At some point, the records management policies and practices of all businesses are tested. Thus, it is critical that businesses have a comprehensive records management policy and that managers and staff have a complete understanding of such policies and procedures. Not surprisingly, California law requires employers to keep certain records for specific amounts of time. Failing to do so could subject your business to monetary liability.
If your business does not have updated records management policies, accomplishing that goal should be a priority. Your records management policies should be created with guidance from legal counsel who can discuss the industry-specific regulations and standards that may apply to your business. Such policies should also be thorough enough to withstand the scrutiny of litigation. An ideal records management policy will provide that you are maintaining all records required for legal and/or industry compliance, while eliminating materials that you do not need.
The benefits of a properly administered, legally compliant records management program are tangible, they include:
- Reduced cost of storing and maintaining records by determining what can be discarded;
- Reduced time involved in locating, collecting and producing documents for compliance, investigations, and litigation, because you know what exists and where it is stored; and
- The ability to demonstrate that you or your business has a legitimate reason for destroying records by having a records retention and destruction policy that is consistently implemented.
Your business has obligations to preserve relevant information as soon as it reasonably anticipates any legal proceeding or investigation. One common way a business will learn about the need to preserve records is through a “litigation hold” notice, likely from an attorney. This is a formal communication demanding that certain materials and electronically stored information be preserved as potential evidence in a case. It is important to have a policy prepared for such circumstances that allows for immediate compliance. Failure to maintain materials as requested can have serious adverse consequences.
To ensure your records management practices are up to date, meet your industry’s standards, and effectively serve your business feel free to contact me or the BFAS attorney with whom you usually work.
Lauren E. Joyce, Attorney
DISCLAIMER: This Advisor is one of a series of business, real estate, employment, estate planning and tax bulletins prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution or use of this Advisor.