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CHCC Monthly Legal Tip By Melinda Guzman "Records Management"

Posted on 3/28/2013 by Alex Ayala
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Most individuals have finished the process of gathering up "important papers" to prepare tax returns. This article addresses the idea of developing a records retention program to manage records.



Records Management

By Melinda Guzman-Moore, Esq.[1]

 

Most individuals have finished the process of gathering up "important papers" to prepare tax returns.  This article addresses the idea of developing a records retention program to manage records.

 

Objectives

! Reducing the volume of records stored;

! Increasing efficiency and use of record keeping equipment and storage facilities;

! Developing a retention "schedule" to determine which documents may be destroyed and when;

! Reducing costs of storage;

! Promoting continued evaluation of records and storage mechanisms.

! Protecting valuable records and ensuring accessibility and retrieval.

General Considerations

 

Businesses store many records:  accounting records, employment records, administrative service records, and client records/files, including correspondence - and for a number of reasons: reference materials, privilege issues, time, cost, legal issues.


Corporate Records -All formal corporate records should be retained permanently:  incorporation documents (articles of incorporation and bylaws) and annual reports, minutes and other records of meetings of the directors and shareholders, licenses, permits, and records pertaining to stock ownership.

Payroll - Payroll records should be kept for at least five years.  State and federal statutes require that payroll records be retained for up to three years.  California Labor Code Section 1174(d) (two year requirement); 29 C.F.R. Section 516 et seq (1991) (three-year requirement).   Most authorities on record management suggest that all pension records should be maintained permanently.  

Personnel - Several state and federal regulations require employers to retain personnel records up to three years after the employee terminates his or employment.  29 C.F.R. Section 1627.3.  Form I-9 must be retained for three years after the date of hire or one year after the individual terminates employment, whichever is later.  8 C.F.R. Section 274a.2 (1992).  (Note that documents which relate to unsuccessful applicants for employment may usually be destroyed after one year.  29 C.F.R. Section 1627.3(b)).  Personnel files should be retained for five years after the employee terminates.

 

The failure to maintain certain personnel records may subject you to civil penalties.  California Labor Code Section 1174.5.  Occupational injury and illness records under O.S.H.A. must be maintained for five years.  29 C.F.R. Section 1904.6.  Employee medical and exposure records must be maintained for thirty years.  29 C.F.R. Section 1910.1020.

Accounting and Finance - Accounting and financial records generally have no legally mandated retention periods.  Outdated and superseded materials may be destroyed in the normal course of business, unless you choose to document a history of your company's policies and procedures through these materials.

Tax - Tax returns, tax records, and the supporting documents be stored permanently.


Environmental -A maze of state and federal regulations governs the retention of records which relate to environmental matters.  You should probably maintain these records permanently.  These records may become valuable for  a lawsuit or if property is sold.

Closing Thoughts

 

If you decide to develop a retention program, review it periodically to confirm it meets your company's needs.  Plans should be updated as requirements change.  Best wishes for a great year!



[1]Melinda Guzman, Esq. serves as General Counsel of the California Hispanic Chambers of Commerce.  She served as General Counsel of the United States Hispanic Chamber of Commerce and the United States Hispanic Chamber of Commerce Foundation from 2004 – 2010 and as Chair of the California Hispanic Chambers of Commerce from 2000 – 2004.  She also serves as director of the Federal Home Loan Bank of San Francisco, and has served as Trustee of the CA State University and of the CA Community Colleges.  She is highly respected as a litigator, business counselor and small business advocate.  She may be reached at 916-551-2906 or mgm@gfsacto.com.