Knowing that’s the case, are you prepared? Having a comprehensive Records Retention Policy (RRP) covering all types of records may help you avoid losing a lawsuit and subsequently costing your company hundreds of thousands of dollars in damages.

Case in point: Hollingsworth v. Time Warner Cable, 168 Ohio App.3d 658, 2006-Ohio-4903.

Patti Hollingsworth worked as an audit coordinator for Time Warner Cable from 1989 until she was fired in 2002. In her last few months of employment, Hollingworth suffered from chronic sinusitis, entitling her to time off under the Family and Medical Leave Act (FMLA). During her leave, she became pregnant and a short time later was terminated — allegedly because of her poor job performance. Hollingsworth sued, asserting pregnancy discrimination under Title VII and discrimination and retaliation under FMLA.

No paper trail

At trial, Hollingsworth presented testimony that after the termination, Time Warner destroyed her error logs and erased her emails without reviewing them. Time Warner stated the error logs and emails were destroyed in accordance with its RRP. But testimony at the trial revealed Time Warner’s RRP contained no reference to error logs.

No choice but to pay up

Time Warner admitted that if they had this information it would have helped to prove the case one way or the other. By destroying the error logs and deleting Hollingsworth’s emails, Time Warner forced the jury to weigh the testimony of multiple witnesses in determining whether it had intentionally discriminated against Hollingsworth.

If the error logs and emails had been preserved, there would have been room for speculation. Without them, the jury believed Hollingsworth’s assertion that Time Warner had intentionally discriminated against her because she was pregnant and awarded her $576,812 in damages, legal fees, and back pay.

Plan ahead

BIS can help your company develop and implement a comprehensive Records Retention Policy. By working together with us, you can protect your company against lawsuits.

Does this sound like a records management service your company could benefit from? Call us at (513) 721-FILE.

Obviously, they weren’t following their Records Retention Policy (RRP) for email. In addition, stored email messages weren’t indexed, which resulted in the company’s inability to limit plaintiff’s discovery demands.

Case study: Boeing Sec. Litig.,  No. C97-1715Z (W.D. Wash. 1997) [This consolidated 13 individual class action suits] (Stipulation of Settlement of November 16, 2001, Exhibit B, Final Judgement and Order of Dismissal With Prejudice, Entered February 20,2002)

Just knowing where isn’t enough

Thirteen individual class action lawsuits from 1997 alleged securities fraud against aerospace manufacturer, Boeing. The case centered on the $4 billion loss in value of shares of common stock. Leading up to a merger with McDonnell Douglas, material misrepresentations and concealment of production problems were discovered.

During a deposition, a plaintiff’s attorney learned the company had warehoused approximately 14,000 email backup tapes in Washington, D.C. If the company had established and followed an RRP for email, this electronic data would have been legally destroyed prior to the filing of the lawsuits.

The plaintiffs issued a discovery request for production of these tapes. Boeing countered by trying to place limits on which tapes had to be produced. Unfortunately for Boeing, this effort had the effect of revealing to the court where the remainder of Boeing’s email backups were warehoused at multiple international sites. To make matters worse, Boeing didn’t know what data was contained on which tape.

Boeing was ordered to restore all of the backup tapes at a tremendous cost, which led to the production of enough damaging evidence that the company settled the class action suits for $92.5 million in cash, among other reparations.

Lesson learned too late

If Boeing had regularly followed a RRP which included email; and had that RRP detailed the location and specific contents of retained materials, this evidence might never have been discoverable. BIS is in the business of helping you understand and effectively manage your record —including your email. We can assist your company in establishing an effective and cost-saving Records Retention Policy.

Does this sound like a records management service your company could benefit from? Call us at (513) 721-FILE. We’d love to help.

Notes and memos need a RRP, too

A significant number of asbestos liability suits were brought against Owens Corning, the Toledo-based manufacturer of insulation materials. During the course of these cases, discovery demands from the plaintiffs turned up large quantities of notes and memos dating from the 1940s and 1950s. Though these records could have been legally destroyed during the intervening decades, once they became subject to discovery, they had to be preserved and made available to plaintiffs.

The discovery of these damaging 40- and 50-year-old documents created an insurmountable obstacle for the company’s defense team. As a result of the tidal wave of asbestos litigation, Owens Corning was forced to establish a fund valued at $5.2 billion for those injured by the company’s asbestos. Owens Corning eventually re-emerged from bankruptcy in 2006.

