To Keep or Not To Keep – and How Long?

© 2005 Door & Access Systems
Publish Date: Winter 2005
Author: Naomi Angel
Page 76

To Keep or Not To Keep – and How Long?
Document Retention Guidelines
By Naomi R. Angel, DASMA Legal Counsel

Document retention is a critical but often overlooked assignment for companies, including garage door dealers.

The recent Enron bankruptcy and document destruction controversy clearly demonstrated the need for a carefully planned, document retention and destruction practice. If you have ever been subject to a tax audit, bought and/or sold a business, or been party to a lawsuit, you know how important business records can be.

The proliferation of forms and records over the last decade has left many businesses with file boxes and drawers of paper, back-up tapes, and electronic messages. The retention of unnecessary documents is both expensive and inefficient.

How to Avoid Document Danger

Damage awards have skyrocketed as business communications are distorted and manipulated during litigation. Errant inflammatory e-mails surface as evidence in harassment cases. Old internal memos appear in lawsuits, antitrust trials, and product liability actions.

To minimize these costs and risks, your door company should review and update its record (also called document) retention program. Plan for the regular retention and destruction of documents based on statutory or regulatory record-keeping requirements and practical business needs.

What to Keep

Retention periods are based primarily on federal record-keeping requirements and state statutes of limitation (these may vary from state to state). The Door and Access Systems Manufacturers Association, for example, is incorporated in the State of Illinois, which has adopted the Uniform Preservation of Private Business Records Act (UPPBRA). Colorado, Georgia, Maryland, New Hampshire, North Dakota, Oklahoma, and Texas have also adopted the Act or a version similar to it.

UPPBRA defines records as “books of account, vouchers, documents, cancelled checks, payrolls, correspondence, records of sales, personnel, equipment and production, reports relating to any or all of such records, and other business papers.” The Act allows for (but does not require) destruction of these documents three years from the date they are produced.

Retain documents only so long as they are (1) necessary to the conduct of your business; (2) required to be kept by statute or government regulation; or (3) relevant to pending or foreseeable investigations or litigation. Currently important documents should be filed systematically and accessibly. Documents that must be maintained permanently can be catalogued and, if possible, reduced to some secure form of electronic record for storage and easy access when needed.

No Tampering Allowed

The Sarbanes-Oxley Act of 2002 prohibits tampering, altering, destroying, or concealing records in an effort to prevent their availability for use in an “official proceeding.” Getting caught can be costly. A good record retention policy should minimize legal risks and reduce the expense of storing obsolete documents and retrieving documents in response to requests.

The following schedule provides minimum retention periods for the major categories of both paper and electronic documents. Consult your attorney for specific advice.

Type of Record Retention Period (in years)
ACCOUNTING
Auditors' reports P (Permanent)
Budgets 7
Cancelled checks, generally 3
Depreciation records P
Officer, director and employee expense reports 3
Employee payroll records (W-2, W-4, etc.) 3
Inventory lists 7
Invoices 7
Petty cash vouchers 3
Subsidiary ledgers (accounts receivable/payable, etc.) 7

CONSTRUCTION RECORDS
Construction drawings and specifications P
Construction documents (shop drawings, field reports, Completion + 7
checklists, correspondence with contractor, etc.)

CORPORATE RECORDS
Annual reports P
Authorizations and appropriations for expenditures 7
Contracts, generally Expiration +7
Contracts, government Expiration +7
Contracts, sales (UCC) 7
Notes (internal reports, memos, etc.) 3

CORRESPONDENCE
General, routine 3

INSURANCE
Accident reports 7
Insurance policies P

LEGAL
Claims and litigation files P

PERSONNEL
Applications 1
Employee earnings/payroll records 3
Employee files 4
Employment contracts Expiration + 3
Form I-9 3
Garnishments 7
Medical or exposure to toxic substances records 30
Pension documents/profit sharing plans 6
Government reports 5
Employee pension records, including service, eligibility, 6
personal information, pensions paid
Time cards/sheets 3

REAL ESTATE
Leases Expiration + 7
Deeds P
Mortgages P

TAXES
Income tax returns and cancelled checks (federal, state, local) 6
Payroll tax returns 4
Property tax returns P
Sales and use tax returns 4

This article is provided solely for informational purposes and does not constitute legal advice. If you have specific questions or concerns about a legal issue, consult your company’s legal counsel for guidance.