- Reduces legal risk: Prevents legal exposure and fines by ensuring compliance with regulations.
- Enhances data security: Avoids over-retention, reducing the risk of cyberattacks and unauthorized access to sensitive data.
- Cuts storage costs: Prevents unnecessary data storage by retaining documents only for the required period.
- Becomes audit-ready: Ensures documents are easy to retrieve for audits or legal purposes, demonstrating compliance with regulations.
Industry-specific retention rules and regulations
| Healthcare |
Medical retention schedules vary by state. In addition, the federal Health Insurance Portability and Accountability Act (HIPAA) mandates that organizations must maintain medical records for at least 6 years from their date of creation or their effective date. |
| Finance |
Banks are subject to the Equal Credit Opportunity Act (ECOA); and the Truth in Lending Act and Truth in Savings Act (TSA) as well as other regulations. The Financial Industry Regulatory Authority (FINRA) requires investment and brokerage firms to follow the Securities & Exchange Commission (SEC) and FINRA records requirements. |
| K-12 education |
Each state determines how long public-school records should be kept. The Federal Rights and Privacy Act (FERPA) ensures data privacy and provides rights for parents that are transferred to the student when they reach the age of 18. FERPA does not specify how long records should be retained. |
| State and local government |
Government entities need to balance the importance of secure data storage with accessibility. Compliance and security are both components of good governance. So, implementing sound cybersecurity practices helps to ensure that all relevant laws are followed, and that compliance is a priority. |
| Nonprofits |
There are no definitive regulations that all nonprofits can follow when establishing retention policies. These organizations should limit retention to documents they create or receive that relate directly to what they do. Documents they’re required to retain include articles of incorporation, reports from independent audits and personnel records. |
How to create a document retention policy in six steps
1. Conduct an audit of your data and organize your files
What to do: Start by auditing all the documents and data your company produces or receives, including original documents, emails, financial records, media files and more.
Key Tip: Not all data is equally important. Don’t create a one-size-fits-all policy. The retention period and handling process should vary by document type.
Action: Categorize your data based on industry, legal, or business needs, and determine the retention periods for each category.
2. Outline the policy’s purpose
What to do: Clarify why the DRP exists and its significance. This helps employees understand the importance of adhering to the policy throughout a document’s lifecycle — from creation to disposal.
Key Tip: A clear purpose motivates employees to follow the policy. Be transparent about whether the policy applies across the whole business or just specific departments or locations.
Action: Schedule informational sessions for your employees once the policies are in place.
3. Define the scope and responsibilities
What to do: Specify who will be responsible for managing and updating the policy, and who will oversee the documents within its scope.
Key Tip: Typically, records management, legal, and compliance teams handle policy development, but in smaller organizations, a cross-department committee may be responsible. Consult outside experts if needed.
Action: Make sure to assign clear responsibilities for document evaluation, updating, and compliance.
4. Define categories, retention requirements, and disposal instructions
What to do: Establish clear categories for each record type your organization manages and specify retention periods and secure disposal methods. Categories should be based on legal and industry standards.
Key Tip: Your policy should outline how long each document or record should be retained and how it should be securely disposed of at the end of its lifecycle.
Action: Specify who can delete certain documents. Then determine if they should be accessed through a password or encryption code.
5. Define security protocols
What to do: Establish clear guidelines for the security of documents, specifying who can access, modify, or delete records.
Key Tip: Include access controls such as passwords, encryption, and audit trails to ensure documents’ authenticity and prevent unauthorized access.
6. Define approvers and review process
What to do: List who can approve changes to the retention policy and who employees should contact with questions.
Key Tip: Define how often the policy should be reviewed and updated to ensure it stays aligned with changes in business needs or regulations.
Retention schedule matrix
The matrix below covers some of the regulations that govern document retention and disposal policies. The regulations can vary by industry, state and circumstance.
| Document type |
Retention period |
Reason for retention |
Regulation |
| Contracts |
Expired 7 years, still in effect 10 years |
Legal and contractual obligations |
Contract law, industry regulations, IRS guidelines |
| Invoices |
7 years |
Taxes and audits |
Internal and external audits, IRS guidelines |
| Financial statements |
Permanently |
Taxes and audits |
Internal and external audits, IRS guidelines, Sarbanes-Oxley Act (SOX) |
| Employee records |
At least 7 years |
HR records retention, legal compliance |
Equal Employment Opportunity Act, Fair Labor Standards Act |
| Payroll records |
7 years |
Legal compliance |
Fair Labor Standards Act (FLSA), IRS guidelines |
| Employment applications |
3 years |
Legal compliance |
Equal Employment Opportunity Commission (EEOC), Americans with Disabilities Act |
| Medical records |
6 years |
Compliance with the Health Insurance Portability and Accountability Act (HIPAA) |
HIPAA |
Managing document retention policies with a modern document management system
Automating retention schedules
A document management system (DMS) enforces document retention schedules automatically, ensuring that documents are stored, flagged for disposal, and deleted according to established policies.
