Now more than ever it is imperative that corporations develop and maintain a Records Retention Policy, or RRP. What is an RRP? An RRP is a policy that ensures corporate documents are managed in a manner that is not only lawful but effective and efficient. In addition, an RRP should have guidelines for destroying as well as retaining records.
So, what are some things a corporation should consider while establishing an RRP? How about, who is responsible for overseeing it, how long should records be retained, what type of records should be retained, and what should we do with those records after the required retention period has passed?
A corporation has numerous categories of records: accounting records, bank records, corporate records, and employee records, just to name a few. There are different retention periods for these records as well. Patents and related papers, insurance claim documents, legal correspondence, capital stock and bond documents require permanent retention. Real property records, such as deeds, bills of sale, and appraisals should also be kept permanently. While in the corporate record category, accident reports/settled claims, expired contracts and leases should all be saved for 7 years. Other records, such as requisitions, routine correspondence with customers and vendors, and insurance policies have 1-3 year retention requirements. Employee records, depending on the type, have a 3-7 year retention period, except for union agreements, which should be permanently retained.
It is also important to keep in mind that records are not just paper documents but consist of “electronic documents” as well. Electronic documents are any files created by utilizing electronic information. This includes, but is not limited to, word processing, emails, databases, spreadsheets, etc. Any device that files are stored on; cd, videos, and flash drives are considered to be electronic documents as well and must follow the same RRP guidelines the corporation sets forth for paper documents retention and disposal.
Just as important as retaining corporate records, is the disposal of them! Although the records are no longer required to be kept in your possession, it does not make the information they contain any less important. If records are disposed of in an unsecure manner and important corporate or employee information falls into dishonest hands, the results can be catastrophic for both the corporation and the employee.
Remember the definition of an RRP- a policy that ensures corporate documents are managed in a manner that is lawful, effective and efficient. Management of documents includes securing the information they contain, even upon disposal of those records. Records that no longer require retention should be destroyed by means of shredding, disintegration or degaussing, whichever is appropriate. Although it is not necessary for a corporation to maintain the same destruction requirements as a government facility, the proper destruction should not be considered any less vital. Although it usually falls to Senior Management to design and administer the corporate Records Retention Policy, an RRP, like any corporate policy, relies on its employees to maintain and enforce it. A well maintained and executed RRP is essential for the corporation and its employees.