Every employer must comply with the Federal Trade Commission’s records disposal rule, designed to protect employees from falling prey to identity theft. The rule stipulates that you must “reasonably” destroy paper and electronic records containing identifiable data on job applicants and employees, such as Social Security numbers and credit histories.
However, the rule doesn’t mandate any specific type of disposal method. For paper files, it suggests shredding them; for electronic files, erasing them or using some other “responsible” means.
Caution: If you don’t properly destroy this data after its statutory retention period expires, you’ll face hefty penalties. Just one mistake here can result in a civil fine of up to $2,500 or, under the worst-case scenario, a class-action lawsuit.