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A record-retention policy is not exactly the most earth-shattering topic but it’s one that, thanks to the latest Enron Corp. document-destruction debacle, has risen to the forefront for employers and general counsel nationwide. Many GCs, having read or watched the countless news stories detailing Enron’s alleged document-destruction campaign, wonder what their companies can and should do to avoid befalling a similar fate, especially since document shredding has become an ordinary and customary business practice in today’s paper-intensive world. This article discusses how GCs can help their companies avoid document-destruction problems. There are a number of actions you can recommend to minimize your company’s legal exposure for wrongful document destruction. First and foremost, you should ensure your company has a formal, written record-retention policy. This policy can, in many cases, insulate your company from liability for improper document destruction if the company can show it had a standard retention and destruction policy and that the requested documents were destroyed in conformance with that policy. Absent such a policy, however, a company can be accused, and convicted, of improperly or unlawfully discarding evidence under the evidentiary doctrine of spoliation. The spoliation doctrine, as GCs know, allows judges and juries to draw an adverse inference from a party’s document destruction. You should, as general counsel, never be on the receiving end of a spoliation instruction. You should, likewise, never have the unpleasant task of informing your company the court is issuing a spoliation instruction to the jury because your company destroyed or discarded case-related documents. These are practice-related unpleasantries that can be avoided if your company adopts and enforces a sound record-retention policy. A legally sustainable record-retention policy identifies the custodian authorized to approve and perform the destruction and defines the type of records or files to be maintained, as well as the maintenance period, and destruction methods and procedures. It likewise provides an internal complaint procedure by which employees can report threatened or actual violations of the company’s document-destruction policy. Your company should, in conjunction with its policy, maintain a centralized log or schedule showing the types or categories of documents destroyed, the basis for destruction, destruction dates and the destruction custodian. It is imperative that someone at a fairly high level within your company’s organization be designated to monitor and enforce compliance with the company’s record-retention policy. It is equally important that this custodian work closely with in-house or outside counsel to ensure that documents, as well as electronic media such as e-mail, relevant to a potential event or incident are not inadvertently destroyed in the normal course of business. Defining the document maintenance period can be especially tricky for companies because of the extensive number of federal and state retention requirements imposed by government statutes and regulations. For example, some federal civil rights laws require employers to retain job applications and other personnel records concerning hires, promotions, demotions and terminations for a one-year period from the date the record is created or the personnel action is taken. Employers who fail to comply with these types of retention requirements face serious consequences, including government fines and penalties. Employers also face equally grave perils from their own employees. For example, the 2nd U.S. Circuit Court of Appeals, in 2001, in Byrnie v. Town of Cromwell Board of Education, found that an employer in a discrimination suit had destroyed employment records in violation of government regulations and, on that basis, invoked the spoliation doctrine to draw an adverse inference against the employer that the destroyed documents would have supported the employee’s discrimination allegations. This court-imposed inference made it surprisingly easy for the employee to prevail in his suit. A MINEFIELD Companies that engage in improper document destruction practices may also find themselves on the receiving end of a wrongful-discharge suit. While Texas law does not recognize a general whistleblower cause of action for private-sector employees, it does provide protection for employees who are terminated for refusing to perform an illegal act. So, for example, if an employer subject to a government subpoena orders an employee to destroy the subpoenaed records, and the employee is fired for refusing to do so, the employee would be entitled to sue his employer for wrongful discharge and obtain reinstatement, as well as recover lost wages, benefits and attorney fees. This can add up to a princely sum of money. Further, and perhaps even more dangerous, the employer also may be criminally prosecuted for obstruction of justice under a number of federal and state laws. Document destruction is a serious matter laden with dangerous traps for the unwary GC. Training is the key to avoiding those traps. All company personnel, regardless of their position, should receive annual training on the company’s record-retention policy and procedures and be instructed they may only discard or destroy data or documents in compliance with those directives. Policy training can go a long way in minimizing your company’s potential civil and criminal exposure for improper document destruction. Companies should routinely be reminded to exercise extreme caution anytime they are about to engage in any kind of structured or organized document destruction. Companies about to embark on this type of purging endeavor should be encouraged to consult promptly with the general counsel to verify they have not, and are not soon likely to receive, one or more of the following: subpoena; informal inquiry from a government agency; formal government investigation or inquiry; internal complaint by disgruntled employee; discrimination charge filed with a government agency; demand letter from an employee’s attorney; and employment suit. If any of these events have occurred, or you believe one or more might occur in the future, you should immediately request your company temporarily suspend all document destruction. You should then promptly meet with the company to personally review and evaluate the questioned documents or data to determine what, if any, targeted materials might need to be flagged and retained. Finally, you should ensure that all identified, relevant documents are reproduced and maintained by you in a separate backup file. Sherry L. Travers is a partner at Thompson, Coe, Cousins & Irons in Dallas. She is board-certified in labor and employment law by the Texas Board of Legal Specialization. Her practice includes litigation and consulting on behalf of management regarding a variety of employment topics, including age, disability and Title VII discrimination, wage and hour law, health and safety, wrongful discharge and noncompete agreements. She also defends public sector employers against various constitutional and statutory rights claims.

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