Smartphones and the Law: Avoiding Legal Liabilities in the Workplace

Transcription

1 Smartphones and the Law: Avoiding Legal Liabilities in the Workplace FEATURED FACULTY: Anthony J Oncidi, Partner, Proskauer aoncidi@proskauer.com

2 Speaker Info: Anthony J. Oncidi heads the Labor & Employment Law Group in the Los Angeles office. Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters. Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub g 2009; co-author of Proskauer on Privacy (PLI 2009), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal. Tony also is a regular commentator on employment-related issues for public radio station KALW-FM in San Francisco and has been a featured guest on Fox 11 News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law Journal, Bloomberg News, The New York Times, CBS News, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management ( SHRM ), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Western League of Savings Institutions, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

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4 Smartphones and the Law: Avoiding Legal Liabilities in the Workplace Anthony J. Oncidi Proskauer Rose LLP Los Angeles (310) Overview Distracted Driving Wage and Hour Violations Privacy and Smartphones - Privacy - IM and Texting Privacy GPS Tracking Other Issues - Discoverability of Smartphone Data - Harassment - Security Issues - Data Notification Laws - Lost Devices 2 1

5 Distracted Driving 3 Distracted Driving Talking and texting on smartphones can create serious legal consequences for: - Employees (in most states) - Employers - When they speak by phone with employees who are driving - When they fail to educate employees of the dangers of driving while texting or calling 4 2

6 Distracted Driving - Employees Employees may face civil and criminal penalties for texting on their smartphones while driving DOT prohibits drivers of commercial vehicles from texting while driving Approximately 30 states (including California) have existing laws to prevent drivers from using cell phones or text messaging while driving 5 Distracted Driving - Employers A recent Indiana case may pave the way for plaintiffs to recover against employers who call their employees while they are driving. In Buchanan v. Vowell, 926 N.E.2d 515 (Ind. Ct. App. 2010), a pedestrian hit by a car sued the driver s mother for negligence because she was talking to her daughter who she knew to be driving The court of appeals overruled the trial court s dismissal of the mother as a defendant This ruling could be extended to employers speaking with their driving employees 6 3

7 Distracted Driving - Employers An employer can also be liable for its own negligence in failing to adequately warn employees regarding the risks of using electronic devices while driving In Elender v. Neff Rental, Inc., 965 So.2d 898 (La. Ct. App. 2007), an employer was found vicariously liable because, at the time of the accident, the employee was using a cell phone the employer had provided and also had never prohibited the employee from using the cell phone while driving Similar lawsuits against employers have settled for millions of dollars 7 Distracted Driving What employers can do: - Ensure supervisors know not to speak with employees who are driving - Create and disseminate a policy forbidding employees from using employer-issued phones while driving - Ensure the policy is broad enough to cover all employees and all types of wireless communication devices - Create consequences for employees who fail to follow the policy, and enforce them consistently 8 4

8 Wage and Hour Violations - Blackberries on the Slopes and at the Beach 9 Wage and Hour Violations In today s Blackberry-focused age, more and more employees are constantly checking work after hourssometimes without authorization Employee use of smartphones outside of work can lead to potential exposure for employers under the Fair Labor Standards Act ( FLSA ) - Exempt employees vs. Non-exempt employees - Note: Use by either type can lead to employer liability! 10 5

9 Wage and Hour Violations Exempt Employees Exempt employees who perform no work during a workweek generally are not entitled to receive pay for that workweek. But if an exempt employee is required to check during the workweek, that electronic activity might constitute working time, thus entitling the employee to receive his or her salary for the entire week. 11 Wage and Hour Violations Non-Exempt Employees Non-exempt employees who are required to carry a smartphone as part of their job duties and who use the device for job-related matters during non-work hours may be entitled to compensation for that time under the Fair Labor Standards Act ( FLSA ) Last year, a Chicago police officer filed a class action lawsuit alleging that the City of Chicago failed to properly compensate the non-exempt police officers for the time that they spent outside of their normal working hours reviewing and responding to s or calls received on personal data assistants ( PDAs ) issued by the City (Allen v. City of Chicago) ABC News stripped their writers of their BlackBerrys after they claimed they were owed overtime for checking s after work Similar class action lawsuits have been brought against T-Mobile, Verizon and CB Richard Ellis 12 6

10 Wage and Hour Violations Non-Exempt Employees Employees might blog or otherwise post statements regarding the company or its products or services on personal time But, in Chao v. Gotham Registry, Inc., 514 F.3d 280 (2d Cir. 2008), the Second Circuit ruled that the FLSA required an employer to pay overtime compensation to employees performing overtime work even where the work was not authorized and was in violation of company policy. Id. at The court, however, placed special emphasis on the fact that the type of work performed during regular hours was the same type of work performed after hours. Id. 13 Wage and Hour Violations What employers can do: - Establish a written, company-wide policy prohibiting employees from using mobile communication devices for work purposes while off-duty - Only issue devices to exempt employees who do not qualify for overtime under the FLSA - Require strict records be kept of when devices are used - Don t give out smartphones at all 14 7

