Posted by: Professionals In Human Resources Association (PIHRA) | March 31, 2011

E-Discovery Results in Second Look at Records Management Policies

By Allen Smith

Truly robust records management policies can help keep the costs of e-discovery in check, according to Danuta Panich, an attorney with Ogletree Deakins in Indianapolis.

Having a policy that outlines when records are to be destroyed can reduce the amount of information that needs to be reviewed when there’s litigation, explained Philip Gordon, an attorney with Littler Mendelson and chair of the firm’s Privacy and Data Protection Group in Denver. E-mail can be particularly voluminous without a records management policy and costly to search through during e-discovery, he noted.
“Courts recognize that employers don’t have a duty to retain every scrap of information produced by the organization and that information is destroyed that’s no longer needed,” he added.

Panich told SHRM Online that a records management policy should address such issues as:

  • Avoidance of casual proliferation.
  • Where and how electronically stored information (ESI) should be stored.
  • The importance of prompt deletion of all ESI that is not specifically required by the retention schedule, is no longer of immediate use and is not subject to a litigation hold.
  • A process for periodic review of all information stored.
  • Appropriate methods of eliminating ESI.
  • An audit process to ensure compliance.

Different Approaches
There are different schools of thought with records retention. Gordon noted that some categories of information by law need to be retained for a minimum period. For example, he said documents pertaining to the Employee Retirement Income Security Act need to be preserved for six years, while job applications need to be preserved for at least a year and some Occupational Safety and Health Administration documents need to be preserved for 30 years. But documents that don’t need to be preserved for a minimum period, like most e-mails, should have a short life span—such as 30, 60 or 90 days—to keep the volume of material down during e-discovery, he remarked.

However, Robin Shea, an attorney with Constangy, Brooks & Smith in Winston-Salem, N.C., said that since the enactment of the Lilly Ledbetter Fair Pay Act, which theoretically allows employees to recover based on long-past employment decisions, her ideal has been to preserve everything and have no automatic destruction. But she acknowledged that this is too burdensome and expensive for some employers. The next best thing is to retain the records for the longest applicable statute of limitations, she said.

“We recommend these long retention periods not because the Rules of Civil Procedure require them but because the information retained may very well provide the evidence needed to help the employer defend itself,” Shea remarked.

But Karin McGinnis, an attorney with Moore & Van Allen in Charlotte, N.C., warned against saving too much and instead recommended the use of retention policies to narrow down the amount of company information that is preserved.

Litigation Hold
A good retention policy can be a defense against spoliation of evidence, McGinnis added. If e-mails are deleted after 30  days and certain older e-mails are not available when litigation arises, the policy can show that the e-mails were deleted not to hide or destroy evidence but because of the records retention policy.

But once litigation arises, a litigation hold bars the destruction of records potentially relevant to the issues in the case. It would violate the Federal Rules of Civil Procedure for an employer to destroy ESI that was potentially discoverable after the employer became aware of the threat of litigation, Shea noted.

It is critically important to have a process in place to get a litigation hold set quickly so there are no issues about the employer destroying information that should not have been destroyed, McGinnis said.

Key Players
HR or an in-house attorney should coordinate the entire e-discovery effort, according to Shea.

HR must be in close contact with counsel to ensure that it understands what types of information may be relevant and subject to preservation and production, Panich remarked. HR also must coordinate with individuals whose decisions or actions are being challenged to ensure that information in their control is preserved.

And HR should work with information technology for a variety of reasons. HR should gain an understanding of what potentially relevant information is stored in company systems so that it can alert the managers of those systems about preservation requirements, she said. HR also needs to work with IT to devise automated solutions to preservation, such as capturing particular employees’ e-mail automatically without depending on the employee to identify and take action to save relevant e-mail. IT also is integral to the process of identifying and addressing features built into many systems that result in the automatic deletion of relevant information, she noted. Under the Federal Rules of Civil Procedure, employers are expected to take reasonable, good-faith steps to disable such features when there is a litigation hold.

Depending on the nature of the litigation, usually it will be necessary to involve someone from the substantive area from which the litigation arises, Shea noted. For example, if the plaintiff is a sales representative, the e-discovery team should include at least one member of sales management. This person can describe the various types of ESI that are available and interpret them for HR, the attorneys and IT.

Employees should be notified about the records retention policy and understand that failure to preserve relevant records can result in substantial liability for the company, she said.

It is better to have no retention policy than to have a policy that is not followed, Panich cautioned. Early in almost every significant case, there is a request to produce the employer’s records retention policy. It provides a road map as to what should be discoverable. “From there, spoliation claims are only a few steps away if the employer fails to have the referenced information for the requisite period. Nothing detours a case and builds costs like spoliation claims,” she remarked.

Allen Smith, J.D., is SHRM’s manager of workplace law content.

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