Better Than Barnum and Bailey's Where do I sign up? This was my immediate reaction after learning about James Pacenza, a former IBM employee who is suing the company for violation of his rights under the Americans With Disabilities Act after he was fired for logging onto an adult chat room using a company computer while at work. Says he became a sex addict as a result of traumatic stress suffered in 1969 in the Vietnam War and that he "treats" his stress disorder by visiting adult chat rooms. Instead of canning him, he claims IBM should have helped him by accommodating his sex addiction "disability."

I don't even know where to begin. Not that I'm a cynic, but I imagine the conversation with his lawyer went something like this:

Pacenza: "....and then I got fired."
Lawyer: "Listen, Jim, there are 100 reasons this claim is going to fail, but as long as you are okay with going public, I'm sure I can help you shake a few trees."
Pacenza: "That would be great."

This lawsuit makes a complete and utter mockery of the ADA and smacks of a media hungry lawyer trolling for publicity. I'm not saying I don't believe that Pacenza has an addiction. I'm not even scoffing at his claim that his sex addiction is rooted in his war experiences. (Hey, I'm a product of a women's college -- we make Fonda look like a righty -- so, I can dig it.) What I am saying is that, on its face, this claim has no legal merit under the ADA and the lawyer should know it, if he doesn't. I would love to be IBM's lawyer. Hell, I'd do it for free (not that I'm a media hungry lawyer..).

It's basic ADA law that employers do not have to condone their employees' illicit or illegal drug or alcohol use on the job. If an employee comes to you and says, "I used to have a drug problem, but I got some help. I'm clean, but I need some flexibility in my schedule to go to my therapy meetings," then you've got an ADA situation to address. You engage the employee to get details about his needs and you see what you can do to help a guy out, so long as he can do his job. That's not what Pacenza did.

If we are to believe that Pacenza is an addict (even assuming that the court will accept that being a sex addict qualifies as a bona fide "mental disorder" under the statute, which is doubtful given the ADA's exclusion of sex-based disorders), then his participation in an adult chat room while at work is no different than the employee caught shooting up in the company loo.

So, even accepting as true Pacenza's allegations, IBM did not have to continue to employ him after he was discovered to be engaging in conduct expressly disallowed by written company policy(which it was) simply on the basis that he can't help it.

Pacenza's lawyer has argued that, because IBM offers treatment programs to employees with substance addictions, it should have offered Pacenza treatment instead of terminating him. Notwithstanding IBM's offer of treatment to those employees, I would bet that IBM prohibits employees from doing drugs at work regardless of whether they are in treatment. Plus, according to IBM, Pacenza had been caught and warned before. Apparently, he didn't ask for help then, although he denies he was previously warned.

Pacenza's (too) late assertion that he is disabled loses credibility when you consider that this is a guy who claims he has been a sex addict for nearly forty years. He had a prime opportunity to ask for help if IBM warned him four months before his termination. Only when fired does he claim ADA protection.
And let's not forget that the ADA places the burden on the employee to ask for a reasonable accommodation for a disability.

The onus was not on IBM to ask Pacenza if he had a sex-based disability that needed accommodating. (If IBM had identified him as potentially disabled and inquired as to whether he was in need of help, perhaps his lawyer would have filed what's known as a "regarded as" ADA claim, but that's another column for another day.) If Pacenza was warned and he didn't make a peep about needing help, IBM was entitled to assume his bad boy behavior was just that -- an idle employee breaking company rules. Even if he wasn't warned, given the fact that IBM offers treatment to substance addict employees, Pacenza arguably had no reasonable basis to believe that a request for help from IBM would fall on deaf ears or cost him his job.

In short, I see no ground to excuse Pacenza from the burden of seeking out a reasonable accommodation for his purported disability. Moreover, IBM was entitled to terminate Pacenza for his illicit internet behavior regardless of whether he had been previously warned. It may open the company up to potential liability if IBM's usual protocol is to warn before firing, but employers are not liable simply because they fail to follow internal policy. There must be something more than the mere inference of possible wrongdoing.

