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What’s the Best way to Manage Legacy Employee Data?

Manage legacy employee data

Decluttering became something of a cultural phenomenon in the U.S. after the 2019 debut of the hit Netflix show “Tidying Up With Marie Kondo.” While it can be satisfying to let go of old books, clothes, and furniture that were eating up space, the same absolutely cannot be said for your organization’s legacy employee data, which requires careful and cost-effective long-term management if you’re to stay compliant.

Because this information is subject to multiple federal and state-level retention requirements—not to mention the prospect of sizable penalties for mishandling or misrepresenting the old pay statements, W-2s, W-4s, and I-9s in question—managing it has to be a key cog in your compliance machinery. How do you ensure your team can do so properly without being overwhelmed by the sheer scale and complexity of the project?

The challenges of managing legacy employee data

In a world where there can be hundreds of thousands of old HR and tax forms to manage, the stakes are high for streamlining and optimizing your historical data records management processes. But there are often some big hurdles to overcome along the way, especially when you shift from an on-prem ERP to a cloud HCM platform.

Cloud-based HCM is fast becoming the norm, according to IT research firm Gartner. While these systems offer potentially big savings and efficiency gains, HCM providers usually only want to import current pay data for current employees. This creates a Catch-22 as you try to manage records for termed employees as well:

  • Not bringing over the old records, such as tax statements, isn’t feasible, since it runs afoul of data retention statutes and sets you up for an audit and costly fine.
  • Yet importing historical records into the new cloud software, or simply keeping the old ERP infrastructure up and running to maintain them, is expensive too.
  • For instance, in the latter case, you’d be paying possibly six figures annually for licenses, support, and labor, defeating the whole purpose of the cloud upgrade.

There are options for staying compliant after you switch HCM platforms, in addition to soldiering on with a legacy system. Let’s explore the most frequent options to see how they stack up and then share what a growing number of companies are doing.

Option #1: Create PDFs

The PDF is the go-to digital file format for storing fixed data that can be OCR’d, searched, and opened from virtually any platform. So, it makes sense that some organizations chose to convert their records en masse into PDFs – a low-cost, low-tech solution for holding on to important legacy data.

It may seem simple, but it opens the door to some real complications. Administration is complex, since everything lives in discrete files and has to be monitored for compliance, possibly with very different state, and even city, laws (for example, California versus New York). It’s difficult to provide employee self-service and accessibility in general is problematic.

It’s even possible for the entire setup to spin out of control, due to issues such as showing the wrong data to certain employees, or having a critical file become corrupted. Accordingly, if you end up in situation like needing to show a 1,000+ record sample for an audit, there’s the real risk of noncompliance resulting in a penalty.

Option #2: Stick with a legacy system

The main value proposition of upgrading to a cloud service is being able to leave legacy infrastructure behind. Going all-in on cloud should mean saying goodbye to the hassles of storing your records on-premises, managing upgrades, and paying for big capital expenditures.

Maintaining a legacy system for the sole purpose of managing historical employee data eliminates the intended benefits. Instead, you’re saddled with the burden of operating two platforms.

Although the administration is a little easier than it is with PDFs, the drawbacks are considerable. On top of the costs of the licenses and maintenance, you will likely need to divert IT resources and personnel away from other projects and toward legacy upkeep. Accessibility for admins and employees can also become challenging with a legacy system as people need to maintain two sets of log-in credentials.

Option #3: Build your own custom solution

As we said earlier, most platform providers limit the type and amount of data you can import into their systems. There are some workarounds here without needing to resort to PDFs or legacy infrastructure, but they’re costly and complex to administer.

For starters, the time and money you sink into making the integration work can be difficult to justify. And while the custom solution might work, it’s not likely to be a model of efficiency.

Access for former employees can be limited. You may need to rely on your call center to process access requests for historical records. Then there’s the overarching concern of security. Dotting all the cybersecurity-related i’s and crossing all the t’s is necessary, but time-consuming if you’re doing it yourself.

Option #4: Use a cloud-based storage service

Let’s say you’re moving to Workday. You need to configure employee access to historic pay statements. A cloud-based service provides the right combination of ease of implementation, affordability, and functionality to make it preferable to any of the options we’ve discussed.

Employee self-service is easy to provide for current and termed employees, so there’s less of a burden on HR to handle all these requests. And all records are stored securely in the cloud.

Everything is stored in the correct and relevant formats to comply with applicable federal, state and local laws.

As your implementation partner, CIC Plus will perform a legacy data assessment early on during the cloud transition. To learn more about our approach, visit our Cloud Transition Service page or check our blog archive.