In an effort to go “green” or “paperless,” employers have been rapidly moving to electronic employment application and on-boarding systems. This movement has created a cottage industry with vendors of all kinds seeking to help employers obtain the benefits of this technology.

These vendors often promise significant advantages for those making the switch, such as: (i) thousands of dollars in savings due to reduced paper and paperwork costs, (ii) simplified compliance for human resources through the use of the proper electronic forms; and (iii) increased productivity. These can be particularly attractive to businesses facing the demands for increased effectiveness and efficiency, the difficulties of managing an off-site/remote workforce, and the expectations of technologically savvy job applicants.

While going green by reducing the use of paper and moving to a web-based employment application and on-boarding system can increase efficiency and reduce costs, employers should be aware of the fresh workplace challenges such a move can present. Before jumping in, employers need to consider issues such as the privacy, security and management of personal data, compliance with various federal and state regulations governing the use of electronic media in obtaining verifiable signatures, how to provide required notices, and the implications of having employees electronically fill out required tax and other government hiring forms, among other things.

Key considerations and questions for employers include the following:

• Does the company have to comply with the federal Electronic Signatures in Global and National Commerce Act or a state law equivalent?
• Are there laws limiting the personal information that may be collected from applicants?
• Can the company require that employees receive notices electronically?
• Can the company require that employees make their benefit elections and receive benefit plan summaries and other benefits documents electronically?
• Is the process subject to collective bargaining?
• How must personal information collected during the process be safeguarded, retained, preserved, and, ultimately, destroyed?
• Are there special rules for government contractors?
• Are electronic consents for fitness-for-duty examinations, background checks, and drug testing valid?
• Can employees fill out I-9 forms electronically? Can the company retain only electronic copies of the I-9 forms?
• If an applicant is hired, how should the collected information about the person be transferred accurately and securely for benefit plan enrollment, payroll, personnel, and other purposes? Does the company have a plan or policy in place that not only addresses how the information is safeguarded, but how to respond if a data breach occurs?
• Are there specific ERISA (Employee Retirement Income Security Act), HIPAA (Health Insurance Portability and Accountability Act), IRS (Internal Revenue Service), and other regulations that apply to using an electronic medium? How do these regulations intersect and how do they differ?
• Do the rules change for applicants from other countries?
• Can handbooks be provided on-line as part of the on-boarding process?
• Can direct deposit forms be filled out and signed electronically?
• Can restrictive covenant agreements be signed electronically?
• Can employees be notified of and sign arbitration agreements electronically?
• Has the on-boarding vendor been vetted and shown capable of safeguarding personal data and preserving the integrity of that data? Where is the data stored by the vendor? Are appropriate contract provisions in place?

Employers implementing electronic application and on-boarding systems may realize savings of time and money. However, those savings may be short-lived if the on-line process is not designed to fit the particular company and address its particular needs and risks. Before taking this step, employers should seek appropriate guidance in navigating their way through the regulatory quagmire that is implicated by the seemingly simple act of going green.