Figure 11-1: Chain-of-custody form.
Chapter 11
Storage Locations
In This Chapter
Storing records onsite
Understanding vendor services
Establishing vendor offsite storage requirements
Examining vendor contracts
Over time, organizations produce and receive a significant amount of paper documents. Most documents are subject to two phases — active and inactive. Active documents normally reside in file cabinets or in shelving units, allowing employees to readily access them. Active documents are needed for processing and inquiries related to recent transactions.
Inactive documents are not frequently accessed, but still may need to be retained based on the company’s record retention schedule requirements. Inactive documents that still need to be retained are usually placed in boxes and sent to either on-site or offsite storage. This chapter addresses how to ensure that your records are protected and remain accessible during their inactive phase and provides tools to evaluate offsite storage vendors.
Storing Inactive Records Onsite
Some organizations with adequate space may make the decision to store their inactive records onsite. Prior to making this decision (or if your company already stores inactive records onsite), you should evaluate several factors to ensure that your records are being stored and accessed in an appropriate manner.
Just because records are stored within your own facility doesn’t mean that they’re properly stored. In the following sections, you find out what requirements and processes should be established for onsite records storage.
Protecting your inactive records
This section addresses how to create the proper environment for the long-term storage of inactive paper records — primarily records stored in record storage boxes. Organizations typically don’t allocate prime office space for the storage of inactive boxed records. In many cases, records are stored wherever a company has available space, such as in utility rooms, basements, rental trailers, and other areas that may not provide a suitable record storage environment.
Improperly stored physical records are susceptible to damage from a variety of elements such as water, humidity, temperature, fire, and infestation. To minimize these risks, it’s important for organizations to put measures in place to ensure the records’ protection. The following requirements should be established for areas housing boxed records:
Smoke/fire (heat) detection: The storage area should be equipped with the appropriate number (and type) of smoke- and heat-detection equipment. Your facility manager or engineer can serve as a resource for information on smoke- and heat-detection equipment and maintenance.
Fire suppression: A wet sprinkler system should be installed in all areas housing records unless the temperature in a storage area could (potentially) not be high enough to prevent freezing (below 40 degrees Fahrenheit). If freezing temperatures inside the storage location are a possibility, a dry sprinkler system (where the pipes are filled with air rather than water to prevent the pipes from freezing) should be used. It’s very important to ensure that nothing is stored in close proximity to a sprinkler head. If the sprinkler head is struck by an object it can become dislodged and cause water damage to the records.
Ventilation: The storage area should be well ventilated to prevent the buildup of heat, which can negatively impact paper records. Excessive heat can decrease the stability of the chemicals in most paper, leading to fading of the print and deterioration of the paper. It is recommended that areas used for the long-term storage of paper not exceed 65 degrees Fahrenheit.
Adequate pest control: Areas used for records storage should be regularly treated for pests and vermin. Pest such as termites and silverfish can quickly destroy boxes of records. Rat droppings can cause damage to records and create unsanitary conditions for employees.
Cleanliness: Areas designated for record storage should be kept free of accumulations of dust and dirt. Employees should be prevented from eating or drinking in storage areas.
Proper shelving: Records should be stored at least 3 inches off the floor. This helps to protect the records in the event of flooding. Preferably, sturdy shelving should be used to store boxes of records. Stacked boxes may become crushed and unstable over time, increasing the potential for employee injury and damaged records.
Adequate moisture control: Excessive humidity may cause mold. It’s recommended that the relative humidity in areas used for the long-term storage of paper records remain below 55 percent. If you store records in a basement, it’s important to ensure that the area is not prone to excessive dampness or standing water. In addition, you should avoid storing records in areas with overhead plumbing. This increases the potential for water damage due to leaking pipes.
Proper boxes: When storing inactive records in boxes, it’s important to use boxes specifically designed for records storage. The boxes should be low-lignin and acid free. Over time, lignin and acid can degrade paper. (Lignin is a chemical compound derived from wood. When it breaks down, it turns paper brown.) Many vendors offer record storage boxes. The boxes should have a crush weight of at least 200 pounds. The appropriate crush weight can prevent or reduce box damage (especially at corners) from occurring. The preferred box size is 1.2 cubic feet. This allows better handling of the box and can reduce employee injuries related to lifting large box sizes.
