Going paperless? Great--but don't shred your document retention policy.

• Author: Saade, Renea I.
• Position: Legal Speak

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...