Updated October 14, 2022
COVID-19’s Long-term Effects on Litigation and Document Retention
COVID-19 and public health orders resulted in temporary closures of businesses and courts throughout the State of California. Many businesses suffer from the ongoing economic impacts of the shutdowns and all businesses face extended exposure to litigation due to the closure of the courts. To prevent the court closures from effectively denying litigants access to justice, the California Judicial Council adopted emergency rules to extend the time for the filing of all civil claims in the State of California.
Civil Statutes of Limitations
The final emergency rules adopted by the Judicial Council had the effect of freezing the running of all civil statutes of limitation starting April 6, 2020. Statutes of limitation for civil causes of action that exceed 180 days were tolled from April 6, 2020, until October 1, 2020. Statutes of limitations for civil claims that are 180 days or less were tolled from April 6, 2020 to August 3, 2020. Thus, up to six months were added to the time for a plaintiff to file their complaint.
For example, a plaintiff alleging that he or she was wrongfully terminated as of May 1, 2020 has the three-year statute of limitations on their claim tolled until October 1, 2020, extending their time to file by 153 days. Their wrongful termination claim will expire on October 1, 2023, rather than May 1, 2023. The same tolling applies to other civil claims, whether founded in law or equity, including wage and hour claims, contract claims, and class actions among others.
Document Retention Policies
Employers must not only consider the tolling of claims when evaluating their litigation risk, but in the implementation of document retention policies to ensure that documents needed for their defense against claims are preserved. Companies and their human resources personnel should have a policy setting forth the retention period for each type of record and citing the law or regulation that establishes the retention period.
Prior to the disposal of a record, employers must confirm the applicable retention period and whether the record is necessary for the defense against pending or threatened claims. For example, the Fair Employment and Housing Act requires employers to retain personnel or other employment records, including applications for employment, for two years after the denial of employment or termination. Various provisions of the Labor Code require retention of records for at least three years and OSHA and Workers’ Compensation regulations require retention of records for up to five years. Regardless of any schedule for the disposal of records, documents related to pending or threatened claims should be retained until the conclusion of any litigation.
One category of document which should be excluded from any document retention policy and destruction schedule is insurance records. Occurrence-based policies, such as commercial liability, auto insurance, and others should be retained forever as coverage is triggered by occurrences or injuries within the policy period. While many employment-related claims have short periods for accrual, some claims, such as those based upon exposure to cancer-causing materials, do not accrue until the manifestation of injury. For example, asbestos exposure from the 1970s can give rise to present-day injury claims and an occurrence-based policy from the time of exposure may provide present-day coverage for the claim. In contrast, claims-made policies, such as professional liability, errors and omissions, directors, and offers, are triggered by claims made during the policy period, not the date of the injury or occurrence. Such policies may be discarded after any coverage expires and the expiration of any tail period that may extend the time for reporting of claims.