What is a record retention policy?

A record retention policy is a formal guideline stating your business’s process for managing documents. A good retention policy can help your employees find documents for easy reference and understand how to dispose of them to protect company and personal information, such as confidential business information or employees’ Social Security numbers (SSN).

Following best practices for document retention can also protect your organization from data breaches and potential noncompliance issues. Your record retention policy may outline:

• Policy’s purpose
• Federal, state and local government legal requirements
• Retention guidelines for different document types, such as vendor contracts or employee agreements
• Period to keep specific records
• Process for filing and keeping business documents secure
• Permissions for access to certain employee records
• Instructions for discarding records securely

When creating your policy, coordinate with relevant departments to align it with your company’s financial, legal and organizational needs. For example, you might work with the human resources (HR) department to address regulations for employee documentation.

6 steps on how to create a record retention policy

You can follow these steps to create an effective record retention policy. To meet legal and industry standards, consider following these business record retention guidelines:

1. Audit your data and organize your files

Gather your internal and external documents, beginning with digital files. You might inventory your company’s shared drives, emails, cloud storage and other internal messaging systems where you store data.

Next, you can move to physical documents stored in filing cabinets. You might label digital documents and physical records by department and function. For example, files with employee hiring information can be placed in an HR category. You may also want to separate legal records, business contracts and financial statements. As you sort through your files, aim to remove repetitive or outdated documents.

2. Determine how long to keep certain documents

Research federal and local laws to determine the required retention periods for your specific documents. The Internal Revenue Service (IRS) provides guidance for tax records, while the Department of Labor (DOL) outlines retention requirements for records related to wages and hours under the Fair Labor Standards Act (FLSA). Requirements and retention periods may differ depending on the document type.

You might note your policy’s retention requirements for each record type, including the period to keep documents on file.

3. Outline the purpose of your retention policy

The purpose section of your retention policy explains why you’re implementing it and its business value. You can briefly explain why it’s important to store these files. Context can help employees understand why they should follow the document retention guidelines.

4. Explain what and who the policy covers

In the scope section, explain who the policy relates to, which can be the entire company, specific departments or certain business locations if your company has several workspaces. Note the specific types of documents covered by the policy, such as employee records, contracts or financial data.

5. Write the body of the policy

Clearly identify the core components of your policy, including:

• Descriptions of categories: List each document category and the types of records included.
• Retention requirements: Note the retention period and when to dispose of or archive each file.
• How to dispose of records: Outline instructions for safe disposal, such as shredding physical documents or securely deleting electronic files.
• Security protocols: Decide which employees can access files or which require password protection.
• List of approvers: Include contacts for employees who have questions about the policy and determine designated approvers for any exceptions.

6. Add an appendix to define complex terms

Identify and define any financial or legal terms that may be unfamiliar to employees. Consider working with leadership teams to provide simple, easy-to-understand definitions.

Record retention policy template

You can use the following template to create a record retention policy for your business:

Purpose: [In two or three sentences, state why this policy is important and how it benefits your business.]

Scope: [List the departments or areas of the business this policy applies to.]

Policy: [Describe the types of documents this policy applies to.]

Retention period: [List the specific length of time employees should retain each document type.]

Disposal: [Outline where to store documents or how to dispose of them after the retention period.]

Protection levels: [List types of documents with specific protection protocols, such as password protection or restricted access.]

Approvers: [List the names or titles of people who can approve exceptions to this policy.]

Appendix: [List definitions of key terminology.]

Sample record retention policy

You might use this sample as a guide while writing your business’s record retention policy:

Purpose: This record retention policy outlines how our HR department retains documents. This policy helps maintain the accuracy and security of important records by defining clear retention periods and procedures.

Scope: This policy covers documents created by our HR department or submitted by employees. It includes new hire paperwork, onboarding documents, company policies and productivity information. This policy covers the following electronic and physical records:

• Email conversations
• Meeting minutes
• Spreadsheets
• Documents
• Presentations
• Scanned documents
• Payroll records
• Tax returns
• Bank statements
• Accounting records

Policy:

New hire paperwork:

• Description: This contains any legal documents or business documentation submitted by employees during their first three days of employment.
• Retention period: The company stores paperwork for two years after employee terminations, with the exception of financial and legal records, such as tax returns and bank statements, which we retain for seven years.
• Disposal: All documents are stored electronically in a secure HR folder, then moved to the company archives two years after termination. The HR department should retain documents for the duration of any potential legal claims. Refer to the FLSA for specific document retention requirements.
• Protection levels: HR employees must store new hire document archives in an electronic file with a password only shared with HR staff and the executive team.
• Approvers: The Chief Executive Officer (CEO) or HR Director must approve any exceptions.

Appendix: Definitions

• Record: Any company document that is stored for future reference
• Records retention: The method for securing and overseeing records
• Retention period: The length of time a record is to be kept

A record retention policy establishes clear guidelines for managing, storing and disposing of business documents to ensure compliance with legal requirements, protect sensitive data and reduce risks like breaches or noncompliance.

Record retention policy templates for PDF & Word

Use these record retention policy templates to set standards for your employees on how to store business documents.

*Indeed provides these examples as a courtesy to users of this site. Please note that we are not your HR or legal adviser, and none of these documents reflect current labor or employment regulations.