efficiency.

HR Record Retention Basics

Before we explore the benefits of leveraging document management solutions for record retention, let’s make sure we have a clear understanding of what’s required.

Human resource departments need to retain most employee records for one to ten years from the “date of action.” This covers hiring documents, testing, employee contracts, I-9 forms, and employee status changes such as promotions, demotions, transfers, and layoffs. Even job orders submitted to employment agencies and job ads must be retained for one year.

Here are the retention schedules, as required by U.S. law, for some of the most critical employee documents, but keep in mind that states may have their own set of additional requirements:

Family & Medical Leave Act (FMLA) records: According to the DOL, employers are required to keep these files for a minimum of three years.
Payroll records: Federal agencies have differing requirements for payroll records. The IRS, for instance, requires employers to keep tax documents for four years. The DOL, on the other hand, requires payroll records to be retained for three years.
OSHA forms 300, 300A & 301: According to OSHA, forms 300 (Log of Work-Related Injuries and Illnesses), 300A (Summary of Work-Related Injuries and Illnesses), and 301 (Injury and Illness Incident Report) must be kept for at least five years.
Health records: The Employee Retirement Income Security Act requires employers to preserve medical documents for at least six years after termination.
Exposure to hazardous materials records: OSHA states that these records must be maintained for 30 years.
I-9 forms: According to U.S. Citizenship and Immigration Services (USCIS), employers are required to retain I-9 forms for three years after the date of hire or one year after the date of termination (whichever is later).

Are you prepared for the rise in I-9 audits? Find out how to ensure you are by reading our blog post that covers the current landscape and best practices for meeting requirements.

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Storing all these paper documents for all your employees for years on end undoubtedly creates inefficiencies and dramatically increases operational costs (hello, storage fees and labor expenses). Document management software, on the other hand, does the opposite.

3 Ways Document Management Software Improves HR Record Retention

Document management software enables HR departments to effectively manage retention and destruction schedules for each employee document type as well as ensure business continuity, especially if your company operates from more than one location.

The transformation from a paper-based system to a digital one addresses core record retention challenges HR teams face. How? Through these four mechanisms:

Automated Retention Schedule Management

Traditional, paper-based systems require HR teams to manually track retention periods. This manual task often leads to human error and, in turn, preventable compliance violations, wasted time, and noncompliance fines.

It can also lead to increased operational costs. With labor costs making up 70% of total business expenses, time is money and it shouldn’t be spent searching for required employee files or backtracking to identify errors. Unfortunately, 83% of employees waste 1-3 hours every day resolving mistakes.

Digital document management solutions with built-in automation technology can seamlessly categorize records based on type and, using the file type, apply the appropriate retention schedule. Automated HR workflows streamline compliance by taking the manual work out of employee recordkeeping, archival, and disposal.

You can find peace of mind knowing that you can eliminate costly, time-consuming manual work and avoid noncompliance fines with the ability to set predefined rules and timelines as required by federal and specific state laws.

Enhanced Searchability & Retrieval

Sticking with the theme of wasting time, research shows that the average worker spends over nine hours a week just searching and collecting information. That’s proof that employees are struggling to find the information they need to do their jobs.

When it comes to HR record retention, ensuring you can find the files you need when you need them is crucial – especially in the event of an audit. That’s where document management software comes in.

The top solutions come equipped with advanced search capabilities, allowing your team to seamlessly locate documents. HR professionals can search and find documents using various criteria – from employee name to document type to date ranges. The best systems even allow you to search by specific text within documents. In addition to dramatically reducing response times during audits, these features make legal requests as well as everyday HR operations much easier to complete.

Centralized Storage, Access Control & Audit Logs

Centralized storage with appropriate access controls are key components of effective HR record retention. If employee documents are scattered across multiple systems and filing cabinets efficiently maintaining proper retention schedules is nearly impossible. Throw in an additional layer of difficulty: HR files in multiple locations throughout various states, and it becomes undoubtedly impossible.

An HR document management system upgrade can address this challenge. Top solutions provide role-based permissions that ensure sensitive employee data is only accessible to authorized personnel.

At the same time, they maintain detailed audit trails of who accessed and modified individual documents and when, allowing you to easily identify any changes to the records you’re still required to retain. With audit logs of all employee file activities, you can also easily prove to regulators that you’ve maintained, accessed, and destroyed records according to legal requirements.

With configurable workflows, centralized HR document management solutions also help ensure you’re retaining records for the correct periods across states. When you can store, access, and update all employee records in one system, your team can easily set up automated workflows based on state-specific policies.

Best Practices for Optimizing HR Record Retention with Document Management Software

To maximize the benefits of using document management software to meet HR record retention standards, consider these best practices:

Conduct a Comprehensive Audit: Evaluate your existing document types, retention requirements, and current storage methods. This will help you develop a clear baseline and identify the most critical areas for improvement.
Determine Your Ideal File Organization: Standardizing naming conventions and folder structures prior to launching your document management upgrade will set you up for success.
Establish Clear Policies & Procedures: Your policies and procedures for document creation, access, and destruction within a new system should align with both legal requirements and unique organizational needs.
Plan for Data Migration Carefully: Key components to consider when developing your data migration plan include document scanning, quality control, and verification that all records have been accurately digitized and categorized.
Provide Comprehensive Training: When creating your training program, keep in mind that it’s important to explain not only how to use your new document management system but why proper document management is critical for compliance and efficiency.

Start Improving Record Retention Today

Effective document management significantly improves HR record retention by automating processes, enhancing file accessibility, centralizing storage, and providing robust audit capabilities. And getting started is easier than you may think.

The first step is to convert your documents into the appropriate format. Document scanning services providers digitize your paper-based employee records as well as index their information into your document management software. While digitizing documents can be done in-house, it’s much more efficient and cost-effective to leverage an expert who can ensure your data is migrated into your digital system with high accuracy (and no human errors caused by manual work!).

That’s why companies like UKG, a global leader in human resource service delivery and workforce management, choose MetaSource as their North American document scanning partner. With over 30 years of experience in high-volume document scanning, document management, and workflow automation, MetaSource has helped UKG with file scanning, file organization, and uploading millions of employee documents onto UKG’s human resource platform.

Contact MetaSource to find out how to easily transition to a paperless document management system or check out our HR Document Management Playbook to learn more about how upgrading your system can help you redefine compliance management and efficiency.

How Effective Document Management Improves HR Record Retention