Pacenza also claims that his termination hints at age discrimination because he "could have retired in a year." This argument holds more water if Pacenza was not warned than if he was warned as IBM claims, but this argument stinks either way.

Why would IBM expose itself (no pun intended) to potential liability to squeeze out an employee who might be gone in a year (unless IBM provides a special retirement package, but it's doubtful that IBM -- with its thousands of employees -- would consider avoidance of Pacenza's retirement package at a $65k annual salary sufficient incentive to terminate him wrongfully. Plus, the Age Discrimination in Employment Act covers employees 40 years of age and older. IBM hired Pacenza when he was 36. Retaining him as an employee for 19 years, until he was 55 (15 years after his ADEA protection began) hardly suggests age discrimination.

Pacenza noted that he would have understood being disciplined for his conduct, but that termination was unfair. This statement suggests his claim is a sham. If Pacenza is disabled under the ADA, it would have been unlawful for IBM to take any adverse employment action on the basis of his disability -- whether discipline, termination or something else. Pacenza's position suggests that his chat room conduct graduated to "disability" only when the stakes were high enough or when his lawyer thought of it.

I suppose Pacenza's claim is a natural mutation of the workplace-stress-as-disability claims that began in the late 90s (from which the courts by and large have mercifully spared us).

But please. Somebody put a tent on this circus (or hit the escape key).

Labels: ADA, Sex, workplace

  10:14 AM •  0 Comments • Links to this post

Et tu, Brute? Remember that old public service announcement – “It’s 10 pm. Parents, do you know where your children are?” I hadn’t thought of it in years until a few days ago when a call from a client reminded me of it.

A little background. I met the owner of a local web design and advertising agency about three years ago. She had recently struck out on her own and had a small, but formidable, group of creative employees and the right mix of clients. She needed the right tools to do business, so I spent time with her discussing the nature of the company’s services and products, the company’s cash flow and other assets, its client base, and related issues. With a good understanding of her company’s profile and where she wanted to take it, I drafted a standard services agreement for use with her company’s clients. Having seen other small, young companies bite the dust because of loss leader and front-loaded arrangements, my client was wary of giving away too much and was resolute that her company would not succumb to the too-eager-to-please syndrome. The services agreement we drafted was enforceable, fair and business savvy.

If only she had paid as much attention to her employees as she had to the services agreement, but I’m getting ahead of myself.

The next few years brought the usual ups and downs of a young company, but overall, they did quite well and developed a great reputation for snazzy, robust work. They won bigger clients than a company that size is typically able to bring in – and managed to keep up with the work. As the client base grew, so did the number of employees, and the owner began to relinquish some control over clients and projects to allow her employees to grow and to develop essential client contact and project leadership skills. Smart business owner. She was now a CEO.

But along the way – both by her failure to stay involved and her employees’ failure to keep her in the loop – the CEO allowed her employees too much independence and she lost critical awareness of exactly what her employees were doing. Until the letter.

On an ordinary Thursday in an ordinary week, the CEO received a rather unordinary piece of mail. She had been served with a complaint naming her company as a defendant in connection with an ad campaign her company – she then learned – had created and asserting that her company and its client – that she never knew about – had violated the plaintiff’s trademark rights and was, therefore, liable for unfair competition. She understood none of this. But the plaintiff’s demand for damages – a million dollars, plus attorneys’ fees and court costs – this, she understood plenty.

After an emergency company-wide meeting, the CEO learned that an employee had brought in a new client last year – a pizza restaurant called Tiny Titus with locations in Baltimore and Annapolis – with plans to expand into DC and Northern Virginia. The restaurant chain was run by the employee’s old college friend. The business arrangement was casual – a few emails about hourly rates and third party expenses and not a lot more. When Tiny Titus came to my client, it had a location in Baltimore County near Towson University and Loyola College. It was getting by, but had failed to capture the student consumers it had planned on. Tiny Titus had a logo that its owners already liked – a goofy cartoon version of the Roman emperor eating pizza while sitting in a chariot – but it needed a slogan, increased media exposure, and an overall campaign strategy to synthesize its brand image into a recognizable source of good, quick and cheap pizza with all the usual sides. My client’s employee did good work and it paid big dividends to Tiny Titus. Within about 16 months, student business was a steady, reliable revenue stream and Tiny Titus had opened up a new location in Annapolis, and was looking to grow even more.

