December 13, 2021

7 Ways to Protect Sensitive Employee Data

Safeguarding sensitive employee data seems like a no-brainer. However, it can quickly become a complex undertaking once you consider the many types of data you collect and retain for your entire workforce.

Thankfully, today’s cloud-based data management software can help you organize employee data and determine who should have access to it. However, protecting sensitive information requires more than implementing software. You need to have policies and processes that ensure everyone who has access to employee data uses it properly and maintains employee privacy.

Take the following actions to improve employee data security in your organization.

1. Understand Legal Requirements for Protecting Employee Data

From the moment candidates apply for open positions, you begin to collect sensitive information about them, such as home addresses, Social Security numbers, and dates of birth. As you collect and store this data, you must be mindful of the legal requirements regarding its storage and protection. For example, the Department of Labor (DOL) provides specific guidance on the information you must retain throughout an individual’s employment. Not understanding or abiding by these requirements can put your organization at risk for fines up to $12,000 per employee per violation.

In addition to DOL requirements, you also need to follow employee data protection requirements set by laws such as the Health Insurance Portability and Accountability Act (HIPAA) and the Americans with Disabilities Act (ADA). Moreover, you must abide by applicable regional and state laws. Such laws include the General Data Protection Regulation (GDPR)—which protects the data of employees who are citizens of the European Union—and the California Consumer Privacy Act (CCPA).

2. Develop Comprehensive Policies for Managing HR Documents

Having detailed policies can help you establish consistency in the way employee information is collected and stored throughout your organization. For example, your employee records retention policy can guide your actions when employees leave your organization. Instead of deleting employee profiles or destroying documents, your policy can tell your HR team what to retain and when to transition terminated employee files to another area of your document management system.

3. Adopt Integrated Employee Document Management Software

Keeping track of employee documents is no small task, especially because the information spans several areas, including payroll, benefits, employment eligibility, performance management, and more. To keep employee data organized and secure, you need more than just filing cabinets in a locked room or antiquated file management software. Also, given today’s increasingly mobile workforce, you need to securely access employee data from any location.

Just as you keep money in a bank for protection, you should protect your employees’ data in a secure, cloud-based management system. Such a solution keeps your HR data organized and secure so only those with authorized access can see the data they need for hiring, paying and managing employees.

When selecting HR record software for your organization, look for the following characteristics:

  • Integration with your workforce management system
  • SOC 2 compliance standards for enhanced security and protection
  • Tools for employee-specific document management
  • Customizable permissions for access to employee data

4. Set Clear Data Access Permissions

Although specific individuals in your organization need access to sensitive employee information, not everybody needs access to everything. For example, your payroll department requires access to tax withholding and benefit deductions, but it shouldn’t have access to employee performance reviews.

To safeguard employee information and provide access according to need, you should use a document management solution with permission controls. That way, you can limit access to sensitive employee information to those who need it. For instance, you can retain open access for HR, give managers access to performance and job history, and provide payroll access to employee pay and tax information.

5. Provide Cybersecurity Education and Training

According to research from security firm Tessian, 85% of data breaches are due to human error. To reduce data theft and accidental loss in your organization, it’s critical to educate employees so they can recognize data security threats and prevent cybersecurity mishaps.

Regular training keeps data security top of mind for employees and provides the tools they need to protect sensitive data. Some key topics to feature in your cybersecurity training include:

  • How to recognize signs of phishing, malware and other security threats.
  • How to manage passwords.
  • Who to contact with cybersecurity questions and concerns.

6. Understand How External Partners Safeguard Your Employee Data

Employees within your organization aren’t the only ones with access to sensitive employee data. External partners—such as benefits providers and your payroll company—also have access. To ensure employee information is protected even when shared with your partners, you need to stay informed about their data protection practices.

According to the 2021 Shred-it Data Protection Report, 40 percent of company data breaches are caused by external partners. To keep employee data secure even when it is outside your organization, ask your partners how they protect sensitive information and encrypt data during transmission.

7. Routinely Review Your Policies and Practices

Employee data security requires vigilance and consistent follow-up. To keep your policies current, you will need to routinely review them for compliance and alignment with existing practices. Moreover, advances in data security technology can periodically offer new best practices you can implement in your organization. With regular reviews of your employee data security practices, you can keep them up to date and relevant.

Improve Your Employee Data Protection Practices

Employee data protection has many layers of complexity. The information is constantly changing, but must also be stored in compliance with DOL requirements. Moreover, you must simultaneously keep the data secure and easy to access for those who need it.

Effective employee data security requires document management software to help you organize, store and update the data in real time. From critical new hire documents to information about pay, benefits and performance, sensitive employee data must be protected throughout the employee lifecycle. For more insights and recommendations, read our guide, Data Security In a Zero-Trust Environment.