Get Organized: Creating an Effective Records Retention Policy and Schedule

Records management is an important, yet often overlooked, aspect of risk management. Sound records management programs begin with creation of a records retention policy and schedule. At a minimum, the policy should state that records must be retained for the duration of the retention period identified in the schedule after which they may destroyed unless they are subject to a legal hold. Effective records management programs go further. They are created by examining all the ways the company creates, receives, uses, stores, and destroys records and looks to use the records retention policy and schedule as a tool in managing those processes.

Unfortunately, many companies do not realize they are in need of a records retention policy and schedule until it’s too late. Often, the realization comes when the company finds itself in litigation and facing copious document production requests or the company is involved in a government investigation. An organized and thoughtful records retention policy and schedule can save time and money by allowing the company to:

• Quickly determine whether certain records exist;
• Efficiently locate relevant records; and
• Explain a legitimate and neutral business-purpose for any records that were destroyed prior to the company reasonably anticipating the investigation or lawsuit.

From a risk management perspective, a records retention policy and schedule helps ensure compliance with statutes and regulations that set minimum or maximum retention periods. Without an effective policy and schedule, many companies end up “over-retaining” records. This is problematic as opposing counsel often argue that those companies in essence have a “save everything” policy so discovery should be expanded because more relevant documents must exist. This can result in a lot of time and expense in searching for a document that likely does not exist.

Outside of a litigation context, an effective policy and schedule is a value-add as it organizes records in a manner that allows the company to share valuable, instructive information throughout the company with greater efficiency and reduces records storage costs.

How to get started? We recommend a four step process.

Step One: Engage relevant stakeholders and create a records inventory

The best way to ensure that the policy and schedule your company develops will be followed by its employees is to engage the relevant stakeholders early to create a records inventory. For many construction company’s this may involve reaching out to representatives from the office (HR, accounting, design, marketing, etc.) and the field (project managers, foreman, laborers) for a series of interviews to determine all the ways they create, receive, and use records and the mediums by which those records are transmitted (physical copy, email, text message, pictures, drone footage, etc.). The benefit of this approach is twofold: 1) the company receives buy-in from those who are impacted by the policy and schedule (making it more likely to be followed once implemented); and 2) the policy and schedule created will be tailored to the types of records the company actually creates as opposed to general categories of records.

Step Two: Draft the policy and schedule

The records retention schedule will list the records categories discovered during step one and the applicable retention period for each category. The retention period for some records will be determined based on a statutory, regulatory, or other legal requirement. Retention periods may be longer than the law requires, but should not be shorter. The retention period for records without a legal requirement should be determined using the information the company learns during the interviews in step one. Companies should be prepared to defend each retention period by relying on a legal requirement, business purpose, or both.

Step Three: Training

A records retention policy and schedule is worthless if it is not followed. Poor training and compliance creates risk of fines, legal sanctions, and other costs. Fortunately, courts and regulators are not looking for a perfect policy. They want to see that the company has a policy and schedule, that the retention periods are defensible (comply with legal requirements and are refined based on a legitimate business need), and that the company is taking reasonable steps to implement its policy. This means drafting a policy and schedule that is easy for employees to understand and training employees to ensure their understanding and compliance. Companies should take time to train employees on all aspects of the policy and schedule including identifying a record versus a non-record, using the record retention schedule, the destruction process, handling legal holds; and everything in between.

Step Four: Fix-it

Realize no policy or schedule is perfect. The goal is not perfection, the goal is compliance. The best way to ensure compliance is to frequently monitor the program by monitoring/auditing compliance, updating training and procedures to correct noncompliance, and checking in with relevant stakeholders to make additional changes based on business need, new record types, and changes in the law.

Bob Sanders is an attorney at Taylor English Duma LLP.  He has helped companies across the country with creation or validation of records retention schedules and compliance policies. He can be reached at rsanders@taylorenglish.com.

These materials are informational in nature, are not legal advice, and do not create an attorney-client relationship.