Smart companies educate their employees about acceptable email use and follow a policy of regular computer-file purging to keep the business network free of unnecessary data storage.
If your organization thinks it may be the target of a lawsuit your company should not follow a regular purging policy as email can be summoned in litigation. Email messages are official company records so, your company may have to put a litigation hold on email deletion if those messages could be important to the case. The same goes for instant messages (IM). Many businesses don’t have a policy to handle electronic discovery requests and when notified of a lawsuit, the companies rarely or never take steps to preserve electronic data according to the American Bar Association.
Two court rulings send a strong message on this issue: Employers who don’t take the right steps to preserve electronic data can face big financial penalties.
- Soon after an equities trader filed a sex-bias lawsuit, the company’s in-house counsel warned employees not to destroy relevant documents. But that warning didn’t mention email messages stored on backup tapes, which the company regularly recycled. As a result, relevant emails were deleted and lost forever. A federal district court said the company was at fault because it had a duty to preserve email and other electronic files, as well as backups of those documents. (Zubulake v. UBS Warburg LLC, No. 02-Civ 1243, S.D.N.Y.)
- A federal court penalized a company for failing to prevent 11 of its top-level employees from deleting key emails during pending litigation. The company kept up its practice of automatically deleting emails even after litigation began, and despite a court order to preserve evidence; the court imposed a hefty $2.75 million fine. (USA v. Philip Morris USA Inc., No. 99-2496, D.D.C.)
These cases act as a strong reminder that courts will get tough with organizations that treat electronic discovery, retention and preservation lightly.
The safest way to dispose of electronic HR records is to ask questions before actually disposing of electronic documents. First and foremost, suspend regular data destruction if litigation is likely. A business is required to impose a litigation hold on routine data destruction in certain circumstances. This duty to preserve comes into play when the business receives notice that an administrative or judicial claim has been filed against the organization and, even sooner, if the organization has reason to believe that a lawsuit is on the horizon. But the duty to preserve doesn’t extend to every document and bit of data. A company only has to save data only if it’s been prepared by or for employees who will be key players in the litigation. Rule of thumb: When in doubt, don’t throw it out. Before purging email or other files, sort through them to determine which items could have legal significance. Print them out and file the hard copies. A business should consult with their IT experts about procedures to protect data from being arbitrarily deleted or overwritten.
Other measures a company should take:
- Companies should establish document-retention periods. An organization must retain certain documents even without the threat of litigation. For example, all employers must retain federal payroll tax records for at least four years from the due date of the tax return they are likely to be used on. e.g. 2009 payroll tax records need to be retained through April 15, 2014. Trucking companies must hold onto employee alcohol test results for five years. There are other government mandated retention rules for tax records, property disposal records, and other employment records. A company should know what they are and follow them.
- Companies should apply a time limit on retentions of data not regulated by government rules. Key business documents should likely be retained indefinitely. Email in accessible format, however, should be subject to a short retention period of about 30 days.
- Companies should have an electronic communications policy and training. Businesses should train managers and employees on their electronic communication policy and make them aware that emails are official correspondence that can be called into evidence during a lawsuit. FAQs are a good way to describe such a policy.
- Companies should apply and enforce their policy consistently. Inconsistency, say, for example, letting high-level employees destroy data more frequently than policy states, could put the company at risk of a charge of bad-faith evidence destruction.
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