When an employer learns of a threatened or filed claim against it by a current or former employee, one of its first reactions should be to make certain that it is preserving all evidence potentially relevant to the case. This action is ordinarily accomplished through issuance of a "litigation hold" instructing all persons with possible relevant information to make sure it is maintained, even if such preservation is contrary to normal company policy regarding retention and destruction of paper or electronic records. While a seemingly simple step, a recent decision by a federal court in a discrimination claim brought by the EEOC demonstrates the disastrous consequences of failure to take these steps.

Last month in EEOC v. Dillon Cos., a federal district court in Colorado imposed harsh sanctions against an employer resulting from the destruction of a videotape that supposedly corroborated its legitimate business reasons for terminating an employee who claimed disability discrimination. The security camera tape supposedly captured a confrontation where the plaintiff pushed his manager. The employer later contended that the master tape had been tampered with by an unknown person, and that the three copies made had disappeared.

In response, the district court imposed serious sanctions on the employer. The court concluded that the tape had been destroyed in bad faith, triggering an "adverse inference instruction" to the jury that it should assume that the videotape would have shown conduct contradicting the employer's version of events. Also, the employer was not permitted to introduce supporting testimony of other employees who witnessed the confrontation.

Based on these sanctions, the employer has very little chance of prevailing at trial, and may be forced to settle the claim on terms favorable to the plaintiff. The clear lesson from this example is that evidence preservation is absolutely crucial to the successful defense of any legal claim, including employment disputes. Human resources, legal counsel, IT, and other areas with responsibility over the dispute and information collection must work in concert to make certain that the employer cannot be accused of trying to hide damaging evidence.