Perhaps the most important reason is to ensure compliance with the multitude of statutory and regulatory requirements. Second, a systematic and organized document retention plan enables employees to efficiently retrieve important business records, increasing productivity.
Finally, a strictly enforced document retention policy is essential when litigation arises because it enables the company to produce documents requested by the opposing party in an organized and timely manner.
An organized and enforced document retention policy also cuts down on the risk of harmful documents ending up in the hands of potential litigants by providing a mechanism for the destruction of documents upon expiration of the required retention period.
The statutes and administrative regulations which impose record retention requirements upon companies are virtually endless, covering almost every area of the law. For example, while a company's tax returns must be retained permanently, other tax records must be retained for only four years.
Federal employment statutes like the Age Discrimination in Employment Act, Title VII and the Family Medical Leave Act all have records retention requirements ranging from one to three years.
The Securities and Exchange Commission has developed a lengthy Records Retention Schedule, which sets forth the appropriate retention period for SEC-related documents. The Environmental Protection Agency has also promulgated numerous document retention requirements, which are constantly changing and therefore require periodic review. And recently enacted laws like the PATRIOT Act and the Sarbanes-Oxley Act require compliance-related documents to be maintained for up to seven years.
These guidelines provide only a glimpse of common statutory and regulatory records retention requirements. It is easy to overlook one or more of these in the process of developing and implementing a legally sufficient records retention policy.
The following three steps are essential in maintaining a document retention plan that both ensures compliance with legal requirements and adequately deals with your company's specific business needs.
1. Compile a master document schedule. Each department should generate a schedule of the documents it regularly uses and the suggested retention periods based on the department's needs. These schedules should form the basis of the overall retention plan. The company should then compile a Master Document Schedule combining the departments.
2. Legal counsel should review the Master Document schedule to ensure the company is keeping documents as long as required by statute and administrative regulations. Counsel should also make sure the retention periods are sufficient based on other legal factors by considering statutes of limitations, limitations on tax assessment and other litigation concerns.
3. The document retention policy should be periodically reviewed and updated. Not only are statutory and regulatory requirements continually changing, a company's need for certain documents also changes. Thus, the Master Document Schedule must be periodically reviewed and updated to make sure it remains consistent with the company's business needs.
Determining the appropriate retention period for all documents generated and used by a company is difficult, considering the vast range of federal and state statutes and administrative regulations imposing mandatory retention periods. This task is made even more cumbersome because the retention requirements continually change and new ones emerge.
It is therefore important to seek legal advice to ensure that your company's document retention policy is current and consistent with the laws that relate to your company's area of business. Kevin R. Conners is a white collar criminal defense attorney with Vorys, Sater, Seymour and Pease LLP. Bethany R. Thomas is an associate with Vorys practicing in the litigation group. Reach them at (614) 464-6400 or www.vssp.com.