Tough lesson learned

Owens Corning learned a tough and expensive lesson too late. If they had an RRP and followed it, all of the notes and memos from the 40s and 50s ago would have been long-since destroyed. BIS is in the business of helping customer control their records regardless of their format, paper, electronic, or even film.

To get our help, call us at (513) 721-FILE. We’d love to be of assistance.

A well-known company failed to consistently destroy stored documents according to its perfectly acceptable RRP. When this organization saw trouble looming, it tried to go back and fix this. But by then it was too late.

Case study: Arthur Andersen, LLP vs. United States, 544 U.S. 696 (2005)

A Records Retention Policy must be enforced

Arthur Andersen, LLP, was Enron’s accounting firm, and had in place an unenforced RRP. When Andersen’s management saw that Enron-based litigation resulting from an investigation by the Securities and Exchange Commission was imminent, it directed employees to comply with their previously unenforced RRP. As a result, an untold number of documents were destroyed.

In May 2002, the United States filed criminal charges against Andersen for obstructing the SEC investigation based on its destruction of documents. What would have normally been a legitimate destruction of documents under the RRP became prohibited due to Anderson’s knowledge of the looming SEC investigation. Because the charge was a felony, and felons may not be auditors of public companies, Andersen was forced to relinquish its CPA license, sealing its fate.

After an appeal to the U.S. Court of Appeals for the Fifth Circuit, which affirmed a lower Court’s ruling, Andersen sought and was granted a final appeal of its criminal guilt before the U.S. Supreme Court. Although Andersen won the appeal and its criminal charges were reversed because of defective jury instructions, it was too late to save the accounting firm. The damage of the lower Court’s rulings forced Andersen—a company that began 2002 as a $9 billion business—to shut down.

Sometimes it’s just not enough

Just having a RRP won’t suffice. You need to regularly follow your policy and comply with your own disposal schedules. BIS is in the business of helping customers understand and effectively manage their records—all of their records— paper or electronic. We can assist your company in establishing an effective and cost-saving Records Retention Policy.

Does this sound like a records management service your company could benefit from? Call us at (513) 721-FILE. We’d love to help.

Correct answer: Only one year for former employees. That’s it.

Most executives are surprised by the short amount of time such files need to be kept after the termination of an employee. What seems to fall under a simple disposal schedule is often complicated by the fact that old personnel files may contain records pertaining to defined benefit plans or even health records, which should be kept in separate files.

For most businesses, the stored volume of old personnel records is inconsequential when compared to the volume of other business records being stored–so they sit around gathering dust. But have no doubt: Old personnel records can be the most dangerous files in a company’s possession.

Years ago, the most frequently filed lawsuit against a business was for product liability. That’s changed in the last dozen years or so. Now, the most frequent action taken against companies has been for adverse employment action. In particular, retaliation complaints filed with the EEOC during 2010 have increased 99% over 1997.

Whether it’s the EEOC or plaintiff’s attorney that reviews or handles a matter pertaining to employment action, you can bet the first thing reviewed will be all stored personnel files. Why? Their objective is to try to demonstrate a pattern and practice of discrimination.

When it comes to actions pertaining to personnel practices, I’ve heard there are only two kinds of employers: Those who have already dealt with personnel inquiries or lawsuits already and those who will have to deal with such disruptions in the future. Which category does your company fall under?

The best way to help you defend yourself against false allegations pertaining to employment practices is to limit the volume of old records you have in storage. In the physical world, doing this is quite difficult and very time consuming. In the digital world, deleting old personnel records is as easy as the click of the mouse. BIS’ imaging application, BIS4HR, can help you do a better job of controlling your stored volume of old personnel records quickly and effectively.

If you’d like to learn more about BIS4HR, please give me a call: (513) 721-FILE.

In the physical world, this requirement can become expensive and time-consuming as more and more records accumulate. In the digital world, not only is keeping the records easier, but so is maintaining them.

I predict that at some point judicial clarification of the Lilly Ledbetter Fair Pay Act will better define and enable businesses to dispose of payroll records after a specified timeframe.

Companies who act now to digitize their payroll records will be in a much better position when this clarification is handed down.

Our imaging application, called BIS4HR™, was developed specifically for HR records. With this application, making changes to disposal schedules is quick and easy. In the physical world, such changes are much more difficult because someone has to touch each box containing the physical records. In the digital world, records can be deleted with the click of a mouse.

