October 27, 2010

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Employee Monitoring - A Balancing Act

Employee Monitoring

Balancing an Employer's Right to Know vs. Employee Privacy

With the proliferation of employer issued laptops, cell phones, and Blackberries, employees, now more than ever, are using workplace resources to conduct personal matters. In fact, some studies suggest that 25% of work time is spent on the Internet and sending e-mails for non-business purposes. Accordingly, monitoring of employees' electronic conduct can be a critical tool in addressing productivity. It can also be used to protect employer assets and detect and deter improper employee conduct.

However, employers do not have carte blanche to read employees' private, confidential e-mails. Employees have a reasonable expectation of privacy regarding some of their personal e-mails, and employers could face liability if they cross the line in electronic monitoring.

Stengart v. Loving Care Agency

The Supreme Court of New Jersey recently tackled these issues in Stengart v. Loving Care Agency, 990 A.2d 650 (2010), which raised the issue of an employee's privacy interest in her personal e-mail correspondence sent on an employer-issued computer. Stengart, the plaintiff in that case, worked for a home health care agency, Loving Care, as an Executive Director of Nursing. She was provided an employer-issued laptop on which she could access the Internet through Loving Care's server. At the time, Loving Care had a policy that stated it could review e-mails at any time, and that e-mails and Internet communications are the company's business records and are not to be considered private. The policy also stated that occasional personal use of the computer is permitted.

While employed with Loving Care, Stengart used the laptop to e-mail her attorney regarding work concerns. The e-mails were sent to her attorney through her personal, password-protected Yahoo e-mail account. Unbeknownst to Stengart, Loving Care's browser software automatically saved a copy of each web page she viewed on the computer's hard drive.

Stengart eventually terminated her employment with Loving Care and returned the laptop to her former employer. A few months later, she filed a discrimination, harassment and retaliation lawsuit against Loving Care. As part of the discovery process, Loving Care had Stengart's laptop forensically imaged. Among the items retrieved were the e-mails Stengart had sent to her attorney through her personal Yahoo account.

Stengart's attorneys asked the trial court to order that the e-mails be returned. When the issue reached the New Jersey Supreme Court, it concluded that the e-mails should be returned to Stengart because she could have reasonably expected that the e-mails to her attorneys sent through her personal Yahoo account would remain private. The Court reached that conclusion in part due to the fact that Loving Care had an "ambiguous" policy regarding electronic media.

The New Jersey Supreme Court, however, was quick to point out that employers are not prohibited from monitoring the use of workplace computers. In fact, the Court stated, employers can adopt lawful policies relating to computer use "to protect the assets, reputation, and productivity of a business and to ensure compliance with legitimate corporate policies." Loving, 990 A.2d at 665. However, the Court made clear that "employers have no need or basis to read the specific contents of personal, privileged, attorney-client communications in order to enforce company policy." Id.

Take Away Lessons

While monitoring of employees' electronic conduct is a valuable tool for management, companies should follow these common-sense guidelines to help reduce the risk of liability that can be associated with monitoring:

• Provide notice that the content of e-mails can be forensically read and retrieved;
• Maintain policies that are tailored to your specific operation and that address the specific technology that will be monitored, including all forms of communication and use of electronic devices;
• Implement consistent review and audit processes;
• Apply policy to all corporate members, employees, and management;
• Do not acknowledge occasional personal use of e-mail in policy;
• Do not review attorney-client privileged material without a clear understanding of the privilege; and
• When in doubt, seek legal counsel!

If you have any questions about employee monitoring, please contact Charitie Hartsig at 602.440.4898, or any member of Ryley Carlock & Applewhite's Labor and Employment practice group.