How long to retain business records, emails, and other documents is a question that many businesses struggle with. After all, when an employee leaves, why not delete their email account and just hold onto official files? While tempting, employee emails are company records. And to make it more perplexing, document retention requirements vary depending on the type of document, the industry in which the business operates, and the regulatory agency that might have an interest in those documents.
Simply put, the purpose of document retention requirements is to ensure that businesses retain important records for a certain period to comply with legal, regulatory, and accounting requirements. Some common document retention requirements for businesses include:
- Tax records: According to the Internal Revenue Service (“IRS”), businesses must keep tax records for at least three years from the date the tax return was filed.
- Employment records: The Equal Employment Opportunity Commission (“EEOC”) requires that employers keep employment records for at least one year from the date of termination.
- Financial records: The Securities and Exchange Commission (“SEC”) requires that public companies keep financial records for at least five years.
- Health and safety records: The Occupational Safety and Health Administration (“OSHA”) requires that employers keep health and safety records for at least five years.
- Contract and legal documents: Contract and legal documents should be retained for as long as they are relevant to the business. Generally, it is recommended to keep these documents for at least seven years.
It is very important for businesses to follow these retention requirements and to properly destroy documents once the required retention period has ended. It is important to follow proper procedures for document destruction to protect sensitive information and to avoid any legal or regulatory issues.
Further, individual states can have additional requirements that differ from those of federal agencies. While there may be some overlap between federal and state requirements, businesses operating in a particular state must comply with both the federal and state laws and regulations. For example, Washington law requires that employers keep personnel records for at least three years after termination of employment (WAC 296-17-35201), which is longer than the one-year requirement under federal law. The Department of Revenue requires business in Washington State to keep complete and adequate records for a period of at least five years (WAC 458-20-254).
In terms of data privacy, California has its own data protection law, the California Consumer Privacy Act (“CCPA”) (CA Civ Code § 1798.185 (2018)), which sets out requirements for businesses that collect, use, and share personal information of California residents. The CCPA requires businesses to maintain records of data processing activities for a period of at least 24 months. Moreover, California has its own environmental protection laws that impose document retention requirements. For instance, the California Environmental Quality Act requires that certain records and documents be retained for at least three years after a project is completed. The California Civil Rights Department (“CRD”) under Senate Bill 807 requires employers to maintain and preserve personnel records for a minimum of four years, and possibly longer if a CRD complaint has been filed. This means records must be kept four years from the date of creation and four years from the date of termination of an employee or non-hire of an applicant. Businesses operating in California should carefully review and comply with both federal and state laws and regulations related to document retention to avoid legal and regulatory issues.
In summary, businesses are required to retain certain documents for a specific period of time to comply with legal, regulatory, and accounting requirements. The retention period varies depending on the type of document, industry, the agency, and even the state, but generally ranges from one to seven years. Once the retention period has expired, businesses can destroy the documents in accordance with proper procedures.
This blog is for educational purposes only and does not constitute legal advice. This article, or contacting Apex, does not in any way form an attorney-client relationship. Speak to a licensed attorney if you need help or advice in how your organization should dissolve. If you have any questions or would like to learn more, please contact George Ptasinski at email@example.com or visit our website and blog. You might also like to read “The Document Retention Policy” or “The Importance of Understanding Your Company’s Financial Projections.”