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What is a Document Retention Policy?
Incorporating a document retention policy in your business can help lower risks, and costs, and improve efficiency. This article provides an overview of creating and maintaining an effective employer document retention policy.

Home » Risk Management » What is a Document Retention Policy?

What is a Document Retention Policy?

Incorporating a document retention policy in your business can help lower risks, and costs, and improve efficiency. This article provides an overview of creating and maintaining an effective employer document retention policy.
Employers today face increasing liability regarding the paper and electronic documents they generate and destroy in the ordinary course of business. For example, federal and state laws and court cases require companies to create and maintain documents for specified periods. A company must also suspend the 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 paper records and electronically stored information, the vast majority of data 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 electronically stored both within the company and even on personal computers or cellphones. All documents should be addressed in a company’s document retention policy or a related policy such as an email or computer usage policy.

Companies should develop document retention policies based on 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 they should be retained.

The document retention policy should begin by stating the company’s good faith objectives 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 the 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 the information is privileged and protected from outside discovery
  • Organize and catalog stored documents so that they are reasonably accessible and can be quickly recovered when needed
  • Identify when documents will become obsolete and therefore not worth maintaining

 

Maintaining Documents

Documents should be maintained for several 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 oversee 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 preservation obligations.

 

Disposing of Documents

It is not a good idea to save every document created within a company indefinitely. That practice could lead to increased liability and expense, especially if the company is involved in a lawsuit or investigation and is 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 will 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 is 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 implemented appropriately. A document retention policy should specify which high-level company official(s) 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 also allow litigants to examine and challenge these practices.

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 implementing a document retention policy. Employees should receive a copy of the policy and sign an acknowledgment that they have received and read it. 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. 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 save a company time and expense. Every company must adapt and consistently follow a policy tailored to its internal practices and the industry it operates.

Employers today face increasing liability regarding the paper and electronic documents they generate and destroy in the ordinary course of business. For example, federal and state laws and court cases require companies to create and maintain documents for specified periods. A company must also suspend the 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 paper records and electronically stored information, the vast majority of data 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 electronically stored both within the company and even on personal computers or cellphones. All documents should be addressed in a company’s document retention policy or a related policy such as an email or computer usage policy.

Companies should develop document retention policies based on 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 they should be retained.

The document retention policy should begin by stating the company’s good faith objectives 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 the 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 the information is privileged and protected from outside discovery
  • Organize and catalog stored documents so that they are reasonably accessible and can be quickly recovered when needed
  • Identify when documents will become obsolete and therefore not worth maintaining

 

Maintaining Documents

Documents should be maintained for several 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 oversee 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 preservation obligations.

 

Disposing of Documents

It is not a good idea to save every document created within a company indefinitely. That practice could lead to increased liability and expense, especially if the company is involved in a lawsuit or investigation and is 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 will 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 is 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 implemented appropriately. A document retention policy should specify which high-level company official(s) 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 also allow litigants to examine and challenge these practices.

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 implementing a document retention policy. Employees should receive a copy of the policy and sign an acknowledgment that they have received and read it. 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. 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 save a company time and expense. Every company must adapt and consistently follow a policy tailored to its internal practices and the industry it operates.

The Last Word

Having a records management discipline in your company is essential. The key to success is effectively implementing a document retention policy that meets your business needs and is adopted by employees. For more information regarding document retention policies, contact an InsureGood Advisor today.

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