That’s when a national pizza chain with the same target demographic and brand image sat up and took note. Just like Tiny Titus, the name and logo of this national pizza chain also made light of a well known, historic Roman figure. It walked and talked like willful trademark infringement, which can result in an award of treble damages plus attorneys’ fees. The plaintiff had sent a demand letter to Tiny Titus outlining the issues and demanding that Tiny Titus cease and desist from doing business with its current logo and business name – the chief ways in which the plaintiff asserted that Tiny Titus was infringing its trademark rights. But apparently Tiny Titus didn’t lend anybody its ears, and just ignored the letter. Not one to be ignored, the national chain filed a mega-watt lawsuit pointing the finger at everyone plausibly tied to the violation of its intellectual property. This, of course, included my client – the smart agency that came up with the terrific advertising and brand imaging strategy.

After the CEO got the details, I got the call. “Calm down,” I responded, “your services agreement outlines in clear language that Tiny Titus has a duty to indemnify you for this type of claim because they brought the logo and name to you. You didn’t create either. This lawsuit doesn’t target the slogan you developed and marketing pizza to college students is hardly a protectable business model. I’ll pick up the phone and call Tiny Titus’ lawyer and we’ll get this straightened out.”

That’s when she told me that her employee – her trusted, independent, creative employee – had done the work without a net. There was no indemnification agreement, because there was no executed services agreement. Sure, Tiny Titus had paid its bills on time and had never stiffed them for expenses, but the employee had never so much as submitted the services agreement for the client’s consideration. This was a major mistake – and will prove to be an expensive one.

Because there is no indemnification agreement, my client is now forced to fend for itself. That means major litigation expenses and the risk of ultimate liability for contributory trademark infringement – or, instead, maybe a settlement payment. And, of course, now my client is compelled to point the finger at Tiny Titus as the wrongdoer. Not exactly good PR for an agency built on growing its clients’ businesses.

Your employees are your ambassadors and your agents, and they have the power to bind your business through their daily business conduct. So, how can you save yourself from being thrown to the lions? Simple stuff. Hold weekly staff meetings or require your employees to send you an email every Friday afternoon giving you an update on project and customer status. It doesn’t have to be formal to be informative, and it could be the difference between allowing your employees room to grow and losing sight of the details that could land you in the middle of a lawsuit, or worse. The right amount of attention can prevent your eager, well-meaning employees from morphing into your surprise assassins.

Labels: advertising, Employment

  4:24 PM •  0 Comments • Links to this post

All Hail the King It’s so right now. It’s hot, hot, hot. The "it" thing. Pink is the new black and retaliation is the new sex harassment. Used to be that if you did what you could to make sure nobody touched anybody, never complimented anybody’s dress or (heaven forbid!) fell in love with a co-worker, you could sleep at night and feel pretty safe that no process server was going to come a-callin’. Those days are gone folks.

Employment law attorneys have spent the last few years with their mouths agape at some of the verdicts coming out of retaliation cases, so anybody with an ear to the ground probably isn’t too surprised by the incarnation of retaliation as King of Employer Liability. But an opinion issued by Judge Titus of the U.S. District Court in Greenbelt in August of this year tiptoed past the sleeping guards. Sound the alarm! Wake up! The King is coming and he’s swinging his scepter Charlie Chaplin style.

