Guide To Data Retention Laws for Businesses: Key Considerations

Does your organization’s data retention policy comply with all applicable legal and governmental regulations? There are important differences between data retention laws in the United States, the EU, and the UK. This guide can help you adapt your policies to the locations where you do business.

1. Research State-Specific Data Retention Laws in the United States

The first step your business should take when creating or modifying a data retention policy in the U.S. is to map out the relevant laws for every state where you do business. This matters because states often have widely varying minimum retention periods for documents.

Hospitals in Florida have to keep patient medical records for seven years, but North Carolina sets the minimum at 11 years. Nevada doctors must keep records for minors until the patient is 23 years old.

The California Consumer Privacy Act doesn’t stipulate a minimum retention period for personal data, but it requires your businesses to set a specific minimum and maximum period and inform consumers. You also have to provide mechanisms to satisfy user requests for information or to opt out of data gathering.

2. List Data Retention Requirements for Your Industry

Navigating industry regulations for data retention can be tricky because guidelines can be polar opposites for different sectors:

• Merchants: The PCI DSS framework requires merchants that accept credit cards or debit cards to eliminate customer payment information as soon as possible, only storing it as long as necessary for processing.
• Healthcare providers: HIPAA regulations require healthcare businesses to keep some types of patient data (e.g., patient authorizations and privacy notices) for at least six years — unless state laws mandate a longer time.
• Publicly traded companies:The Sarbanes-Oxley Act requires public corporations and accounting firms to store audit documents for seven years.
• Investment companies, brokers, accounting firms, and financial businesses:The Security and Exchange Commission requires organizations to maintain statements and audit records for seven years, and email communications for up to to six years. FINRA rules mandate keeping books and records for six years.

Take regulatory compliance seriously where document retention is concerned. Businesses that are subject to PCI DSS can face fines of up to $500,000 per incident in the case of security breaches that expose improperly stored cardholder data.

3. Consult With All Relevant Stakeholders

No executive has the range of expertise necessary to comply with all applicable data regulations. At a minimum, enterprise decision-makers need to get input from the following internal stakeholders:

• In-house legal team: Your document retention policy needs to consider the possibility of lawsuits and electronic discovery requirements.
• The HR department: There are many federal regulations surrounding employee records retention, including Occupational Safety and Health Administration rules, Fair Labor Standards Act requirements, and Employee Retirement and Income Security Act standards.
• IT professionals:Keeping access logs and other documents can be critical for pinpointing vulnerabilities after a data breach, but you also need to minimize the risk of sensitive data exposure.
• Accounting:You must keep payroll records for at least three years. The IRS has differing recommendations for tax and asset documents, ranging from three years to indefinite storage.
• Production managers: Manufacturers need to store different types of documents for traceability purposes, client audits, and government inspections.

Taking stakeholder recommendations into account is one of the most important steps for creating an effective policy. The goal is for your policy to comply with regulatory requirements, minimize your legal exposure, and cut down on redundant tasks.

4. Appoint a GDPR Compliance Officer

Before expanding into European markets, do your homework on EU data retention law and GDPR requirements first. GDPR fines for document violations can be enormous. In 2022, Meta was hit with a $275 million fine related to the exposure of personal data of more than 500 million users.

Navigating GDPR is complex for data retention policies. You can only store data for the minimum time necessary to meet legal or consumer obligations. At the same time, you have to make it available on request to consumers and ensure accuracy, which requires careful organization.

EU laws also require you to justify your timeframe, explaining exactly why your business needs the information, how you use it, and why you keep it as long as you do. With so many factors to juggle, having a GDPR compliance officer (or team), is vital for global businesses.

Data retention laws in the UK mirror many aspects of the GDPR. That said, you also have to comply with the Limitations Act 1980 for document retention, requiring businesses to keep contracts and legal claims for at least six years.

5. Minimize Data Storage

It can be tempting to look at consumer data as a valuable source of revenue, but those days are long gone. Selling private data — or keeping it indefinitely to develop in-house AI models — has many legal pitfalls. The long-term costs may not result in the return on investment you expect.

First, the longer you hold sensitive information (even names, addresses, or social security numbers), the greater the risk of exposure. For example, protecting cardholder data successfully requires significant investments in cybersecurity, network monitoring, access control measures, and IT.

The more sensitive data your business handles, the more likely compliance violations become. Your scope increases, making your organization responsible for the data. Passing on risk to third parties (such as payment gateways with tokenization technology) lowers your compliance burden.

6. Create Two Versions of Your Data Retention Policy

Covering your legal bases is important, but one of the main purposes of a data retention policy is to help your employees avoid running afoul of the law. That’s hard to do if your policy is filled with legal jargon.

To avoid this issue, create two versions. The consumer-facing policy should outline your organization’s legal bases for data processing. The internal policy should use simple language, clear procedures, and helpful examples. Explain clearly how employees can handle customer data safely, securely, and legally.

Use a Compliance Platform To Meet Data Retention Laws in the United States

An automated tracking platform like Compyl can make it easier to adhere to data retention laws in the United States, EU, and other regions. Compyl helps you visualize in-scope data points and automate storage, deletion, organization, and other tasks. Learn more about Compyl’s compliance features today.