Electronic Recordkeeping: Keep it, Toss It, Scan It, or Store It?

Tuesday, July 12, 2011Presented by the Employer Resource Institute

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Recordkeeping in California: Electronic Recordkeeping: Keep it,

Toss It, Scan It, or Store It?

Simpson, Garrity, Innes & Jacuzzi, PC601 Gateway Boulevard, Suite 950

South San Francisco, CA 94080http://www.sgijlaw.com

(650) 615-4860Laura E. Innes, Esq. – linnes@sgijlaw.com

Form of Records• In general, the records must be kept in

indelible, typewritten or digital form for all employees. The records must be dated and kept on file at the place of employment or at a central location within California.

Electronic Records?Use of electronic timecard systems, and the storage of records by electronic means meets the requirements of California law if the records are (1) retrievable in the State of California, and (2) may be printed in an individual format upon request of either the employee or the Division. The DLSE policy closely follows the federal regulation contained at 29 CFR section 516.1. (See, DLSE O.L. 1994.02.03-1 and 1995.07.20)

29 CFR 516.1(a) Form of records. No particular order or form of records is prescribed by the regulations in this part. However, every employer subject to any provisions of the Fair Labor Standards Act of 1938, as amended (hereinafter referred to as the Act), is required to maintain records containing the information and data required by the specific sections of this part. The records may be maintained and preserved on microfilm or other basic source document of an automatic word or data processing memory provided that adequate projection or viewing equipment is available, that the reproductions are clear and identifiable by date or pay period and that extensions or transcriptions of the information required by this part are made available upon request.

Electronic Record Keeping: Federal Contractors – Similar Standard

• Contractors may destroy original paper documents and keep them in electronic format if the following conditions are met: Safeguards have been put in place on the electronic storage system (backup procedures, security systems in place, etc.)

• The electronic storage system may be easily accessed by the OFCCP (during an investigation, for example)

• The duplicate electronic copy accurately reproduces the original (must be legible and must constitute a substitute copy of the original under Federal law)

• It must be easy to convert the electronic copy onto paper (must be able to print the record)

How Long Do We Keep Them?Statutes of Limitations

• Federal Fair Labor Standards Act – 2 years for innocent violations, 3 years for willful violations

• CA statutory obligation – 3 years• Unfair competition – Business & Professions

Code section 17200 (an equitable claim) – 4 years

• Claims under the Lily Ledbetter Fair Pay Act?

What records must you have?

Record All Time Worked Time in at the beginning of the shift Time out for the meal breakTime in at the end of the meal breakTime out at the end of the shiftWhat if they don’t?Failure to Comply = Disciplinary Action up to and

including terminationPenalties for the EmployerTime Card Disclaimer

What if you don’t keep records re: hours worked?

• Where the employer fails to keep records required by statute, the consequences for such failure fall on the employer, not the employee. In such a situation, imprecise evidence submitted by the employee with regard to the number of hours worked can provide a sufficient basis for damages. The employee has carried out his burden if he proves that he performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence the Court awards damages to the employee, even though the result be only approximate. See, for example, Hernandez v. Mendoza , 199 Cal.App.3d 721 (1988).

More Records Full name, home address, occupation, SS No. DOB (if under 18) Time Records Total wages paid each payroll period (value of board, lodging, or

other comp) Total hours worked in the payroll period and applicable rate of

pay At time of each payment – written statement** showing:

All deductions Dates of the pay period Name of the employee and last 4 digits of SS No. or other

identifier Name of employer All records in writing, in English, in ink or other indelible form,

properly dated

The “written statement” paystub

• What if you pay wages by automatic deposit, can you provide a digital paystub to employees?

• Yes, so long they can print it out using your facilities at the time they receive it; and,

• So long as you maintain the digital record and can provide it/print it again upon request.

Still more records…

• Records to support your decision making with regard to hires, fires, promotions, demotions, discipline, compensation systems, policies, etc.

Where are the Records?

