Quirky Question # 29, Maintaining Electronic Records

Quirky Question # 29:

Our company has offices in California.  This year we want to improve our document retention practices.  We’ve decided to maintain electronic records of personnel files.  Can we do this in California?  We were told that California law requires the records to be available at the job site.  If this is true, can we switch to an electronic database in California?

Dorsey’s Analysis:

The California Labor Code, § 1198.5, specifically addresses the subject of your question. Under the Labor Code, a California employer is permitted to retain personnel files electronically. That right, however, is circumscribed somewhat, to ensure that employees are permitted access to their personnel files.

In short, you can switch to an electronic database. But, you have to make sure the records can be downloaded, stored on a disk, and maintained at your California location. California Labor Code Section § 1198.5 requires employers to permit an employee to inspect his or her personnel records. Inspection pursuant to this section must be allowed at “reasonable intervals and reasonable times.” (L.C. § 1198.5(b).)

Section 1198.5( c) requires the employer do one of the following:
(1) Keep a copy of each employee’s personnel records at the place where the employee reports to work.

(2) Make the employee’s personnel records, available at the place where the employee reports to work within a reasonable period of time following an employee’s request.

(3) Permit the employee to inspect the personnel records at the location where the employer stores the personnel records, with no loss of compensation to the employee.

L.C. § 1198.5(c) (emphasis added). Therefore, § 1198.5 permits the employer to keep the original personnel records at a location other than that were the employee reports to work, so long as a copy is available at the location where the employee works and can be made available for inspection upon request.

Subject to the provision in section (2) above, the employer is not required to make personnel records available immediately upon request. The California Department of Labor Relations, Division of Labor Standards Enforcement (“DLSE”) offered some guidance in its August 27, 1998 opinion letter on how soon such personnel records should be provided to an employee for inspection. (See Wage-Hour Opinion Letter No. 1998.08.27 (1998).)That letter reiterated the employers’ obligation to make records available to an employee within a “reasonable” time. The August 27, 1998 opinion explained that while reasonable attempts at a timely response must be made, there was no per se rule and would be subject to a “case by case” evaluation. The DLSE stated as follows:

“The Division has historically taken the position that the flexibility demanded by the clear language of this statute means that reasonableness can only be determined on a case by case basis. …

Other difficulties in setting any hard and fast rule on access to an employee’s personnel file would allow, for example, an out of state employee who maintains their personnel files in an out of state location, or one who has statewide operation and employee, but maintain their personnel files at a central location, to provide access to these files within a “reasonable period of time” after a request is made to inspect them by the employee. On the other hand, it would not be unreasonable to expect fairly immediate access to an employee’s personnel file maintained at the place where the employee works as required by statute, absent compelling reasons or unusual circumstances that the employer would have the burden of establishing.

In the event your constituent is denied access to their personnel files outside of these time parameters, or altogether, he or she may file a complaint with the nearest office of the Division of Labor Standards Enforcement.” (Emphasis added.)

In sum, the regulations permit employers to keep electronic copies of the personnel files. However, employers must ensure a copy (electronic or hard copy) is maintained and retrievable (to be printed in hard copy format upon request), at the location where the employee works in California.

A separate issue is what materials you wish to include in the electronic personnel records. When maintaining electronic copies of personnel files, we recommend that you consider segregating certain types of materials to ensure that they are not inadvertently produced when the personnel file materials are made available to the employee. For example, business records, confidential data, and privileged communications should be scrutinized carefully to assess whether any of this data belongs in the personnel file. Consideration also should be given to the retention periods that govern different types of documents. While certain types of documents have mandated retention periods, other materials (e.g., emails and other routine communications) do not and may be destroyed after a reasonable period of time. One potential problem with maintaining materials electronically is that you may find yourself retaining documents that could be (and should be) disposed of. Therefore, if you elect to maintain electronic personnel files, you may want to conduct periodic file reviews to cull information that no longer needs to be retained.