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The Perils of File Hoarding

15 Jul 2020 7:47 PM | Anonymous member (Administrator)

Are you a file hoarder?  Elizabeth McMorrow, Owner of Elizabeth A. McMorrow Law LLC and BWF board member reviews best practices for your organization's overall file retention. 

You may have seen the television show Hoarders and thought, “How could anyone get to that point of hoarding? Why can’t they see the damage they are doing by keeping all of that stuff!?”  You may even be sitting on your couch watching as you “clean” out your work in-box by putting everything in Saved.

It is time to look through that Saved box and (please say you are not still printing everything) your paper files and your organization’s overall file retention practices to avoid the risks of file hoarding.

BUDGET BUSTER

If you maintain paper files, you are either renting floor space in your office or at a third-party storage facility for file cabinets and/or boxes.  In addition to the rental piece of the third-party storage, there are service fees associated with file retrieval, refiling, and transport.

When paper file boxes are loaded up to be moved offsite, it is easy to understand the cost associated with packing up, transporting and storing that pallet of boxes. There are also costs associated with electronic storage. The cloud is not a magical place: it is a bunch of energy consuming servers sitting in a building somewhere in the world being serviced by skilled experts.

Companies allocate about 5% of their IT budget to storage and backup. Some studies show that companies’ data storage is increasing 35% per year. Are you willing to increase your CIO’s budget for hoarders?

PRIVACY LAW VIOLATION

Data hack! Our data is at risk every day from hackers. Why put even more data at risk? Moreover, why put even more data at risk that you were required under law to have destroyed?

The European Union’s General Data Protection Regulation (GDPR) which applies to certain U.S. organizations does not have a set data destruction period. However, the GDPR does require that the organization document and justify the retention period it has established for retaining covered data.

AUDIT EXAMINATION & LITIGATION DISCOVERY TROVE

When your organization retains documents beyond the statutory or regulatory retention deadline, you are giving government regulators and plaintiffs an opportunity to find more potential problems in the organization. You may have corrected the historic problem or fired the offending employee but the 10-year old document still exists. It may have to be turned over during a regulatory examination or litigation discovery.

RECORD RETENTION - HOW LONG?

Because I am a lawyer, I will give the standard lawyer answer: It depends. The general answer is that you should look to the longest period of regulations relevant to your business or your customer’s business. Retention rules vary by regulatory agency, state and country.  One retention period that cuts across all industries is 6 years. This is the retention time required by the U.S. Internal Revenue Service (IRS).

It is critical to have a communication plan in place for litigation. If your organization becomes subject to litigation, investigation or subpoena, you must notify relevant employees immediately to ensure documents are not destroyed even if a document has been saved beyond the normal retention period. There may be significant criminal or civil penalties even if the destruction of documents was inadvertent.

POLICIES & PROCEDURES

Document retention or destruction decisions cannot be convenient ones – a document purge the day before a regulatory examination may land someone in jail.  Organization-wide written policies and procedures must be put in place.

Even if you are not in a large organization, you should educate yourself on these basic points as the first step to establishing document retention policies and procedures:

Paper v electronic files

  • Scanning
  • Retrieval capability

Security
  • Contingency planning for someone else to access files
  • Data breach incident response plan

 File disposal procedures
  • Documents and electronic media
  • Shred, permanently erase, or otherwise destroy so that the information cannot be reconstructed
    • Shred / purge at end of each year
    • Internal certification / log
  • Some devices may save electronic copies of documents
    • Scanners, photocopiers, fax machines
    • Ensure any stored information is erased before the device is removed from office
Document management software

For those in larger organizations, it may make sense to obtain outside assistance in establishing new or updating existing policies and procedures.

For additional blog posts, please go to my website: https://www.elizabethmcmorrowlaw.com/blog.


ABOUT ELIZABETH MCMORROW

Elizabeth McMorrow is an attorney with more than 25 years’ experience representing companies in diverse industries including financial, life-sciences, beverages, steel, and imaging technology on international-related legal issues as both in-house and outside counsel. She is Board Secretary for BWF and the owner of Elizabeth A. McMorrow Law LLC.

She can be reached at elizabeth@elizabethmcmorrowlaw.com.

Copyright © Elizabeth A. McMorrow Law LLC.  All rights reserved

Elizabeth will be a frequent contributor to BWF News.  Stay tuned for future insights.  For additional blog posts, go to Elizabeth's website: https://www.elizabethmcmorrowlaw.com/blog.


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