Deleting old records is not the only thing made easier by BIS4HR™. Once records are digitized, they can also be retrieved with the click of a mouse. I know when I am writing performance reviews, I want to see what I put in previous reviews. When we had all paper personnel files, I had to physically retrieve the material I wanted to review. Now I can use BIS4HR™ to view what I want from anywhere in the world via the Internet.

But I prefer to focus on disposal rather than on retention.

There are only two reasons to maintain business files:

1. For legal reasons–because you are required to do so by federal, state, or local regulations. You have no choice–you must achieve compliance.
2. For administrative purposes–to help you run a better business. Records worth keeping can help you remember how you made decisions (the spreadsheets you used), what purchases have been made (frequency, quantities, price, etc. from purchase orders), and what employment actions you have taken (from personnel files), etc.
   These help you make good decisions in the future.

If the only reasons to retain records are to comply with regulations run a better business, isn’t it logical that all records should have defined “lifespans”?

In terms of regulated files, you should keep them only as long as you are required to do so.

You get no gold stars for keeping records beyond their mandated disposal schedule.

As for administrative purposes, what value is there in a 25-year-old purchase order (or, for that matter, even a 5-year-old purchase order)? As records age, they become less and less valuable. Think of it this way: “Old is cold.”

The sooner you dispose of unnecessary administrative files, the better off you’re likely to be–especially in the event of a lawsuit or an audit. The less stored material you have, the less there is to be used against you.

So when it comes to business records, remember: keep them only has long as you have to and dispose of them as soon as you can.

Apparently, most organizations don’t follow their own advice. A whopping 87% believe a formal records retention policy would allow them to delete unnecessary information. Yet fewer than half actually have a formal information retention plan in place.

I see this all the time: Having a disposal schedule is not enough. You must adhere to the policy you establish as a standard business practice. Because in the event of a lawsuit or audit, NOT following your own policy could result in a seriously negative outcome.

Simply having some sort of disposal policy will not insure a successful outcome from an audit or lawsuit. Following your policy is much more likely to produce a favorable result.

Think about the famous George Patton quote about a good plan executed today being better than a perfect plan executed at some time in the future.

It’s less important to have a perfect policy. It’s more important to execute the policy you have.

If you’d like some professional advice about writing or executing a records disposal policy, please give me a call: (513) 721-FILE.

Is it safe?

When considering cloud computing, you might wonder if it’s safe. While the safety of public clouds can be debated, private clouds are considered more trustworthy to keep your data secure. That’s because private services utilize firewalls and other data security techniques to create a safe environment.

All business people care about keeping data secure, but it’s not usually cloud computing that puts your information at risk. Most data security failures have resulted from internal hardware and software failures or accidental deletions.

Cloud computing actually helps protect against such problems. By outsourcing your computing operations to companies that specialize in these services, your business has access to state-of-the-art hardware, software, and data security processes.

Leave IT to the pros

Most of us are in business to do something other than provide computer service. IT operations are not our strategic focus. So turning to cloud computing for data processing or IT applications for most of us is an improvement in how we handle our automated processes.

The fact of the matter is, more IT operations are moving into the cloud. Like it or not, we’ll all soon be doing most of our computing there, too.

BIS welcomes audits by customers of its facilities and procedures. Announced and un-announced audits of our facilities have been conducted by customers such as the U.S. Internal Revenue Service www.irs.gov and Time Warner Cable http://www.timewarnercable.com. BIS operations are always open to inspection by our customers.

Sarbanes-Oxley Compliance

The Sarbanes-Oxley Act of 2002 (AKA “Sarbox” and “SOX”)  requires covered entities to ensure the validity of their published financial information. BIS regularly participates in audits for customers like Frisch’s http://www.frischs.com/and Kendle International www.kendle.com that insure their compliance with Sarbox.

PCI Data Security Standard (DSS)

Performance Enhancement Group (PEG)

BIS is an active participant in a PEG consisting of leading independent record centers located in 11 different U.S. cities. Organized by the Management Growth Institute http://www.managementgrowth.com, the purpose of PEG is to benchmark each member’s performance against the industry Best Practices.

PEG audits span a three-day period during which each member is assessed in the areas of Organization, Finance and Control, Operations, and Sales and Marketing. The result of each PEG audit is a comprehensive report listing performance-enhancing recommendations in each of these areas.