7 reasons to embrace a robust records retention program | Opinion • Daily Journal of Commerce

At the end of each year, I sit down to write a holiday card to send to family and friends. I spend countless hours thinking about a theme, remembering engaging stories, and finding just the right pictures to capture a year. It is not easy, and it is time intensive, but I do it for three reasons: 1, familial obligation; 2, like a pensive effort, it frees up mental space going into the next year; and 3, it builds rapport with those we do not get to see every day.

But what relevance does that have for you and your business? Simply, it is the story I tell employers who ask me, “why do I even need a records retention program? It’s relatively cheap and easy to store everything electronically – and we won’t have to deal with the headache of determining the retention period for every document we have.” In response, I explain that while it might seem easier to just keep every document, the benefits of an effective records retention program far outweigh the effort needed to categorize and store records appropriately.

Knowing the data and records in your possession – including with whom it is held – and how long it needs to be retained is critical for compliance with applicable laws. It is also a best practice. Here are seven reasons why records retention laws and practices shouldn’t be ignored.

1. Document retention for appropriate duration

Records retention programs provide employers with an efficient system to manage their records, including the ability to destroy records that are not legally required to be maintained. Most management employment attorneys could recount horror stories of dealing with potentially damaging records that should have been destroyed years earlier if the company had only implemented an effective records retention program. The lack of such a program can also increase discovery costs exponentially.

2. Best information security practices

Businesses often collect large amounts of data, some of which may be considered sensitive. Improper management and data governance practices can create security concerns and increase risk and exposure to data breaches or other security and privacy-related issues.

Maintaining consistent and compliant practices for retention and storage also helps ensure access is limited to those with a “need to know.” And it can provide a paper trail of who may have accessed confidential and proprietary information. An effective records retention program also includes the proper destruction of records at the appropriate time.

3. Storage capacity

The lack of an effective records retention program can result in storage of the same records in numerous places, which will increase costs.

4. Cost savings and operational efficiency

Destroying unnecessary records and data will reduce costs otherwise devoted to storage, and proper organization of documents will reduce the amount of time it may take to find relevant records. You must consider the records that are necessary for effective business processes and activities, including oversight of simple matters such as document version control.

5. Effective decision-making

Document retention supports efficient decision-making. In the absence of an effective indexing and storage system, your “institutional memory” can be essentially lost – even though all the records may exist in one form or another.

6. Legal compliance

It is important to recognize that employers are required to maintain several types of records for precise time periods under federal, state, and/or local laws and regulations. Failure to maintain records for at least the minimum period required can subject an employer to fines and potentially adverse inferences. Depending on several factors, including the nature of the business and its size, some laws and regulations to consider include:

• Age Discrimination in Employment Act. Employment records maintained for one year, but specifically requires keeping payroll records for four years.
• Equal Employment Opportunity Act. Employers keep all personnel or employment records for one year. If an employee is involuntarily terminated, the person’s personnel records must be retained for one year from the date of termination.
• Employee Retirement Income Security Act. Requires benefit plan information to be maintained for six years.
• Fair Labor Standards Act. Employers must retain payroll records, collective bargaining agreements, sales, and purchase records for three years.
• Family and Medical Leave Act. Requests for leave, company responses, physician certifications, and other FMLA-related documents must be maintained for three years after the leave ends.
• Occupational Safety and Health Act. OHSA records must be kept for five years following the end of the year to which they relate and 30 years for medical exams or employee exposure records.

This is by no means an exhaustive list. Other agencies with record retention requirements include the Internal Revenue Service (IRS), the Environmental Protection Agency (EPA), and state taxing authorities. Failure to comply with the requirements can result in penalties and fines. In the absence of an effective records management system, an organization cannot ensure proper compliance with its obligations.

7. Support of remote work environments

The above considerations are magnified by the remote work environment. The absence of a well-enforced records retention program leaves many employees with no direction regarding retention requirements. Employees working with limited management supervision may be deleting documents that need to be retained under federal law or pursuant to a legal hold, storing records permanently on their laptops. Or worse yet, they may be printing and storing company records in personal filing cabinets. A well-designed records retention program can provide clear parameters for the creation, storage, and destruction of company records – especially in remote work settings.

I get it – the process of building out a retention policy is not easy. The feeling you have right now is probably how I feel every November, looking at a blank page, getting ready to write a holiday card. But you know what? The juice is worth the squeeze because a well-run records retention program can not only save money and promote efficiencies, but also mitigate risk.

Stephen Scott is a partner in the Portland office of Fisher Phillips, a national firm dedicated to representing employers’ interests in all aspects of workplace law. Contact him at 503-205-8094 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the DJC guarantees the accuracy or completeness of any information published herein.