How long to hang on to corporate information and records (records retention) is a common source of conflict within companies. Those in the “keep it” camp believe companies should keep any business records that are needed to conduct business operations effectively, records that serve as a company’s “corporate memory,” records that must be kept for legal, accounting or other regulatory compliance purposes, or have other value to the company (such as protecting the company’s interests). Those in the “destroy it” camp believe companies must promptly destroy records when there is no longer a legitimate business need to retain them, in order (a) to ensure they are minimizing the amount of information that could potentially be exposed in the event of a security breach, inadvertent disclosure, legal disclosure requirement such as a subpoena, or during the discovery phase of litigation, (b) to comply with legal, accounting and other regulatory requirements to destroy information after a certain time, and (c) to reduce the costs of discovery and of storing corporate information. Which side is right?
The answer, of course, is that they’re both right. All of the reasons to keep corporate records, and all the reasons to destroy them, are legitimate. This is the “double-edged sword” of records retention. For every argument that “we might need that piece of information somewhere down the line,” there’s a counterargument that “we could get in trouble someday if we still have that piece of information around.” The way to ensure your company is striking the right balance between these two extremes is to have a written records retention policy that balances the reasons to retain information against the reasons to destroy it, by setting appropriate “retention periods” for various categories of corporate records and requiring employees to destroy data once the retention period is ended in most cases. It is an essential component of a company’s incident response planning process to reducing the amount of information potentially exposable in the event of a security incident or breach. The policy must cover corporate records wherever located, including physical and electronic data wherever stored (in employee workstations, on intranets and network drives, in third party data centers, in cloud-based service providers’ systems, etc.) It should list the categories of business records governed by the policy (I prefer a table format), and the records retention period for each category. It should clearly explain to employees what they need to do to comply with the policy, including how to ensure records are properly destroyed when the retention period ends.
It’s easy to argue why companies need a records retention policy. It’s much harder to actually draft and successfully implement one. Here are 7 drafting and implementation tips to help drive the success of your records retention policy.
1. Success is directly proportional to simplicity and communication.
The simpler you can make a records retention policy, the easier it will be for employees to follow it and the greater the likelihood that employees will take time to follow it. Policies that add significant process requirements into the life of rank-and-file employees who already feel like they are “doing more with less” and may be resistant to new ways of doing things are often met with skepticism at best, and outright rebellion at worst. It can be very difficult to successfully implement and administer a records retention policy if employees feel it is onerous and unnecessarily impeding their ability to do their job. If that happens, employees may simply ignore the policy in favor of their day-to-day business duties, or worse, use the records retention policy as a scapegoat if they fail to deliver on their projects and goals.
To solve this problem, ensure your policy is written as simply as possible, take into account the employee’s perspective, and have a communication plan to roll it out. Ensure your policy overview answers questions such as “Why is having a records retention policy important to me?”, “How hard will it be to follow the policy?”, and “What do I have to do under the policy?” Consider using a “frequently asked questions” format for the policy overview. Have a few employees whose opinion you value give you feedback on the policy. Develop a communication plan to roll out the policy to all employees, and leverage HR and Marketing for their input to make it as effective as possible. Ensure your senior leadership team endorses the policy so employees understand it has top-level visibility.
2. Set a “once per year” date for retention periods to expire.
One way to write a records retention policy is to have a fixed retention period for each business record run from the date the record was created. Under that approach, retention periods will be expiring throughout the year. If the records retention policy requires employees to destroy records immediately upon expiration of the retention period, the policy may require employees to be managing document destruction on a daily or near-daily basis. This may make compliance seem like a daunting task to employees, even if your policy allows employees to destroy expired business records one per month or once per quarter.
As an alternative, consider having the expiration date for all retention periods expire on the same day during each calendar year by having your retention period be measured in full “retention years,” defined as a full calendar year or other 12-month measurement period. For example, if you set December 31 as your annual date for expiration of records retention periods, a presentation created on May 15, 2016 which must be kept for 3 “retention years” would be kept from May 15, 2016 through December 31, 2019 (3 full calendar years from the date of creation). While this approach does extend the retention period for some documents by a bit, that may be an acceptable trade-off to a simple, once-per-year obligation to destroy records under the records retention policy. Consider tying your annual records retention period expiration date into an “office clean-up days” event in partnership with HR where everyone pitches in to tidy up the office, clean up their workspaces, and destroy any documents for which retention periods have expired under the records retention period.
3. Right-size the departments and categories of corporate records listed in the policy.
In an effort to be as comprehensive as possible, some records retention policies include a significant number of categories of information subject to retention requirements. This can result from using an “all purpose” template such as a template obtained from a law firm, from a colleague, or from online searches. In others, a company may want to ensure they are not missing anything by including everything employees have today or could have in the future. One size does not fit all with respect to records retention categories. Consider having a “general” or “common business records” category as the first section of business records in your policy, covering items like business presentations, contracts and agreements (both current and expired); general and customer/vendor correspondence; material of historic value; software source code; etc. Then determine which departments have additional, specialized categories of business records (e.g., HR, IT, Finance, Marketing, Legal, etc.) that should be listed specifically in the policy. For each such department, learn which business records they have and use to create a first draft of your categories list and retention periods. Using a general/departments grouping of categories allows employees to find the information on records retention applicable to them a targeted and streamlined fashion. There will likely still be a significant number of categories of corporate records, but taking the time to think through the right categories for your company’s records retention policy will help ensure it is as easy as possible for employees to read, follow and use.