Storing your inactive records in the proper environment helps to ensure the safety of employees who must access them. Storage areas should be equipped with adequate lighting, ladders, and stools to assist in record retrieval. In addition, you should ensure that aisles between shelving units are at least 30 inches wide to allow adequate employee movement, and ensure that boxes are not stacked more than three high and two deep to reduce employee injuries and ensure efficient retrieval.
Implementing access control procedures
In addition to ensuring that physical records are protected from environmental elements, it’s important to establish proper access controls. In many cases, organizations store inactive records from multiple departments together based on available space. As an example, it’s not uncommon for a business to store Facility Maintenance records alongside Human Resources or Customer Account records. While Facility Maintenance records may not contain any sensitive or confidential information, the latter record types do contain information of this nature.
Often organizations use a self-service approach for retrieving inactive records in storage areas. This means that numerous employees have access to a storage area and can retrieve, refile, or reshelve information as needed. This method increases the potential that unauthorized employees may access sensitive, confidential, and competitive information.
To eliminate or minimize the unauthorized access of inactive records, companies should implement security and access controls. The following is a list of topics to consider when securing inactive storage locations:
Access: Access to inactive storage areas should be secured through a lock and key or security card access. Warehouse operations will often store inactive records on shelving in open areas. If this is the case, the area should be fenced in or walled off.
Employees: Access to inactive storage areas should be granted to the minimum number of employees needed to retrieve, deliver, and refile or reshelve the records. Typically in this scenario, the employees may be assigned to a shared-services area such as Mail Services or the Records department.
Training: Employees responsible for the security and operation of a storage area may have to handle sensitive information governed by legislation such as HIPAA (personal health information) and Gramm-Leach-Bliley (privacy). In this case, it’s important for employees to be trained on the proper handling of this type of information.
Segregation: If a company is unable to assign dedicated custodians to a record storage area, and needs to have departmental employees retrieve their records, sensitive information should be segregated and secured. This can occur by fencing off and locking a portion of the area.
Chain of custody: Chain of custody refers to having a paper or electronic audit trail of who has had (or currently has) possession of specific records, files, or boxes of records. The audit trail allows you to keep track of your information. When inactive records are removed from storage, you should have a method for establishing chain of custody. Most Records or Enterprise Content Management systems provide this functionality. However, if you don’t have access to this type of system, you can document the movement of records usingby using a simple Microsoft Access database form. (See Figure 11-1.) (The next section addresses the importance of using bar codes and shelving locations in an inactive records storage area.)
Optimizing your inactive storage
Although inactive records shouldn’t need to be frequently accessed, it’s important that you can easily find them when they’re needed. To assist in the retrieval and refiling or reshelving of inactive records, it’s recommended that you use tools such as shelf and bar-code labels. Most Records and Enterprise Content Management software applications that have even bare-bones physical records functionality allow you to configure your storage area in the system. This means that you are able to create locations in the software that correspond to actual locations in your storage area. Before entering this information in the system, you should label each storage location in the area. For example, if your storage area is equipped with shelving, you should label each row of each shelving unit with a unique identifier, including a corresponding bar-code label if you plan to use a hand-held scanner to automate the process. (See Figure 11-2.)
Figure 11-2: Shelf labeling.
If your organization doesn’t have a Records Management application, you can still track where a box is located by labeling each row of each shelving unit along with placing (writing) a unique identifier, such as a department identifier, plus a number on each box. (See Figure 11-3.) This approach allows you to use a spreadsheet to identify and keep track of where a box is located on a shelving unit.
Figure 11-3: Box identifier.
Getting to Know the Record Storage Vendor
If you have more boxes of inactive records than space to store them, or if it will take too much money and effort to create the proper onsite storage environment, you should explore enlisting the help of a record storage vendor. Record storage vendors offer a variety of storage, transportation, and document management services. However, not all record storage vendors are created equally. It’s important to get to know the vendor and its operation before allowing it to store your records.
In the following sections, you find out how to evaluate vendor fee structures, how to develop a requirements checklist, and how to negotiate a storage contract. Developing a proficient understanding of each of these areas provides the foundation for an effective partnership with a storage vendor.
Understanding the fee structure
A good starting point for determining whether to use a storage vendor is to understand what the storage is going to cost. Although I’m unable to tell you specifically what you’ll be charged, I can provide you insight into how vendors structure their fees and what can impact your costs.
