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Data retention and compliance for HCM

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Enterprise information continues to grow in volume and variety. For human resources documents and data in particular, it’s crucial to keep records for as long as necessary – and no longer. Retaining …

Enterprise information continues to grow in volume and variety. For human resources documents and data in particular, it’s crucial to keep records for as long as necessary – and no longer. Retaining information for too long is costly and risky, but so is destroying it too soon. Ensuring proper user authorization and access is also crucial. Optimized digital solutions for managing employee files and records enable companies like yours to improve data compliance, increase efficiency, and prepare for potential litigation.

Read this whitepaper to understand how SAP Employee File Management can help you achieve the best balance.

Read this whitepaper to understand more about SAP Employee File Management by OpenText that can help you achieve this balance.

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  • 1. SAP Thought Leadership PaperHuman Capital ManagementDocument and Data Retention ComplianceUnderstanding and Addressing the Costs, Risks, andLegal Pitfalls
  • 2. Enterprise information continues to grow in volumeand variety. For human resources documents and datain particular, it’s crucial to keep records for as long asnecessary – and no longer. Retaining information fortoo long is costly and risky, but so is destroying it toosoon. Ensuring proper user authorization and access isalso crucial. Optimized digital solutions for managingemployee files and records enable companies like yoursto improve data compliance, increase efficiency, andprepare for potential litigation.
  • 3. Table of Contents 4 The Challenges of Document Retention Throughout the Employee Lifecycle 5 The Legal Landscape Document Retention Obligations Wasteful Discovery Costs 6 The Potential for Litigation – From Hire to Retire Enabling Data Compliance with SAP® Solutions About Loeb & Loeb
  • 4. Striking the Right BalanceThe Challenges of Document RetentionThroughout the Employee LifecycleManaging enterprise information, Keeping data and documents longer The law firm of Loeb & Loeb LLP hasespecially HR documents, is complex in than necessary hurts efficiency, increas- broad experience regarding the legalan environment of burgeoning digital data es cost, and raises the risk of liability. Yet obligations and risks relating to employeeand business networks. Organizations disposal of records in violation of legal records. This paper draws upon thismust strike the right balance to legally obligations to retain them can result in experience to define the legal landscape,and effectively manage information and fines and damage the company brand. litigation challenges, and costs of non-keep all the right data for just the right What’s more, a high percentage of records compliance. It also addresses how digitalamount of time. Many firms, however, maintained are of little value, and are, in solutions for managing employee recordsretain more records than necessary fact, potential liabilities. Many stored files and files can help.or have inappropriate access and autho- are duplicates, increasing storage andrization controls. As the amount of infor- litigation discovery costs.mation – including social media, blogs, Leading organizations are employinginstant messaging, and text messaging – digital enterprise file managementcontinues to explode, the problem will solutions to improve data management,only grow. authorized access, compliance, and litigation preparedness. These solutions simplify the management of all paper and electronic worker-related documents and files by supporting their integration, storage, retrieval, and archiving. As a result, they enable you to meet your legal obligations and reduce the risks and costs of compliance. SAP Thought Leadership Paper – Document and Data Retention Compliance4
  • 5. Understanding Retention Regulations and CostsThe Legal LandscapeDocument Retention include the Immigration Reform and For example, in the 1990s a corporationObligations Control Act (IRCA), state wage and hours purchased a Pennsylvania-based firm laws, and laws concerning employment that was shut down soon after the acqui-Scores of regulations dictate which agreements. sition. In litigation a decade later, lawyersrecords you must keep and for how long. Companies have a duty to preserve requested records belonging to theTitle VII of the Civil Rights Act prohibits documents that may be related to ongoing now defunct company. After discoveringdiscrimination based on race, color, reli- or pending litigation. The obligation to that over 10,000 boxes of records stillgion, sex, and national origin. Under Title preserve evidence arises when a party existed at an off-site facility, the parentVII, companies