Running Your Business

Physical vs. Electronic Employment Records: What’s the Better Choice?

  • It's time to make the switch from paper employment records to electronic employment records

  • Electronic records are more secure and accessible, and can help simplify the reporting process

  • It's worth the time and money to seek out an employee record system that works for your business

Posted by June 22, 2018

It’s easy enough to make paper employment records—you just have to write something down. An electronic record, on the other hand, can be a bit more complicated. They have some serious advantages, though.

Ultimately, it’s time to make the switch from paper employment records to electronic employment records, even though there may be a cost to implementing such a system. If your company still uses paper records, here’s why it should focus on this important update.


Where are your paper records? In a filing cabinet? In a desk drawer? Well, who has the key? If it’s one person and they are out sick, is there a backup key? Who has access to that? And what if there’s an emergency—an employee falls suddenly ill, so you need to reach their emergency contact—but the person who has the key to the filing cabinet is out to lunch?

Electronic records allow a lot more flexibility and accessibility while still keeping employee information safe. A good system allows numerous people to access an employee’s emergency contact list while ensuring salary and disciplinary records remain confidential.

Likewise, with electronic records, John can have access to his three direct reports and Jane can have access to her three direct reports while HR maintains access to all. With paper records, documents have to either be separated by manager or have a single access point. That’s fine if a business has three employees, but if it has 50 employees, records become difficult to track and files are bound to be mislocated.

Misplaced files are a major security concern. Not only can confidential information land in the wrong hands, but if Jane takes her assistant’s file out of a locked box to write a note and forgets to bring it back, this file is no longer accessible to others who might need it, such as the HR department. If it’s electronic, the file remains protected and accessible to all necessary parties.

Data Compliance

Federal and state laws dictate how long each record should be kept. For instance, payroll records have to be kept for three years, according to the U.S. Equal Employment Opportunity Commission. Each state has different legislation and, of course, businesses should be in compliance with federal laws as well. A properly designed electronic employee records system can ensure records are maintained for the correct amount of time, making compliance a less laborious (and physical) process for employees.


If employee records are kept on paper, how does payroll access salary information? Someone might walk over and explain, “Jane got a raise. She’s now earning $18.25 an hour instead of $18.” But what happens when payroll hears $18.45 instead of $18.25? It’s critical that HR records match payroll records and both are accurate. If there isn’t an easily accessible online document with a record of payment, the risk of error increases.

Not to mention, handwriting can cause issues. This may seem silly, but if you’ve ever tried to read a note added to an employee’s paper record that was written by someone whose handwriting isn’t very legible, you know what an issue this can be. If an employee is no longer around to interpret his or her own handwriting, you’ll have to guess. Sure, that hourly rate is more likely to be $19 an hour instead of $79 an hour, but a phone number or social security number won’t have any contextual clues. Typed words are clear, easy to read and leave no room for interpretation.


All electronic systems can be backed up regularly. Paper records aren’t so lucky. Sure, you’re far more likely to suffer a computer crash than you are to experience a flood that destroys your paper records, but a properly backed-up computer can be restored. Damaged paper records are gone forever.


How’s turnover? Who is on a performance improvement plan? Who has received a raise in the last year?

These questions are harder to answer when you have to go through individual paper files to pull out data—but pretty easy when you have a strong electronic record system that can access, organize and present the information to you immediately.

Whether you prefer paper or electronic employee records, it’s worth the time and money to seek out a modern system that works for your business.

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