Records Retention in a Litigious Society
Records Retention in a Litigious Society
Oregon Lodging Association’s "Lodging News"
June 2005
When opening the mail one day, you come across a letter from an attorney representing Jane, your former front desk manager whom you recently were forced to let go for her poor performance. The attorney’s letter alleges that Jane was unlawfully discriminated against on the basis of her gender and threatens a lawsuit if you do not agree to pay her $50,000. Unfortunately, about a week after Jane was fired, you threw away Jane’s personnel file which contained 15 disciplinary reports over the six months prior to Jane’s termination. Without these documents, it is your word against Jane’s. Don’t you wish you had kept Jane’s personnel file?
A similar story can be told to cover nearly every type of document that affects your business-- from organizational documents such as bylaws and corporate minutes, to tax and accounting records, to contracts, to general correspondence and emails. There is a lot of confusion among business owners and managers about how long documents should be kept and when they should be discarded. With increased scrutiny of corporate governance brought about by the recent spate of corporate scandals and the passage of The Sarbanes-Oxley Act of 2002, the failure to keep certain documents could lead to criminal liability and stiff penalties. We discussed these issues and the potential liabilities associated with improper document destruction and whistleblower protections in a previous article published in the July, 2003 edition of Lodging News. We also strongly recommended that every business, large or small, should establish whistleblower and document retention policies to educate managers and employees about what is expected of them, and to protect your business in the event of litigation. While we continue to strongly urge you to implement such policies as soon as possible, we also recognize that time is often difficult to come by and things that should get done today may be put off until tomorrow. Therefore, we want to give you some help.
The following is a short list of various business-related documents and the period of time for which we recommend such documents be retained. While these retention periods generally track the applicable statute of limitations for common legal claims that might arise from such documents, it is critical that you bear in mind that at any time you or one of your employees becomes aware of the possibility of legal action that may involve a particular document, both state and federal law will likely require that the document in question be retained until the matter is resolved, regardless of how long that might be. Failure to retain documents under these circumstances could have very severe consequences.
Type of Document
Retention Period
Organizational Documents (bylaws, meeting minutes, etc.)
Permanently
Property Records (leases, deeds, easements, etc.)
Permanently
Contracts
6 Years (after expiration/termination)
Tax Returns, Charts of Accounts, Cash Books
7 Years
Audit Reports, End-of-year Financial Statements
Permanently
Employee Wage and Hour and Payroll Information
7 Years
Personnel Records (many, but not all)
Emp. Term Plus 3 Years
Workers Comp/Unemployment Insurance Records
7 Years
General Correspondence
The retention period for correspondence can vary greatly depending upon the nature of the document
Please understand that this partial list of documents is intended as a general guide only and is not to be construed as legal advice. Should you have any questions about specific documents and an appropriate retention schedule for your business, we recommend that you seek the advice of an attorney who can assist you in the preparation of a document retention policy and record retention schedule tailored to address the specific needs of your business. As always, the hospitality attorneys at the law firm of O’Donnell & Clark LLP stand ready to assist you in any way we can.