Record storage vendors provide numerous services, resulting in numerous fees. Often, organizations are not aware of all the cost components involved with storing their records with a vendor. The following is a list of services that most organizations will need (and will need to pay for) when they store their records with a vendor:
Receiving and entry: This involves the vendor entering new boxes of records into its computer system. Most vendor fees are based on the cubic foot of a box — meaning that the price it quotes has to be multiplied by the cubic feet of the box. For example, most storage boxes are 1.2 cubic feet in volume.
Therefore, if the vendor quotes a receiving and entry price of $1.50 for a 1-cubic-foot box, the actual cost will be $1.80 (1.2 x $1.50). Additionally, the vendor will charge more if you want files in the box to be entered into its system (file indexing). Indexing files in a box creates a parent-child (hierarchical) relationship. This allows you to request either the entire box to be delivered back to you or just a file (or set of files) from the box.
Storage: Vendors charge a monthly fee for the cubic feet of each box that you have in storage.
Retrieval: This is a fee charged by the vendor when you request a box or file from storage. It relates to the vendor’s labor cost for locating and retrieving a box or file from a shelving unit. (Most vendors charge a higher rate for retrieving a file from a box due to the increased time it takes to look for the file inside the box.)
Refile: Like a retrieval fee, this is the cost you are assessed when you return a box or file to the vendor. It involves the labor cost for placing a box back onto a shelving unit. (Vendors typically charge more for refiling a file into a box.)
Handling: When a vendor delivers boxes to your location, you are charged for each box the vendor unloads from its vehicle. In turn, when a vendor picks up boxes from your location, you are charged a handling fee for each box it places in its vehicle.
Transportation: Vendors usually have a three-tiered price structure for delivering your records — next day, half-day, and rush. Next-day delivery is the most common and economical delivery method. Vendors may charge significantly more for half-day and rush delivery. In addition, a vendor may levy a fuel surcharge depending on the cost of fuel. This fee normally isn’t based on the volume of a box.
Destruction: Most record storage vendors offer secure destruction services (shredding). The vendor will charge you for each box of records you have it destroy (based on the volume of the box). The charge includes a fee for destruction plus a fee for retrieving the box from its shelving units.
Permanent withdrawal: Commonly referred to by clients as hostage fees, permanent withdrawal refers to permanently withdrawing your boxes from the vendor prior to the expiration of the contract. Vendors claim that permanent withdrawal fees are necessary to cover the cost of removing client information from their systems, while clients feel, due to the high cost of the fee, that permanent withdrawal is used as a deterrent from moving their business to another vendor — thus earning the nickname hostage fees.
The price range for these services normally depends upon how many boxes of records you plan to store with the vendor. The majority of the costs an organization incurs are related to transactional services rather than monthly storage fees. For example, if you store 1,000 boxes of records with a vendor and your monthly storage fee is $0.30 per box, your monthly storage cost will be $360 (1,000 x 1.2 cubic feet x $0.30). However, if you request 50 boxes be delivered to you during the month and send back 20 of them during the same invoice period, your estimated costs will be closer to what you see in Figure 11-4.
Figure 11-4: Transactional costs (estimated).
The moral to this story is to ensure that you only send truly inactive records to offsite storage in an effort to minimize the transactional costs.
Making sure that your requirements are met
Inactive records may consist of a significant amount of personal and confidential information, some of which potentially needs to be managed and retained in accordance with laws and regulations. Therefore, it’s important that you select a storage vendor that can meet these requirements.
Before selecting a storage vendor, it’s recommended that you tour its facility. Conducting an onsite review of the vendor’s facility provides you with the opportunity to inspect the physical structure where your records will be stored, as well as to evaluate the vendor’s security procedures. To assist you in completing a comprehensive review of the vendor’s operations, you should develop an off-site records storage requirements checklist. A sample checklist is shown in Figure 11-5. The checklist should encompass the following areas:
Company information: It’s important that you familiarize yourself with a prospective vendor. You should determine its financial stability, how long it has been in business, and its expertise in records storage. In addition, you should request that the vendor provide references.
Location: The vendor’s location should be carefully evaluated. For example, records shouldn’t be stored in areas prone to flooding. If possible, you should also avoid areas susceptible to other natural disasters such as tornadoes and earthquakes. Other factors to consider include whether the vendor’s facility is in a known high-crime zone or near an airport. Many companies avoid locating critical operations near airports due to the potential for air disasters that could damage surrounding facilities.
