How long will your company keep a former employee’s W2? What about 1099s? Do bank deposit slips get saved for a few years, or saved forever? How should old receipts and expense reports be handled? These are just some of the questions that can be answered by a company’s record retention policy.
A clearly-defined and strictly-enforced record retention policy can help a company protect its interests and avoid legal trouble. Creating such a policy is a relatively simple objective that could pay off tremendously later on. While we can’t give you any legal advice, we can suggest that you review your company’s existing record retention policy, or start the ball rolling to get a brand-new policy established. Here’s why that matters.
Why You Need a Record Retention Policy
Creating a record retention policy allows your company to standardize its approach to record keeping. Without one, employees have to make their own judgment calls about what to keep and what to toss. One person might keep certain client files forever; another might toss them whenever the filing cabinets are too full.
There are many circumstances in which having no such policy could prove legally or financially problematic. If the company is sued or brings a suit against another organization, you’ll want to be able to access any original documents that support your case. If a client ever claims that your company didn’t complete its contractual obligations, or a former employee accuses the company of underpaying overtime, you’ll want to have ready access to documents that show otherwise. An IRS audit is another common occurrence that warrants keeping good records.
There could be a legally significant compliance piece to your record retention policy, too. Some companies have local and state laws governing document retention. Some must also follow industry-specific regulations; companies that operate in the financial, governmental or healthcare space must be especially mindful of how documents are saved.
Finally, keep in mind that establishing a record retention policy can actually free up storage space in the long run. Clarifying the point at which documents are no longer needed gives employees permission to dispose of obsolete files, instead of keeping everything indefinitely.
What Your Record Retention Policy Might Include
There are plenty of sample record retention policies out there, which provide a good starting point for you to start crafting your own policy. You may also want to speak to your company’s attorney and get their input about specific language. (Especially if you’re required to comply with any industry-specific retention regulations, your attorney’s legal advice is essential here.) But as a jumping-off point, it may be helpful to think about your answers to a few basic questions.
Who will be in charge of managing record retention? Is there one person who will be appointed to oversee the adoption and enforcement of your policy? How will this person ensure that all employees understand the policy? Is there a backup who can answer questions when the main point person is unavailable?
What kind of documents will you keep and for how long? This is the central question to answer with your policy. Exactly what kind of records do you expect employees to retain? How long should each type of document be saved after it’s initially created? Are there documents that should never be destroyed?
To create your policy, you may need to compile a list of all the types of documents and records that your company generates. Typically a record retention policy will address things including hiring files, personnel documents, client records, health and safety records, financial and tax documents, legal documents, and records related to benefits and/or insurance. You may want to create a very specific list of document names, or establish a more blanket policy. Either way, it’s a good idea to include language urging employees to take any questions about specific documents to the policy manager.
How will important documents be stored? Once employees know what types of records to keep, make sure they know how to proceed. Are there particular procedures that employees should follow for storing important records? If your record retention policy calls for certain types of documents to be retained permanently, how and where should they be kept? Are employees required to scan certain types of physical documents to create digital copies?
How should employees retain electronic files? A comprehensive retention policy takes electronic files into account, too. What types of emails and digital files should be retained, and for how long? Does the IT department have guidance for how employees should securely store and back up these records? What about if employees use their own personal devices for work communication?
How will documents and other records be destroyed? When records pass their retention date, are employees free to dispose of these sensitive documents themselves? Should records be placed in designated containers, or turned over to the person in charge of enforcing the policy? How will the company verify that records have been permanently destroyed?
Again, those are just some of the things you’ll want to consider when drafting and implementing your record retention policy. We’re not attorneys, but your own attorney can assist you with creating your policy – and Northeast Data Destruction can help you with the data destruction piece. When you’re ready to destroy the records that you no longer need, Northeast Data Destruction can arrange for one time or regular secure pickups. We’ll permanently destroy your confidential files and data so they can’t be recovered.
The team at Northeast Data Destruction is here to help you meet all your data security goals. Contact us today for more information.