Records are Everywhere in the Modern/Digital World

• Digital Data• Telephone extension detail• Computer/network system log-on, log-off

times• Scan-tron security system details• Outlook calendars, notes, to-do lists• Private files/journals• Papers…

A Closer Look at Data(Data = Document)

• E-mail• MSWord• Wordperfect• Excel• Powerpoint• .pdf• Voicemail• Video clips• Photographs• .wav• .img .jpg .tiff• Cell phones/photos

.txt Web browser recordsMetadata.HTMLHandwrittenComputer DesktopLaptopPDA’sMobile devicesText messagesInstant messages

E-mail as Evidence"It's like the gift that keeps on giving," said Tom Greene, a deputy attorney general in California, discussing the Microsoft antitrust case -- built largely on email evidence. "People are so chatty in e-mail."

Examples of email woes…

• E-mail revealed the shredding of documents at Arthur Andersen.

• E-mail exposed stock analysts condemning stocks as a "disaster" or a "dog" while publicly touting them to investors.

• In recent employment litigation, emails between managers ridiculed the plaintiff (former employee) as a “slacker” – offending the jury.

Manage Email Documents

• Assume all e-mails will be forwarded to someone else.

• Do not put anything in an e-mail that you would not want to see as Exhibit A in court.

• Personal use can expose the company to liability.

• Train managers, monitor email and enforce.

Assess the Document Environment• Know your data systems• What is used to create data?• What is used to store data?• How is data destroyed?• How can data be tracked, managed, and

controlled?• What document creation, storage, retention

and destruction policies exist?• What controls do you want/need?

– Don’t forget trade secrets

When and How to Destroy

When?

• So long as no controversy is pending or threatened, it is lawful to comply with corporate policies regarding document retention/destruction – so have a policy.

• This involves tough decision making.• Once you have a policy – follow it!

Destruction = Obliteration

• Paper records can be destroyed by shredding or by incineration.

• You cannot simply toss confidential records.– Be sure your provider is reputable!

• Digital records should be “shredded” digitally.• CD’s, DVD’s can be shredded.• Flash drives can be shredded digitally.• Kill old PC hard drives.

Steps for Managing Documentsin Litigation

When Does the Duty to Preserve Begin?

• When a party:– “reasonably anticipates litigation” Zubulake, 220

F.R.D. 212, 216-17 (S.D.N.Y. 2003)– Starts planning a defense– Creates attorney work product– Receives a demand or cease and desist letter– Suffers a major accident likely to result in a lawsuit– Plans to bring a lawsuit

Preservation Duty RequirementOnce duty is triggered, HR/counsel should:• Identify and preserve records that may be

relevant to claim• Review claims and possible defenses• Make a reasonably diligent search• Identify probable locations of relevant

data/documents

Preservation Duty Requirement -- Where Should You Look?

• Personal computers• Servers• Handheld devices• Cell Phones• Internet Service Provider Records• Instant Messaging Services• Internet Search and Data

Providers• Data Recorders• Security Systems• External Hard Drives

More places to look:

• Laptop computers• Thumb Drives• Fax machines• Scanners• Digital copies• Voicemail• GPS Systems• Automotive computers

Still looking…

• Paging Devices• Backup disks and tapes• Legacy Systems• Archives

• Train managers• Limit personal e-mail on your system• No auto-date features on documents• Mark all confidential documents as such

– Trade secrets / Business confidential– Attorney-client Privileged

• Have all attorneys use signatures that identify them as attorneys and/or label documents and communications

• Use “attorney client privileged” as the subject in emails to counsel.

• Electronically track sensitive documents

What Should You Do?

QUESTIONS?

Simpson, Garrity, Innes & Jacuzzi, P.C.601 Gateway Boulevard, Suite 950

South San Francisco, CA 94080(650) 615-4860

http://www.sgijlaw.com

Laura E. Innes, Esq. – linnes@sgijlaw.com

© 2011 Employer Resource Institute. All Rights Reserved

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