The Benefits of Properly Drafted and Administered Document Retention Policies: HR Tip of the Month

In a discrimination case in which the plaintiff is alleging that the employer treated others more favorably, a company manager testifies at deposition about another employee who violated the same policy as did the plaintiff. That other employee’s personnel file is then requested, but the employer cannot produce it because the file had been purged pursuant to the company’s document retention policy. The plaintiff cries foul, and at trial, wants the jury advised that the contents of that personnel file were harmful to the company. Should such an instruction be given? 

This hypothetical is analogous to the scenario presented in Hicks v. Wegmans Food Market, 2011 U.S. Dist. LEXIS 13047 (D.N.J. Feb. 10, 2011). The court refused to give an adverse inference charge to the jury because it did not find any bad faith by the employer. In the absence of any such bad faith, the company’s destruction of the personnel file pursuant to its ordinary document retention practices prior to the date that it first knew that the file might be connected to plaintiff’s case did not want warrant the issuance of a spoliation inference. 

Document retention policies serve a number of goals. Many categories of business documents are required by applicable federal, state, or local statute or regulation to be kept for specific periods of time. A properly implemented document retention policy will enable a company to monitor and comply with these requirements. Retention (or destruction) policies also help save companies from being buried under the sheer magnitude of documents, both paper and electronic, which are generated year after year. In addition, a properly administered document retention policy can limit a company’s exposure in another important way: documents that are purged in good faith pursuant to such a policy will not damage the company’s case (though by the same token, purged documents would not be available to support a company’s defense). 

Even if a company has a written document retention policy, there are a couple of important points to note.

• First, it is critical for a company to follow its own policy. A company’s failure to follow its policy on a consistent basis or an employer’s haphazard destruction/retention of documents may subject it to a variety of unfavorable outcomes, from liability to sanctions to adverse jury instructions.
   
• Second, when employment litigation arises or appears reasonably foreseeable, additional legal obligations arise to preserve certain documents, which would trump standard document retention policies. These obligations are commonly known as a “litigation hold,” and have become increasingly critical in the conduct of litigation in recent years, with the advent of electronic communications. 

This Alert has been prepared by Sills Cummis & Gross P.C. for informational purposes only and does not constitute advertising or solicitation and should not be used or taken as legal advice. Those seeking legal advice should contact a member of the Firm or legal counsel licensed in their state. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. Confidential information should not be sent to Sills Cummis & Gross without first communicating directly with a member of the Firm about establishing an attorney-client relationship.