How it works: Retention rules are applied to documents and media, with automatic triggers for actions, such as archiving or deletion, based on specific timelines or events. For example, AI-driven Intelligent Document Processing (IDP), which brings together machine learning, natural language process, and other artificial intelligence technologies, enables automatically classified and indexed documents to kick off a workflow.
Applying business rules for document handling
Businesses can set up customized rules that dictate how documents are stored and securely archived, who can access them, and when they should be disposed of.
How it works: Rules can be applied to different types of documents or departments, allowing flexible management while ensuring compliance.
Access control and security
A DMS strengthens data security by controlling who can view, modify, transfer, or delete documents.
How it works: User access is controlled with secure logins, multi-factor authentication, and role-based access, ensuring that only authorized personnel can interact with sensitive documents.
Creating a complete audit trail
The DMS creates an audit trail that tracks who accessed a document, what actions were taken, and when.
How it works: Every document action, including modifications and deletions, is logged, ensuring compliance and providing a transparent, traceable record.
Replacing manual processes with digital workflows
Manual tracking and enforcement of retention policies are replaced by automated workflows that manage documents, tasks, and data.
How it works: Workflow automation translates retention rules into logical steps using "if/then" statements, ensuring consistent, predictable actions, and reducing human error.
Real-time monitoring and error flagging
Automated workflows ensure that tasks are completed on schedule, and any potential errors or deviations are flagged for review.
How it works:A built-in control center monitors the progress of tasks and documents, notifying users of any issues before they become compliance risks.
Ensuring compliance with regulatory standards
By automating retention policies, a DMS eliminates the risks associated with human oversight, ensuring all retention and disposal activities are conducted in accordance with legal requirements.
How it works: The DMS ensures that documents are retained for the legally required timeframes and securely disposed of, reducing the risk of regulatory fines or data breaches.
Document management case study
DocuWare ensures compliance for a public school district
At the Daviess County Public Schools (DCPS) in Kansas, prior to implementing DocuWare, employees kept track of document retention schedules on paper. Because different document types are purged on varying schedules, this was a labor-intensive task. For example, attendance data must be kept for 20 years while health information obtained by school nurses is kept for only 5.
Now, DocuWare workflows automatically enforce retention schedules established by the Kentucky Department for Libraries and Archives, making compliance easier and more transparent. State auditors review retention practices, and it's much easier to provide them with requested documents. DCPS also switched to the newer transcript archiving method that allows for faster searches. The use of electronic forms helped to further streamline the process
Today’s operational standards surrounding document security, data privacy, retention policies and disclosure are complex and penalties for noncompliance are steep. DocuWare brings your policies to life through automated workflows that enforce retention schedules for documents and other media. The software enables you to apply business rules that dictate how information is stored, when it’s flagged for disposal, and how it can be deleted securely.
Frequently asked questions
What is the difference between a document and a record?
After a business process is completed, a document becomes a record. The record may also include related photos, videos and other components.
Records are:
- Proof that an individual, comLet’s say there were guidelines you could put in place that would protect your company from noncompliance fines, reduce storage costs and help avoid legal action and cyberthreats.
- Archived in their final form in case they are needed for verification and not edited or amended.
- Subject to internal and external audits to ensure compliance with industry, state, and federal regulations.
A document management system allows your company to digitize and archive both records and documents.
What is disposable information?
Disposable information is data that can be thrown away or removed by the user if it is no longer needed or can be deleted safely because it has not been classified as essential.
Examples include:
- Copies of documents that do not contain notes.
- Preliminary drafts, SPAM and junk mail.
- Letters, reports, and memos that do not relate to the creation of an official record.
- Printed materials like books, training binders, and magazines or newsletters from external sources.
What is a records series?
A record series groups files or documents that should be managed as one unit. Items in a series can include documents, videos, photographs, sound recordings and other media.
These elements:
- Relate to a particular topic.
- Verify the same type of transactions.
- Have another relationship relating to the creation, receipt, or use of the material.
For example, record series may be made up of:
- A group of contracts with the same company.
- Projected budgets and actual expenditures for each company department.
- Correspondence, invoices and supporting documents for one project.
What is a litigation hold?
If a company is facing or expects to be in litigation, including arbitration, a government inquiry or an audit, it should be cautious so that relevant information is not deleted or destroyed.
A litigation hold policy:
- Requires the suspension of normal destruction practices for any record or disposable information that is relevant to a particular legal issue.
- May be put in force for other exceptional circumstances, such as a merger, a divestiture, or an acquisition, that require document retention beyond the time mandated by law.
- Is created and activated by a company’s legal department or a member of the executive team with the input of outside counsel.