4. Use a limited number of retention periods, with “permanent” used as sparingly as possible.
Another common issue with records retention policies is the use of a large number of retention periods. Different departments may have different periods under which they currently retain documents, and they may put pressure to keep their own retention periods in an enterprise-wide policy. A policy with a large number of retention periods will make it harder for employees to follow, and harder for IT and others to operationalize. Remember, simplicity where possible is key to success. Consider using a limited number of retention periods (e.g., 1 year, 3 years, 5 years, 7 years, Permanent) which will simplify administration of, and compliance with, the policy. For departments with different existing retention periods, determine which of the next closest periods (longer or shorter) will work, and be prepared to explain to the head of that department why a limited number of periods is essential to the successful implementation of an enterprise-wide policy.
It can be tempting to put many things into a “permanent” bucket (those in the “keep it” camp are likely candidates to ask for this category). However, overuse of the “perpetual” category cuts against the reason for implementing the policy in the first place. While some documents may need to be kept perpetually, for example, information subject to a document preservation notice due to litigation, document categories should be assigned a “permanent” retention period very sparingly. Use it where it is legally necessaryto preserve a category of documents (e.g., it’s required for regulatory purposes), or where there is a compelling business interestin keeping it forever (e.g., prior art that may have value in defending against a future patent infringement claim). One way to find a “happy medium” with those in the “keep it” camp is to include in your policy a mechanism by which Legal and the CISO/CIO can approve an exception to the retention period on a case-by-case basis, but make clear that exceptions will be rarely very sparingly and only where legally necessary or where there is a compelling business interest.
5. Partner with department heads to solicit and incorporate their feedback, and to turn them into champions of an enterprise-wide policy.
One of the keys to the successful roll-out of a records retention policy is to have the support of senior management and department heads. Compliance with a records retention policy should be driven from the top down, not bottom up. It’s also important to consider that just because a company has not implemented an enterprise-wide records retention policy does not mean that some departments have not “gone it alone” and implemented their own limited retention and destruction schedule. Partnering with department heads to gain their support for an enterprise policy, and ensure their own efforts are leveraged as part of the broader policy, is essential.
Once a draft policy is prepared, set up one-on-one meetings with the leader of each department to let them know that you want the enterprise policy to be a collaborative (and not an imposed) effort on his/her department. If they have department-specific document categories or retention periods, leverage them to the greatest extent possible to minimize the impact the enterprise policy will have on that department. If they do not, walk them through the reasons why having a well-followed enterprise records retention policy will benefit the company as a whole. Walk the department head through the draft policy, and ensure they agree with the categories and retention periods applicable to their business unit. Try to incorporate their feedback wherever possible, and talk them through where you cannot (e.g., they ask for a non-standard retention period). Finally, ask for their help in rolling the policy out to their department, e.g., by sending a note to the department as a follow-up to the enterprise-wide policy announcement. By meeting with department heads, you will not only ensure the policy hews as closely as possible to the operational and compliance needs and practices of each department, but also establish a contact for future revisions/enhancements to the policy, and hopefully foster an internal champion to help drive the success of the policy.
6. Ensure the policy accounts for document preservation notices.
One critical element of any records retention policy is a very important exception — information subject to a litigation hold or other document preservation notice (such as in the event of litigation or anticipation of future litigation, where the company receives a subpoena, etc.) If employees follow the records retention policy and destroy business records that are relevant to a legal proceeding or subpoena, the company could face very significant fines and penalties. Ensure that the records retention policy makes it very clear that a document preservation notice supersedes the records retention periods, and that any documents and business records subject to a litigation hold or other document preservation notice must be kept for as long as the preservation notice is in effect regardless of the expiration of the retention period. It’s also important to communicate that once an employee is notified that a document preservation notice has been canceled, any documents subject to the notice should be destroyed at the next anniversary date. Ensure that any systems and processes used by the company to operationalize the records retention policy (e.g., automatic deletion of emails after a certain amount of time) account for the preservation of documents and business records subject to a preservation notice irrespective of the retention periods.
7. Partner with IT to implement technical safeguards to minimize policy “workarounds.”
Finally, partnering with IT will be critical to the success of the policy. In many cases, some document destruction processes can be automated (for example, emails can be deleted after a certain period, files older than a certain date can be automatically deleted from network shares, etc.) Work with your IT group to determine what technological solutions can be put in place to help operationalize the records retention policy. At the same time, some employees may believe that their needs trump the records preservation policy, and will try to work around it (e.g., by saving emails to a PST, printing them to a PDF and saving them on a network drive, “backdating” them by changing the system date before saving files, etc.) Partner with your IT team to put as many appropriate technical safeguards in place as possible to minimize employee workarounds to the records retention policy.
Eric Lambert is Assistant General Counsel and Privacy Officer at CommerceHub, a leading cloud services provider helping retailers and brands increase sales and delight shoppers by expanding product assortment, promoting and selling products on the channels that perform, and enabling rapid, on-time customer delivery. He works primarily from his home office outside of Minneapolis, Minnesota. Any opinions in this post are his own. This post does not constitute, nor should it be construed as, legal advice. He is a technophile and Internet evangelist/enthusiast. In his spare time Eric dabbles invoice-over work and implementing and integrating connected home technologies.