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Going Paperless?

Great—but don’t shred your document retention policy

Renea I. Saade

Renea I. Saade

PHOTO: Courtesy of Stoel Rives

Doing business in the technology-focused 21st century has become synonymous with going paperless. More and more businesses are saying goodbye to rows of sturdy metal file cabinets and converting to an electronic data storage system. It is easy to understand the appeal. Going paperless can increase efficiency and reduce a company’s carbon footprint and overhead costs.

Well organized, electronically stored documents can be found with the click of a mouse instead of the hours it usually takes to thumb through a dusty pile of papers. A paperless approach to data storage usually translates to a company purchasing less paper, printer ink, and copier toner, and fewer file folders and labels.

Adopting a paperless approach often allows the company to rent less space and decrease costs for shredding and file archiving. So, by all means, go paperless. But do not shred your company’s document retention policy in the process. For those that do not already have such a policy, be sure to adopt one as you transition to a paperless system.

Managing Data and Documents
A document retention policy, also known as a records and information management policy, establishes and describes how a company expects its team to preserve and manage company documents and data from creation to destruction. Such policies not only serve various business purposes but also provide many legal benefits.

Every company doing business in the United States has certain recordkeeping and record retention obligations under federal and state law. For example, under most state laws, employers must retain certain personnel records for at least one year after an employee leaves the company, as well as payroll records for at least three years, and any workplace injury records for a minimum of five years.

All companies must keep their tax-related documents for a minimum of three years and up to six years in certain circumstances. There are other requirements, particularly for those companies that are federal contractors or receive public funding.

Benefits and Disadvantages
There are also benefits and disadvantages to keeping particular documents longer than required. For instance, in Alaska, a company can be sued for breach of contract or bring a contract claim related to the delivery of professional services for up to three years, and warranty claims on products sold can be raised for up to four years. Thus, a company would want to keep documents related to such transactions for a minimum of those respective periods of time.

A document retention policy can help prevent the premature destruction of documents that may be relevant to a pending or future lawsuit or governmental investigation and provide the company with a legal defense to some document production requests when certain records relevant to a litigation or investigation have been deleted or destroyed, as the policy demonstrates that the deletion or destruction was done with reasonable care (as opposed to done haphazardly or with a perceived attempt to destroy key evidence).

Because each company is different, there is no “one size fits all” approach to document retention policies. The precise details of a company’s policy will depend on the company’s size, internal structure, type of business, use of historical documents and data, internal resources, affiliation with other entities, places of operation, and so forth. However, all companies should consider a few fundamental components and issues as they develop or review their document retention policies.

Join the Paperless Movement
Again, go ahead and join the paperless movement. Your employees and Mother Earth will likely thank you. Just be sure that your transition to an electronic system is done in a manner that complies with a reasonable document retention policy.

 

Renea I. Saade is a partner at Stoel Rives LLP (stoel.com). She provides legal advice and representation to companies in connection with their employment law needs and contract disputes. Contact her at 907-263-8412 or risaade@stoel.com. This article is provided for educational purposes only and does not serve as an adequate substitute for legal advice.

This article first appeared in the July 2013 print edition of Alaska Business Monthly magazine.

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