11 Smartphones and Privacy Rights 15 Smartphones and Privacy Rights There are many reasons employers would want to monitor their employees smartphone use - Avoid productivity loss - Intercept harassing or discriminatory messages But employers must balance this desire to stay informed against employees reasonable expectations of privacy in their electronic communications ( s, IMs, texts, etc.) While case law on privacy deals largely l with employee computer use, it is important to understand these cases as they will likely serve as precedent as smartphone use becomes subject to increasing litigation in the coming years 16 8

12 Sources of Privacy Law Sources of American Privacy Law - No single integrated source of privacy law in the U.S., but rather an incomplete and often confusing patchwork - U.S. Constitution - Does not apply to private sector actions unless the employer is acting as agent of the government - Fourth Amendment employee must have a reasonable expectation of privacy before violation occurs - State t Constitutions - Some states recognize an explicit right to privacy in their own constitutions (such as Florida and California) - New York does not 17 Sources of Privacy Law Sources of American Privacy Law - Common Law Privacy Torts - Intrusion; Public disclosure of private facts; False light publicity; Misappropriation of name or likeness - Not recognized in all states - Federal Statutes - E.g., the Electronic Communications Privacy Act - State Statutes 18 9

13 Sources of Privacy Law Electronic Communications Privacy Act, 18 U.S.C , Prohibits unauthorized and intentional interception of wire, oral and electronic communications - 18 U.S.C Prohibits unauthorized accessing of electronically stored wire or electronic communications - 18 U.S.C Originally intended to address wiretapping telephone lines 19 Communications Covered by ECPA 1. Wire Communications (voic and telephone conversations) Sound traveling through a wire Reasonable expectation of privacy not required 2. Oral Communications (face-to-face conversations) Sound traveling through sound waves Reasonable expectation of privacy required 3. Electronic Communications Broad definition: any form of data transferred by electronic or optical systems; not carried by sound waves; not containing human voice Reasonable expectation of privacy not required 20 10

14 ECPA Prohibits Intentional Interception of Electronic Communications Interception is: the acquisition of the contents of a communication using a device Typical example: wiretapping a phone line during a conversation What about ? - Interception of phone conversations is necessarily contemporaneous - But is data transmitted in packets, so the interception of is generally not contemporaneous - No clear answer 21 Three Exceptions to ECPA 1. System provider - Accessing or intercepting by the entity that provides a wire or electronic service (e.g., switchboard operator or ISP service technician) - Debatable whether an employer is considered a service provider 2. Business Use Exception - Telephone equipment (1) is furnished to a subscriber by a supplier acting in the ordinary course of business, and (2) is being used in ordinary course of subscriber s business - Consent must be obtained - E.g., employee training, quality control, or to deter personal use 22 11

15 Three Exceptions to ECPA 3. One-party consent - Obtaining consent of only one of the parties to the communication a. Express consent secured through a waiver b. Implied consent obtained through policy putting employees on notice of monitoring 23 Smartphones and Privacy Rights - Monitoring

16 Why Bother? $759 Billion - The amount of dollars of productivity American companies lose annually due to employees personal Internet usage while on the job - Newsweek (May 15, 2006) 25 Who is Doing it? AMA/ePolicy Institute Research 2007 Electronic Monitoring & Surveillance Survey 66% of employers monitor internet connections 43% of companies monitor - 96% of those monitoring track incoming and outgoing external messages - 58% of those monitoring track internal messages sent among employees 26 13

17 Reasonable Expectation of Privacy The cornerstone of the analysis is whether the employees have a reasonable expectation of privacy in their electronic communications. 27 Notice of Searches Notice typically defeats an employee's reasonable expectation of privacy. United States v. Ziegler, 474 F.3d 1184, rehearing en banc denied, 497 F.3d 890 (9th Cir. 2007), cert. denied, 128 S.Ct. 879, 169 L.Ed.2d 738 (2008) - Court found that employees have a right of privacy in the contents of their workplace computers but employers who have an established policy of monitoring those computers retain the right to seize the files and turn them over to police. - The employer s right overrides the employee s expectation of privacy