Facility: Storage facilities should be constructed in accordance with local zoning laws and fire ordinances. In addition, if the facility is located near a known earthquake zone, it’s important to determine what additional structural precautions have been implemented. The facility should be equipped with an adequate smoke- and fire-detection and sprinkler system. The system should be tested on a regular basis. Some vendors are now incorporating shelving units that have a flue space that, in the case of a fire, would channel the flames away from the boxes.
Security: You should ensure that the vendor has 24-hour monitored surveillance cameras in key areas of its facility. The property should be fenced in, and visitors should be identified before they are able to enter the property or facility. The vendor should have documented security procedures that are internally and externally audited at least twice per year.
Disaster preparedness: The vendor should have documented disaster preparedness procedures that are tested at least semiannually. Determine whether the vendor has backup power such as a diesel generator.
Customer service: It’s important to ensure that the vendor can allow you 24/7 access to your records in the event of an emergency. The vendor should incorporate bar-code and tracking technologies. Many record storage invoices can be difficult to decipher. Therefore, you should ask to see a sample copy of its format.
Vehicles: The vendor’s vehicles should be well maintained and equipped with alarms, GPS systems, a fire extinguisher, and communication devices. Some vendors’ vehicles will sound an alarm if the vehicle is left unsecured.
Policies: The vendor should conduct extensive background checks and drug testing on each employee at least once every three years. Employees should also sign confidentiality agreements.
In addition to these requirements, you should assess the overall cleanliness and organization of the vendor’s facility and property. These factors can be good indicators of how your records will be handled while in the vendor’s possession.
Contracting with the vendor
After you have found a vendor that meets your off-site record storage requirements, it’s time to think about the contract. Contracts impact many aspects of your offsite records storage experience. The first thing to remember is that everything is negotiable. However, your negotiating leverage will be based on the volume of records you plan to store with the vendor. The more volume you send the vendor’s way, the more negotiating power you have.
Figure 11-5: Storage vendor requirements checklist (excerpt).
A vendor’s price structure is based on volume and a tiered level of discounts. A small business that needs to store 50 boxes of records may pay $0.40 per box per month for storage, while a large company with 50,000 boxes may pay $0.25 per box per month (both are estimated costs). Transactional fees for services such as retrievals and refiles are also based on the same volume scale.
Although your attorney may review the legalese of the contract, you should ensure that you fully understand the operational aspects of the agreement and how it can impact you going forward. You should carefully review the following areas included in most vendor contracts:
Term: The term refers to the contract period. Most record storage vendors would like you to sign a long-term contract such as five years. Many times, the vendor will provide discounted rates for a longer-term contract. However, if this is your first experience with a vendor, you should be wary of locking yourself into a contract for longer than three years. Although most contracts have an exit clause that allows you to terminate the relationship with written notice (usually 30 or 60 days), if operational issues are unable to be rectified, the vendor may levy charges such as permanent withdrawal fees against your account if you terminate the contract before the stated expiration date.
Pricing: Although the contract provides rates for services (the so-called Schedule A — see the next bullet item), vendors typically include language in their contracts that allows them to increase your costs after the first year. If you agree to this approach, it’s important for your attorney to add verbiage in the contract that specifies an increase ceiling such as “not to exceed 3 percent.” In addition, you can require that the vendor base the increase on a specific price index.
Pricing schedule: The pricing schedule, commonly referred to as Schedule A, provides the pricing for all the services that the vendor proposes to offer. It’s important to ensure that the rates you previously agreed upon are reflected in the schedule. You should negotiate the removal of any permanent withdrawal fees or use a diminishing schedule approach. For example, if you enter into a three-year contract and terminate the contract in the first year, you agree to pay 100 percent of the stated permanent withdrawal fees. If the contract is terminated in year two or later, you agree to pay a lesser percentage.
Liability: Most vendors will only compensate you a small amount ($1–$2 per box) if your records are destroyed while in their possession. In some cases, this is listed in the contract as value of deposit or limitation of liability. Usually, the vendor is not going to budge on such compensation fees — or, in budging, insists on a significantly higher rate for storage and transactional services. If this is the case, you may have to acquire third-party insurance to insure items of high value.
An additional item you may consider adding as an addendum to the contract is a Service Level Agreement (SLA). Although most record storage vendors will provide you with a document outlining their customer service commitment, it’s not contractual. A Schedule A may reflect a set charge for next-day delivery, but it doesn’t provide the customer any remedy if the vendor fails to deliver the records to you as stated. The SLA addendum can provide a remedy such as, for example, you will not be charged for any service failures on the part of the vendor.