Records retention policy critical for propane businesses

December 11, 2013 By    

A recurring question I get from clients is: What type of records retention policy should we have for our company? The answer may vary depending on what records you are saving.

A records retention policy needs to be carefully thought out and, most importantly, implemented in the normal course. Too often when I am called to represent a client in a claim or litigated matter they inform me of their retention policy, and it has not been implemented consistently. Records that would have been discarded had the policy been followed are still in existence when a claim or lawsuit is filed.

The legal issue is the requirement that these records still in the possession of the company must be preserved. It is also possible that these obsolete business records may have to be produced to an adversary in the course of prosecuting a claim or lawsuit. The way in which a request for documents is made determines what a company needs to produce.

The best course is to look at the various types of documents in your company and determine the appropriate retention policy. For some items, a relevant law may determine the time limit on keeping certain documents.

Tax returns are an example. You want to keep records far enough back to defend against any Internal Revenue Service audit or state equivalent audit. Typically your accountant maintains these records, but it is wise to keep your own set.

The more relevant records I deal with in litigation are personnel files for past employees, old training material, old customer records (for both former and present clients) and general business records, such as employee handbooks and safety manuals, and customer call logbooks for customer service representatives and drivers. These types of records are routinely requested in the event of a claim or lawsuit.

Once you are reasonably on notice in a claim or lawsuit, your company legally must retain all such records. It is not enough to have management or the owner know to retain these records. A genuine effort must be made companywide to prevent the destruction of records that might relate to a claim or lawsuit once you know your company might be involved.

A court may be asked to impose penalties against a company that destroys records relevant to a claim or a lawsuit once the company is on notice. Notice can be a letter of representation from an attorney, the filing of a lawsuit or, in some cases, knowledge of the incident.

Here are some recommendations for a records retention policy on specific items: Training manuals that you no longer use and consider obsolete should be discarded now. The same goes for training videos that are obsolete.

Old employee manuals and safety manuals should also be discarded. If it is no longer company policy, you should not have it around.

Employee records should date back to the beginning of an employee’s tenure. Training certificates over the many years and the commercial drivers license-hazmat certifications are the most important aspects in this file. The more evidence of training the better.

Many drivers have logbooks in their trucks to record deliveries and calls. Many customer service representatives keep a record of calls as well. I recommend these also be kept for a year or two in excess of the legal statute of limitations for negligence, products liability and property damages claims. Each state has different legal limits, so I cannot give you a hard and fast number. But check with a lawyer in your state for the right answer.

Most records are stored electronically today. So the company records retention policy must interface with the records that are kept in digital form. If the items are obsolete for the company, they must be permanently deleted from the company IT systems as well.

A critical part of running a business is the development and implementation of a cohesive records retention policy. The policy should be enforced at regular intervals so policies, procedures, training and other records that are obsolete can be removed from company records. This will eliminate unnecessary confusion when claims and lawsuits are filed.

John V. McCoy is with McCoy Leavitt Laskey LLC, and his firm represents industry members nationally. He can be reached at 262-522-7007 or jmccoy@MLLlaw.com.

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