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To purge or not to purge. When to ditch old paperwork.

February 24, 2010

Do you have something like this in your office? It may be time to reconsider your document retention policy.

Many companies err on the side of saving too much out of fear of throwing something important away.

Next time your afraid to throw something away consider this: the statute of limitations on written contracts is only 3 years in some states. California is 4 years and Massachusetts is 6. Practically, this means you don’t need to hang on to your old client files indefinitely. Be brutal in what you save. Do you have to hang onto the every brochure you got on a client visit? Will the relationship be improved if you save a printout of the about page for the company’s website? There is only a very small number of items that have to be kept indefinitely, including minuets from board of directors meetings. Most documents can be thrown away in 6 years or less.
Another way to tame your paper mess is to store it electronically. Can your CRM be set up to attach signed contracts? There are several products your IT team can look at to make this happen for you. Ask your payroll company to send you reports on disk instead of paper. As always with an electronic solution, make sure everything is backed up frequently.

Remember also that you don’t have to save every resume that comes across your desk. You only need to save applications for a year. You may ask “Why do I need to save applications of people I never hired?” The short answer is: the Americans with Disabilities Act (ADA), Age Discrimination in Employment Act (ADEA), and Fair Labor Standards Act (FLSA), said so. You will need documentation if you ever have to defend yourself against a discrimination suit.

If you need help staying organized, devise a system. But make sure the system works for you. One office I visited had an elaborate system to track documents that needed to be signed. Many of the unsigned items were more than 10 years old! The system obviously hadn’t worked. I’ve also seen systems involving binders. If it works for you, thats wonderful. Before you commit to it, consider whether you will take the time to 3 hole punch everything that belongs in the binder. If not, look for a system you will use.

Work closely with the other departments in your organization to create your document retention policy. For example, you can dump employee files 7 after they stop working, unless they have an ongoing workers comp case. Then the documents have to be held for 11 years after the case is settled. It is suggested that best practice is to assign one person to be in charge of document retention.

Organization and document retention don’t have to be difficult. Create systems that are easy to use and maintain. Keep only what is necessary and digitize as much as you can. A solid document retention policy will keep you out of trouble and prevent boxes of paper form clutter ing your office.

The fine print: This is not intended to be an exhaustive list of documents. This is only a suggestion. This should not replace legal counsel and your own research in devising a document retention policy appropriate for your company. Civil penalties for non-compliance can be steep.

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