18 Notice of Searches (cont.) Biby v. Board of Regents, 419 F.3d 845 (8th Cir. 2005) - University-employer searched computer of employee for e- mails relevant to a pending arbitration - The employee did not have a reasonable expectation of privacy in his computer files because the University computer policy put the employee on notice that he could not expect privacy if the University had a legitimate reason to search his computer files - Thus, the court held that the University did not violate the privacy rights of the employee for the searches. 29 Notice of Searches (cont.) Notice of monitoring can even defeat the attorney-client privilege! Holmes v. Petrovich Dev. Co. (Cal. Ct. App., Jan. 13, 2011) - Plaintiff sent s to her attorney regarding possible legal action against her employer via her work computer. - Company policy prohibited personal use and put employees on notice of monitoring. - California Court of Appeal held that such s were not protected by the attorney-client privilege: - They were akin to consulting her lawyer in her employer s conference room, in a loud voice, with the door open - Therefore, they were not made in confidence and not privileged

19 Notice of Searches (cont.) Notice can even defeat a reasonable expectation of privacy in the employee s own home! TBG Ins. Servs. Corp. v. Superior Court, 96 Cal. App. 4th 443, 452 (Cal. Ct. App. 2002) - A computer usage policy that warns of the company s right to inspect computers provided for business use has been held sufficient to allow a company to inspect the contents of a company computer used by an employee in his home. 31 Passwords and Personal Folders Notice typically trumps any expectations of privacy by way of password protections or personal folders. McLaren v. Microsoft Corp., 1999 Tex. App. LEXIS 4103 (Tx. Ct. App. 1999) (unpublished) - Even though plaintiff created a personal password, the court concluded that he had no reasonable expectation of privacy because any s stored in personal folders were transmitted over the network and at some point were accessible by a third party

20 Personal on Company-Owned Laptop Notice can even defeat a reasonable expectation of privacy where the employee has the opportunity to buy the company-owned computer. Hilderman v. Enea Teksci, Inc., 551 F. Supp. 2d 1183 (S.D. Cal. 2008) - Genuine issue of material fact as to whether employee had a reasonable expectation of privacy in personal data saved on his computer where dispute existed as to whether company had policy of allowing employees to purchase laptops upon leaving the company. 33 Personal on Company-Owned Laptop (cont.) Hilderman: - The computer was company property at least until employee left; - Company looked at computer to protect its confidential information and to ensure that employee was not engaged in unauthorized activity that would harm company. - Company did not use laptop to access employee s personal account or otherwise pry into employee s personal affairs

21 What about Web Accounts? Status of personal Yahoo!/Google accounts on a computer- owned computer is unclear. Stengart v. Loving Care Agency, Inc., 201 N.J. 300 (2010) - Upholding lower court s determination that employer s interest in monitoring its computer network was outweighed by employee s interest in maintaining the privacy of privileged communications with her attorney made through her Yahoo! account on a company-issued laptop, even though the account was password protected. - The court s decision was animated by a concern for attorney-client privilege and a finding that the company s internet monitoring policy was vague and did not clarify whether personal, password-protected, web-based accounts were covered. 35 Employee-Owned Computer Even the fact that employee owns the computer and brings it into the workplace may not establish a reasonable expectation ti of privacy. United States v. Barrows, 481 F.3d 1246 (10th Cir. 2007) - Even though employee brought in his own computer at work, after child pornography was found on the computer, the court concluded that he had no reasonable expectation of privacy because the computer was being used for work-related purposes. - The fact that t the employee owned the computer did not settle the matter, the court said. It pointed out that while private ownership can be an important factor in favor of Fourth Amendment protection, it is not dispositive. The court added that the significance of personal ownership is considerably weakened when the item in question is being used for the business of the owner's employer

22 Employee-Owned Computer (cont.) United States v. King, 509 F.3d 1338 (11th Cir. 2007) - While defendant worked as a civilian contractor overseas, pornographic images were found on defendant's personal computer, which was connected from his dorm room to a U.S. military base's networked "shared" drive. - On appeal, the court found that defendant lacked a legitimate expectation of privacy in his computer files under the Fourth Amendment, even though he believed he had secured the offending files, because anyone with access to the base's s networked drive had free access to his files. 37 Smartphones and Privacy Rights - Instant Messaging and Texting 38 19

23 IMs As Evidence Flaskamp v. Dearborn Public Schools, 232 F. Supp. 2d 730 (E.D. Mich. 2002) - A teacher brought a claim against the school for wrongful denial of tenure. - The court admitted into evidence and considered the contents of instant messages between the teacher and one of her students. - In granting judgment for the school, the court determined that the instant t messages contained sexual innuendos that t proved unprofessional conduct on the teacher s behalf. 39 IM Privacy Issues Similar to Same question: Does the employee have a reasonable expectation in the privacy of text messages? Factors to consider: - Notice via a written policy? - Policy prohibiting download of unapproved programs? - Presence of a firewall? - Company-provided IM software? - Online IM applications (e.g., Google Chat)? - Public or private area Visibility of IM program? 40 20

