By Mike Lauderdale and Josh Solberg
Any employer that has received notice of an Equal Employment Opportunity Commission charge or employment lawsuit in the recent past also has received a notice that all documentation, including electronically stored information (ESI), must be preserved. An employer that fails to properly assemble and retain ESI related to an employee’s claim will find itself in a bad spot once litigation begins. This article provides some practical guidelines for coping with the world of ESI and e-discovery (the pretrial exchange of electronically stored evidence).
Hardware and people
ESI includes e-mails, webpages, word processing files, e-mail servers and archival systems, instant messaging servers, voice-mail systems, backup systems, imagery document scanning systems, and hand-held storage and communication devices. It also includes cell phones, fixed storage devices (e.g., hard drives on network servers, backup systems, individual workstations, and laptop computers), and portable storage devices (e.g., CDs, DVDs, and memory sticks). Whew.
First, it’s important to know where ESI exists and how it is stored before you need it. You should make a list of ESI storage devices (hardware) and where they’re located in your workplace, and note which employees (or classes of employees) have access to them. Doing so will enable you to quickly send notices to relevant employees when you receive notice of employment claims. It also helps organize the actual collection of ESI when the lawyers come calling.
Information and policy
Second, you should have an effective document management and retention (DMR) policy. A DMR policy is critical for properly preserving and destroying documents (including ESI), and it should set out specific procedures for the maintenance and timely destruction of those documents. Your DMR policy should include a list of hardware types, where they’re located, and who has access to them. It should also contain a list of the general types of documents and ESI that are likely to exist on the storage devices, plus a description of how each category of documents should be retained.
Your DMR policy should identify the employees who have custodial authority over the various types of ESI — that is, who is responsible for overseeing retention and destruction — someone has to be in charge! Implementation of the policy is important to ensure that critical records are retained (some permanently).
To sum up, a DMR policy should fully address, at a minimum, the following points:
- Which ESI storage devices exist in the workplace?
- Where are those storage devices located?
- Who has access to them?
- What kind of ESI is likely to exist and in what medium?
- How will ESI be maintained?
- When can ESI be destroyed?
- Who is responsible for ESI?
The DMR policy is primarily an information management tool, but it also provides you the ability to meet any legal requirements for production of ESI (such as e-discovery) in the event of an employment claim. It must be used in a regular, consistent manner, and like any policy, it must be put in place and followed.
Consequences of noncompliance
Third, you should ensure that ESI is handled properly. Why? Because the chances are high that at some point, you will be sued for an employment-related matter. The law states that when it is merely “reasonably foreseeable” that employment litigation may occur, you have a legal duty to begin retaining and preserving every document that may be pertinent to the potential litigation.
A number of factors determine when litigation is foreseeable, including:
- when you receive a subpoena;
- when a complaint is filed to initiate a lawsuit;
- when a governmental body has provided notice of an investigation;
- when an attorney or third-party investigator requests facts related to an incident or dispute;
- when an incident that results in an injury takes place;
- when an employee makes a formal complaint to management; or
- when an employee threatens litigation against you.
Whenever one of these events occurs, you have an obligation to identify and preserve documents that may be relevant.
Failure to quickly preserve arguably relevant ESI can result in increased costs when you attempt to recover it at a later date, the loss of valuable evidence, and significantly, the imposition of court-ordered sanctions. Sanctions can include monetary penalties, the inability to use certain defenses, and instructions to the jury that you destroyed relevant information necessary to the employee’s claims. The last one really hurts at trial!
Having a DMR policy also provides you with safeguards during employment litigation. Rule 37(e) of the Federal Rules of Civil Procedure says you are protected from court sanctions if ESI and documents are “lost as a result of the routine, good-faith operation of an electronic information system.” This “safe-harbor” provision provides a defense for employers that have a properly defined and implemented DMR policy.
To ensure that you can use the safe-harbor defense, you must exercise an effective “litigation hold.” A litigation hold is a notice to all relevant employees to preserve and maintain information that may be relevant to the litigation matter at issue. Courts may require a company to prove that the litigation hold was effective should ESI end up destroyed or missing. Several practical steps should be followed to implement an adequate litigation hold.
First, as part of your DMR policy, you should develop a written litigation hold policy that addresses the following:
- a general timeline for the litigation hold to be in place;
- a general description of the ESI subject to the hold;
- identification of employees who may be witnesses and what kinds of general ESI they may have;
- the location of any known relevant ESI; and
- identification of any third parties (e.g., accountants, attorneys, payroll providers, records storage providers, and government regulators) who may have responsive information.
Second, have designated employees in place who are familiar with the litigation hold policy and who can implement the policy should it become necessary. Consideration should be given to using in-house or outside legal counsel to be in charge of the litigation hold — not only can it be more effective, but it also preserves the attorney-client privilege for related matters.
Third, during any litigation hold, be sure you:
- document the implementation of the litigation hold;
- locate and preserve any necessary desktop or laptop computers;
- locate and preserve in its dated form all responsive information; and
- if any information has been destroyed, document how, when, and why it was destroyed.
Finally, like any policy, the litigation hold procedure must be applied consistently.
The use of a litigation hold, along with an adequate document management and retention policy, can greatly reduce the costs associated with litigation, the burden of producing and discovering evidence, and the potential for discovery sanctions. Good e-discovery practices, in fact, can be the difference between winning and losing an employment lawsuit.
The authors may be reached at