have to retain relevant knows or reasonably should know that company was forced to spend more thanpersonnel or employment records for one the evidence is relevant to current or US$2 million searching and culling theseyear. These records include application reasonably likely future litigation. The records to just six boxes of pertinentforms; hiring, promotion, demotion, eradication of “smoking gun” documents information. As it turned out, this infor-transfer, and termination records; and once a potential discrepancy is discovered mation neither helped nor hurt the plain-terms of compensation. can be interpreted as obstruction of tiff’s case – but the discovery expenses The Age Discrimination in Employment justice. While not every shred of paper or for the defendant were considerable.Act (ADEA) also calls for companies to electronic document must be retained, a Similarly, the defendant in a recentretain personnel or employment records party must not destroy unique relevant discrimination case was ordered tofor one year. These include job appli­ evidence. Once litigation is reasonably produce some 70,000 e-mails that hadcations, resumes, and failure-to-hire anticipated, an organization must matches in a keyword search. For thisrecords; hiring, promotion, demotion, suspend its routine document retention single-plaintiff case, the cost of providingtransfer, and termination records; and and destruction policies and place a the e-mails was over US$250,000.agency, union, and job orders. In addition, litigation hold on relevant evidence.for three years companies must keeppayroll and other records containing Wasteful Discovery Costseach employee’s name, address, dateof birth, occupation, rate of pay, and Regardless of their disposition, litigationcompensation earned per week. cases can impact the bottom line. Signif- The Fair Labor Standards Act (FLSA) icant costs can be incurred through thehas similar requirements covering docu- discovery process, in which the organi­ments from employment and earnings zation must produce relevant data andrecords to payrolls and contracts, while documents. These expenses often arethe Family and Medical Leave Act (FMLA) accepted as the cost of doing business –is concerned with employee leave and even though they frequently can bebenefits records. Other regulations reduced or avoided.SAP Thought Leadership Paper – Document and Data Retention Compliance 5
  • 6. Recent Document Retention CasesThe Potential for Litigation – From Hire to RetireThe failure to establish or follow policies In Connecticut in 2001, an applicant for a Fines assessed in cases like these can addfor shredding HR-related records can teaching position brought a failure-to-hire up quickly. Under Immigration Reformresult in the retention of large amounts claim for age discrimination under ADEA. and Control Act (IRCA) regulations,of unnecessary data and documents. The court granted adverse inference employers that fail to maintain onboardingAnd the risk and cost potential for to the plaintiff due to the absence of records such as INS Form I-9 are subjectlitigation spans the employee lifecycle, requested evidence from the school. to civil penalties ranging from US$100 tofrom recruiting, reference checks, and The school lost its case because it did US$1,100 for each violation.onboarding to maintenance, perfor- not retain the proper documents relating The risks also extend to documentsmance, and separation. to the hiring process, such as applications, maintained overseas. In 2009 a federal If policies are in place and followed, rankings of candidates, and references. court compelled a Delaware corporationhowever, companies can legally and A group of employees terminated in New to produce electronic records createdethically dispose of their HR-related York in 2003 alleged wrongful dismissal and stored outside of the United States.documents in a timely fashion – reducing due to age discrimination, while the In recent, separate cases spanning athe potential for future harm, cutting employer claimed it was due to poor decade, three companies had to producestorage costs, and improving efficiency. performance. The employer lost the claim potentially relevant evidence related toThe following are some examples of because it failed to retain documents employee records from a foreign parentrecord retention and destruction litiga- showing evidence of poor performance, or affiliate for a U.S. lawsuit.tion cases. including notations correcting employee Without an integrated enterprise work and supervisor performance notes. solution, how can companies manage In 2006 a plaintiff in Connecticut was growing volumes of records and comply awarded damages for retaliatory dis- with an array of regulations? charge in violation of FMLA, due to the defendant’s failure to maintain the notes from the employee’s doctor. In the same year, an Ohio corporation was fined for prematurely destroying records of hours worked and paid, in violation of FLSA regulations. Significant cost can be incurred through the discovery process, in which an organization must produce relevant data and documents. These expenses can often be reduced or avoided. SAP Thought Leadership Paper – Document and Data Retention Compliance6
