Perhaps it’s the economy. Perhaps it’s the lure of trying to catch someone in the act. Perhaps it’s something else entirely, but we’re starting to see more instances of employers getting themselves in trouble because they’re monitoring employee use of employer technological resources to investigate possible employee misconduct without first seeking legal advice. Two fairly recent examples: Hay v. Burns Cascade Co., Inc. out of the Northern District of New York and Van Alstyne v. Electronic Scriptorium, Ltd. out of the Fourth Circuit.

In Hay, the employer, concerned that the plaintiff, one its customer service employees, was bad-mouthing it to customers, began monitoring her telephone calls. While listening to one telephone call, the president of the company determined that the conversation was between plaintiff and a male customer and overheard her saying that she "can’t believe these guys are managers" and that she had "lost all respect" for the company’s CEO. The president testified that he knew it was a customer because it was during work hours, and “there was nothing to indicate that it was anything other than a business call.”  The president did not ascertain, however, which company the customer was affiliated with or whether the company was an existing or prospective customer. According to the court’s decision, the president listened to the conversation for 30-40 seconds before he stopped monitoring. Based apparently on this one telephone call, the company decided to terminate the plaintiff’s employment due to "poor performance."

Problem: According to the plaintiff, the conversation the president monitored was with her husband. As a result, the plaintiff filed suit, alleging that her employer had illegally intercepted, disclosed and used her private and personal telephone communications and that she was wrongfully terminated from her employment due to the unlawful use of information derived from illegal wiretapping and eavesdropping.  The employer filed a summary judgment motion, which the court denied in all significant respects. Specifically, the court held that the plaintiff had produced sufficient evidence to obtain a jury trial on the issue of whether the employer’s conduct violated Title III of the Omnibus Crime Control and Safe Streets Act of 1968, also known as the Federal Wiretapping Act, which prohibits the intentional interception of wire communications, including telephone conversations, in the absence of a court order.

There are two exceptions to that statute, which unfortunately the employer could not make fit to avoid a jury trial. First, there is an exception if the subject of the telephone monitoring consents either explicitly or impliedly. Here, however, the court found that the employer had not sufficiently established the plaintiff’s consent to monitoring. Although the plaintiff may have been aware through conversations with co-workers that the employer may be or was capable of monitoring phone calls, there was no evidence that plaintiff was actually informed that her conversations were being monitored. In addition, there were no tones or other signals that would indicate to the plaintiff that her calls were being monitored. Finally, the company’s code of conduct did not clearly state that telephone calls were being monitored. 

The second possible exception to the Wiretapping Act is the business exception, which applies to monitoring conducted in the ordinary course of business. The court skirted the question of whether the interception of plaintiff’s telephone calls to determine if she was making derogatory statements about the company to customers was in the ordinary course of business because there was an issue of fact as to whether the call that got her fired was with a customer or her husband. Finally, because the evidence used to terminate the plaintiff’s employment was potentially obtained in violation of the Wiretapping Act, the court permitted her wrongful termination case to go to the jury.

In Van Alstyne, the plaintiff pursued a sexual harassment case against her employer after being terminated from her employment at Electronic Scriptorium, Ltd., which filed a counterclaim against her alleging several business torts. During the course of the litigation, ESL’s president admitted that he had accessed emails from the plaintiff’s personal AOL account. The plaintiff then filed suit alleging that the president’s access of her personal emails violated the federal Stored Communications Act as well as Virginia law. The Court’s statement that the president admitted accessing the plaintiff’s AOL account at all hours of the day, from home and Internet cafes, and from locales as diverse as London, Paris and Hong Kong suggests that the employer accessed the plaintiff’s AOL account directly from a third-party service provider, making a finding that the SCA was violated a near certainty . At the conclusion of trial, the jury awarded the plaintiff a total of $200,000 in damages and approximately $136,000 in attorney fees. On appeal, the Fourth Circuit overturned $100,000 of the damages, which were allocated to damages under the statute, because the plaintiff had not shown that she sustained actual damage as a result of access to her email account. The court upheld the award of $100,000 in punitive damages and the attorney fees.  

Hay and Van Alstyne demonstrate the kinds of trouble employers can cause themselves when they use their technology resources to either monitor or obtain evidence from their employees without their knowledge or consent and without first seeking legal advice. The employer in Hay has little to demonstrate that it obtained the plaintiff’s consent to monitoring, particularly because its code of conduct was quite vague on the issue. (As an aside, many state laws – but not Ohio’s – require that both parties to a telephone conversation be advised that their call is being monitored). Also, if the plaintiff can establish that the intercepted call indeed was with her husband, there will be slim chance for the employer to claim the business exception to the wiretapping act.  As far as Van Alstyne is concerned, the employer was courting danger once it started tapping into the employee’s private email account.

Another case to watch: Pietrylo v. Hillstone Restaurant Group, a New Jersey federal court case that is scheduled for trial in June. In Pietrylo, the employer terminated two employees for disparaging comments made about the company and supervisors on a private password-protected MySpace site after obtaining the password from a third employee. The primary issue likely will be whether the employee voluntarily gave the employer the password or whether she was coerced into doing so. If the case in fact goes to trial, we will let you know the outcome.

In the meantime, it is critical that employers seek legal advice before undertaking employee monitoring programs.  Although employers certainly may reserve the right to monitor their employees’ use of company technology resources, there are limits to what employers can do without risking liability.  Legal counsel can help employers avoid a world of headaches.