Most businesses today have a record retention policy in place. But there is a burgeoning divide between policies that secure businesses against litigation and those policies fraught with inconsistencies that leave companies open to fines, sanctions, and criminal liability. The major components in building a water-tight record retention program are education, effective implementation, and systematic auditing.

Retention and Purging Timeframes

“Keep everything” retention policies are no longer viable—such programs are costly, burdensome, and leave businesses vulnerable to assorted legal problems. But how long should you keep different types of records? Key players in your business structure—IT personnel, administration, and legal counsel—must evaluate where data is stored, and how valuable each class of records will be in the future. How often information is accessed and whether records are used in daily operation also affect how long a business may hold on to information. These factors are business-specific, but there are also federal and state guidelines that dictate how long certain records should be kept: 

Section 802: This section of the Sarbanes-Oxley Act (SOX) applies to both public and private companies, and imposes severe fines and/or imprisonment of up to 20 years for altering, destroying, mutilating, concealing, falsifying records, documents or tangible objects with the intent to obstruct, impede or influence a federal investigation. These record policies affect all of a company’s e-mail, hard documents, and information retained on servers and websites.

Employee Retirement Income Security Act (ERISA): The Act provides that all plan and report documents with supporting materials for existing pension or welfare benefit plans must be retained for 6 years after the filing of the documents.

29 C.F.R. § 1602.14: Title VII of the Civil Rights Act of 1964 and Americans with Disabilities Act state that personnel records, resumes, applications, promotions, demotions, transfers, layoffs, termination, compensation, requests for accommodation under the ADA, and selection for training or apprenticeship be held for one year.

29 C.F.R. § 1904.1: Occupational Safety and Health Act mandates that medical exam records are held for the duration of employment plus an additional 30 years. In addition, records to monitor exposure to hazardous materials must be kept for 30 years.

What to Consider when Creating or Updating a Record Retention Program

Open communication between the IT department, organized leadership, as well as legal counsel are necessary when evaluating how information is stored, how best to purge records (hitting “delete” is not enough, computer systems may retain deleted files on hard drives for years), and how best to implement and enforce policies. Cooperation between these key departments creates policies that conform to existing infrastructure, ensuring that your record retention program is not just great on paper but is effective in practice.

Keep it Confidential

Various statutes protect records including payroll, health, drug testing, and credit documentation. Businesses must include provisions in their policies clarifying that all records considered confidential will be treated as private during storage and even when purged.

Be Litigation-Ready

Businesses must have a litigation hold program in place that ensures that upon notice of potential inquiry or litigation a business can promptly suspend purging. The litigation hold procedure must be streamlined in order for it to be effective—employees must be informed of the suspension of purging procedure and must ensure that all backup media are preserved. In litigation, a court or agency will look favorably on a company that follows its retention policies.

Educate, Enforce, Audit

It is important that all personnel who create, store, or purge records are informed and trained in the retention policies. The program must be audited systematically to find flaws in the system and create better ways to streamline operations.

How Walter and Haverfield can Help

The attorneys of the General Counsel Services Group have advised small private ventures as well as Fortune 500 companies on business matters from start-up to wind-up. Our experienced attorneys are able to evaluate a company’s needs and build a record retention program that ensures compliance and safeguards business growth from government intrusion and litigation.
We realize that a healthy business culture is one in which the organization aligns its actions with its articulated values, balances business risk and the cost of the policies it puts in place. Finding this balance is something we can help you achieve.

About the General Counsel Services Group

Walter & Haverfield’s General Counsel Services Group provides public and private companies with small or no legal staff sophisticated and strategic legal counsel similar to that received from in-house counsel.  The service is provided with a controlled cost arrangement through a retainer agreement or alternative fee management and features the following:

• Led by a former general counsel of a Fortune 500 company with over 25 years experience in leading the legal functions.
• Includes a former hospital administrator with 26 years of experience in the health care/hospital industry.
• Senior attorneys with combined 60+ years of experience.
• Tailored to businesses of all sizes.
• Multi-industry experience.
• Recognition of costs versus benefits of legal services.

General Counsel Services integrates all of our practice groups and offers across the board advice in real estate, mergers, acquisitions and divestitures, tax matters (for taxable and tax-exempt entities), environmental law, antitrust law, corporate governance, health law, intellectual property protection, labor and employment matters, governmental relations and other areas. Industry experience includes medical devices, healthcare, broadcasting, construction, food brokerage, computer, automotive, machine tool, to name a few.

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