  • 7. Enabling Data Compliance with About Loeb & Loeb Learn MoreSAP® Solutions The SAP® Employee File Management Much of the content in this paper was application by OpenText, tightly integratedThe challenges of managing digital provided by Mark Goldberg, a partner in with the SAP ERP Human Capital Manage-data are many. Storing documents is Loeb & Loeb’s Employment and Labor ment (SAP ERP HCM) solution, helpsexpensive and inefficient. Keeping them Practice, and discussed in a Webinar companies improve information manage-too long exposes the organization to titled The HR Digital Shift – Are You ment and data compliance. Together this software facilitates conformity with a hostlitigation. Destroying data too soon at Risk? Goldberg can be reached at of regulations and helps ensure that youbrings expensive fines. mgoldberg@loeb.com or 212-407-4925. retain documents and data for the right With the SAP® Employee File Manage- Loeb & Loeb is a multiservice law firm amount of time to satisfy both ethicalment application by OpenText, companies with over 300 attorneys in 5 U.S. offices, and legal demands. Automated processeslike yours can enable compliance across as well as a representative office in and alerts facilitate document retention and destruction, allowing you to reducethe information lifecycle and address a Beijing, China. For more information, associated expenses and risk.range of legal and regulatory challenges. please visit www.loeb.com.Tightly integrated with the SAP ERP In addition to enabling data compliance,Human Capital Management (SAP the software helps HR organizations deliverERP HCM) solution, SAP Employee File efficient, accurate service. It provides user- friendly access to enterprise information.Management simplifies the management People in roles throughout the organizationof paper and electronic worker-related can find documents quickly with enhanceddocuments. Together the solutions search functionality and intuitive foldersupport the integration, storage, structures and thumbnails. Employees andretrieval, and archiving of all workforce managers get secure, role-based access to files with employee self-service and shared-documents. services functionality. SAP Employee File Management andSAP ERP HCM enable you to consolidate To learn more, contact your SAPpaper and digital files and collect, digitize, representative or visit www.sap.comand centralize all employee documents /solutions/solutionextensions /employee-file-management/index.epx.and master data in a single repository.You can securely archive employeedocuments in accordance with legal regu­lations. Records can be automaticallydeleted at the proper time, reducing therisks and expenses of noncompliance.Integrated workflows automate andfacilitate review and approval processesand document-related inquiries.SAP Thought Leadership Paper – Document and Data Retention Compliance 7
  • 8. www.sap.com/contactsapCMP17702 (12/07) Printed in USA. ©2012 SAP AG. All rights reserved.SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign,SAP BusinessObjects Explorer, StreamWork, SAP HANA, andother SAP products and services mentioned herein as well astheir respective logos are trademarks or registered trademarksof SAP AG in Germany and other countries.Business Objects and the Business Objects logo, BusinessObjects,Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and otherBusiness Objects products and services mentioned herein as well as theirrespective logos are trademarks or registered trademarks of BusinessObjects Software Ltd. Business Objects is an SAP company.Sybase and Adaptive Server, iAnywhere, Sybase 365, SQL Anywhere, andother Sybase products and services mentioned herein as well as theirrespective logos are trademarks or registered trademarks of Sybase Inc.Sybase is an SAP company.Crossgate, m@gic EDDY, B2B 360°, and B2B 360° Services are registeredtrademarks of Crossgate AG in Germany and other countries. Crossgateis an SAP company.All other product and service names mentioned are the trademarks oftheir respective companies. Data contained in this document servesinformational purposes only. National product specifications may vary.These materials are subject to change without notice. These materialsare provided by SAP AG and its affiliated companies (“SAP Group”)for informational purposes only, without representation or warranty ofany kind, and SAP Group shall not be liable for errors or omissions withrespect to the materials. The only warranties for SAP Group products andservices are those that are set forth in the express warranty statementsaccompanying such products and services, if any. Nothing herein shouldbe construed as constituting an additional warranty.