24 Supreme Court Texting Case City of Ontario v. Quon, 130 S. Ct (2010) - Police officer for City of Ontario, California, was issued a text-capable pager on the Arch Wireless network. The police dept. subscribed to a limited texting plan where officers were required to pay for overage. - Police dept. had a computer use policy that included text and auditing, and disclaimed any reasonable expectation of privacy; however, officers were informed by supervisors that texts would not be audited as long as they paid for any overage. - Text audit uncovered extensive personal use of the pagers. - Some officers sued, alleging a breach of their rights to privacy under the 4 th Amendment and a violation of the Stored Communications Act. 41 Supreme Court Texting Case (cont.) - The 9th Circuit Court of Appeals found the officers had a reasonable expectation of privacy given the supervisors statements. - Also, the police dept. s search was unreasonably overbroad because it did not need to read the texts to determine whether there was overage. - The U.S. Supreme Court reversed the 9th Circuit, holding that the police dept. s search was reasonable and did not violate the officer s Fourth Amendment right because it was done for a legitimate purpose: to determine the efficacy of existing character limits to ensure that officers were not paying hidden work-related costs. - The Supreme Court chose not to address whether Quon had a reasonable expectation of privacy because it found the search reasonable

25 Smartphones and Privacy Rights Advice for Employers: - Develop an electronic communications policy that informs employees what they can and cannot do, and states the consequences to their employment if they violate the policy - Obtain written consent from all employees to any video, digital and/or audio recordings, images or photographs authorized by the company at its offices or facilities - Obtain employee consent to such monitoring at any time, whether continuously or randomly, without further notice - Adopt policies and practices that protect valid business interests while being sensitive to the culture of trust and mutual respect you hope to foster in the workplace 43 GPS Tracking 44 22

26 GPS Tracking Some smartphones include GPS capabilities that allow employers to track the whereabouts of their workers when they travel off-site Employers can use the GPS data to identify unauthorized activity that exposes the employer to liability or lost profits, such as speeding in company vehicles, moonlighting, dalliances, or inefficiency resulting in excess overtime Employees object to what they perceive as overreaching, particularly where employers monitor employee movements during off-work hours 45 GPS Tracking Advice for Employers - Have a clear written policy alerting employees of the GPS tracking, and that employees have no reasonable expectation of privacy as to their whereabouts during working hours - Only use data collected from GPS tracking devices for proper purposes, such as only gathering information during working hours or otherwise pertaining to work - Be conservative, as case law on this topic is virtually nonexistent 46 23

27 Discoverability of Smartphone Messages In many cases, the data contained on employee smartphones is subject to discovery Employers should always preserve the data on their company s smartphones once litigation has commenced - In Southeastern Mechanical Services, Inc. v. Brody, 657 F. Supp. 2d 1293 (M.D. Fla. 2009), the court sanctioned the defendants with adverse inference jury instructions for wiping clean their BlackBerry smartphones after being sued for trade secrets violations 47 Inappropriate Use of Smart Phones - Brett Favre and Sexting Minnesota Vikings quarterback Brett Favre sent inappropriate messages and photos to at least one woman who worked for the New York Jets when he played for the team in Upon complaining, one of these women lost her position as a Jets massage therapist. Favre was fined $50,000 by the Jets, and faces a sexual harassment lawsuit. In addition to Favre, the Jets also face potential liability. Employers must take care that their smartphones are not used for harassing or discriminatory purposes, else they could be vicariously liable

28 Data Breach Notification Laws These laws require businesses and government agencies to immediately notify people when their personal information has been compromised by either an accidental or deliberate data breach Passed in every state except Alabama, Kentucky, New Mexico and South Dakota Congress considering a national statute that would supersede state laws Penalties can include punitive fines, adverse publicity and damage to customer relationships, and, in some extreme cases, criminal charges 49 Lost Devices Because smartphones are small and portable, they are easily lost Lost phones can lead to security breaches and unapproved access to private employee and employer data Employers are encouraged to work with IT security agencies to encrypt data and be able to remotely lock and track their devices In some states t (including California), i it may be problematic to make employees pay for the cost of the lost phone

29 In Conclusion... Smartphones have brought new efficiencies along with new risks to the workplace Employers should work with counsel to develop a comprehensive, written policy governing the use of smartphones that protects both employer interests and employee privacy Always be sure that proper security controls are in place before issuing any devices 51 Smartphones and the Law: Avoiding Legal Liabilities in the Workplace Anthony J. Oncidi Proskauer Rose LLP Los Angeles (310)

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