Employers today are faced with increasing liability regarding the paper and electronic documents they generate and destroy in the normal course of business. For example, federal and state laws, as well as court cases, require companies to create and maintain documents for specified periods of time. A company must also suspend destruction of pertinent documents once it is informed of a legal claim against it.
It is critical in today’s business environment to adopt and consistently follow an effective document retention policy. A document retention policy can help a company decide which documents to keep and the length of time they should be maintained. It can also help lower risks and costs, and improve access to documents.
Developing a Document Retention Policy
Though documents include both paper records and electronically stored information, the vast majority of information created today is in an electronically stored format. Electronically stored information includes emails, voicemails, instant messages, documents, spreadsheets and databases, as well as a host of other information electronically stored both within the company and even on personal computers or cellphones. All forms of documents should be addressed in a company’s document retention policy, or in a related policy such as an email or computer usage policy.
Assessing Needs and Objectives
Companies should develop document retention policies based upon business needs and the requirements of applicable laws and regulations. Though a company may already engage in certain unofficial practices regarding retaining information, a policy is a necessary tool in formalizing what documents to retain and the length of time for which they should be retained.
The document retention policy should begin by stating the company’s good faith objectives in order to help protect the company against claims of illegal document destruction. The policy should be drafted and implemented before litigation is on the horizon.
The organization should work together to identify company and department needs regarding document retention as follows:
- Identify who controls all documents, both paper and electronic
- Determine where and in what format documents are located and stored
- Establish whether information is privileged and protected from outside discovery
- Organize and catalog stored documents so that they are reasonably accessible and can be easily recovered when needed
- Identify when documents will become obsolete, and therefore not worth maintaining
Maintaining Documents
Documents should be maintained for a number of specific reasons, such as:
- Compliance with state and federal document retention laws
- Necessity to the day-to-day operation of the company’s business
- “Reasonable anticipation” of a legal dispute (for example, a charge of employment discrimination)
A document retention policy should include a detailed litigation-hold or purging suspension procedure regarding all potentially relevant information when the company has reason to anticipate a legal dispute. Reasonable anticipation may exist where an investigation has begun, a subpoena has been served or a lawsuit has been filed. The procedure should designate an individual to be in charge of the litigation-hold or purging suspension procedure and to be responsible for promptly informing the appropriate personnel of the need to preserve potentially relevant documents. Such documents should then be maintained until they are no longer subject to any preservation obligations.
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Disposing of Documents
It is not a good idea to indefinitely save every document ever created within a company. That practice could lead to increased liability and expense, especially if the company is ever involved in a lawsuit or investigation and required to produce these voluminous or carelessly-written documents.
Documents should be routinely disposed of, in good faith, to save the company space, time and money. The retention policy must detail how documents are to be destroyed when the retention period has run. Primarily, a policy should state whether the destruction of documents will be scheduled to happen automatically, in the case of emails or voicemails, or whether the user of a paper document will be required to destroy it. The policy should likewise outline the manner of destruction.
Onsite and offsite paper shredding are the most common means of securely destroying records. The National Association for Information Destruction (NAID) regulates professional, commercial paper shredding companies. The NAID suggests that employers ask for, and receive, a certificate of destruction when the job is done.
Implementing and Enforcing a Document Retention Policy
Once a company adopts a document retention policy, it should be properly implemented. A document retention policy should specify which high-level employees will be assigned to implement, enforce, monitor and update the policy. Failing to implement a duly adopted policy could result in civil liability to the company. A company must be mindful of its document retention practices, not just its policy, since courts may allow litigants to examine and challenge these practices as well.
In addition, the policy should be periodically re-evaluated and updated, if necessary. It is typical for document retention policies to include review deadlines (for example, a statement that the policy is subject to an annual review or update). Employee training is also essential to the process of implementing a document retention policy. Employees should receive a copy of the policy and should sign an acknowledgment that they have received and read the policy. Often this is part of the employee handbook.
Employees should also be instructed that the policy must be uniformly followed. Then, appropriate officials should audit stored documents to verify that compliance is uniform. In order to ensure that the policy is followed, an employer may decide to impose penalties for non-compliance with the policy.
A well-written document retention policy could potentially save a company much unnecessary time and expense. It is important that every company adopt and consistently follow a policy tailored to its own internal practices and the industry it operates in.
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