Okay, so I may be exaggerating a bit for dramatic effect. But the District Court’s recent opinion in a retaliation case brought by the EEOC on behalf of a former COMSAT employee against Lockheed Martin after the two merged puts in black and white for the first time in Maryland law two holdings that ought to make employers rethink how they offer severance benefits, as well as how they write those necessary releases that accompany severance offers. First, the court held that you can’t condition severance pay on dismissal of an EEOC charge filed by the employee. Second, the court held that a release that waives an employee’s right to file charges with the EEOC is facially retaliatory and unlawful. Stop. Read that last part again. This means that, in addition to being unenforceable, your release might subject you to liability for retaliation. (Are you listening, Alanis? This is irony.)

Retaliation claims aren’t that big a surprise. It’s the law. It’s the application of retaliation law to severance agreements that’s novel. Unlawful retaliation occurs when an employer takes some sort of action against an employee because the employee has invoked some right or engaged in some other protected activity like complaining of harassment. In the Lockheed case, Lockheed terminated an employee who had been a long time COMSAT employee before the merger. The company offered severance in exchange for a release. She refused to sign and, before her termination was final, she filed a claim with the EEOC alleging unlawful termination on the basis of age, race and gender discrimination. Lockheed told her that she could still have the severance package previously offered but only if she signed the release and withdrew her EEOC charge. She refused and claimed she had a right to the severance regardless of whether she withdrew her charge. Lockheed stood firm. Lockheed was wrong, so says Judge Titus.

Lockheed tried to convince the court that Lockheed couldn’t be liable for placing a condition on the employee’s severance, even if that condition was the withdrawal of her EEOC charge, because it’s not required to offer severance to anyone. But employers are not entitled to dole out employment related benefits in a discriminatory fashion. In other words, the fact that employers are entitled to offer severance to everyone or no one is irrelevant. Lockheed’s mistake was that it denied its employee severance benefits so long as she pursued her EEOC charge. Filing an EEOC charge is the classic “protected activity.” Judge Titus reasoned that withdrawal of the severance offer on the basis that she refused to dismiss her charge of discrimination was tantamount to punishing her for invoking her civil rights. That’s retaliation.

On the second point – the release Lockheed presented to its employee – the court held that an employer’s offer of severance benefits in exchange for an employee’s waiver of the right to file an EEOC charge is facially retaliatory and unlawful. And Lockheed’s release did just that – it effected a waiver of any and all claims and charges of any sort, including charges with the EEOC. Judge Titus ruled that such a broad waiver of rights was unlawful where receipt of severance benefits was the carrot dangled in exchange for the employee’s agreement never to invoke any civil rights over which the EEOC has jurisdiction – which includes just about all forms of unlawful discrimination. It’s against public policy, and it’s retaliation too said Judge Titus. Denying an employment benefit (severance) because the employee refused to give up protection of her civil rights is retaliation for the employee’s election to preserve her right to complain about harassment. The court was careful, though, to distinguish between a release that waives the right to file a private lawsuit or to recover money damages in connection with an EEOC charge from a release that waives an employee’s right to complain or to participate in an EEOC investigation. Judge Titus, and other courts that agree with him, based the distinction on public policy and the inherent public interest in EEOC enforcement of anti-discrimination laws.

Lockheed’s neat and tidy release was judged worthless to protect it from the EEOC’s lawsuit on behalf of the former employee. Worse yet, Lockheed’s release was ruled “facially retaliatory.” There was nothing nefarious or unusual about Lockheed’s release. It was standard language that most employment lawyers in town use. I did a double take and shook off my post-lunch malaise to read and re-read this sucker. This is not yet the undisputed law of the land in Maryland, but this is big stuff – and new stuff in Maryland. And Judge Titus’ decision is well-based on the law of other federal circuits, so it stands to reason that employers would be foolhardy to ignore it. Goodness knows how many employees – casualties of mergers and other terminations – are, as I wrote this, digging through that box in the trunk of the car looking for that crumpled up release. Next time you want to offer an employee severance in exchange for a release, call your lawyer and spend a few pennies on a rewrite of your standard release language. Better safe than sorry. Just ask Lockheed Martin.

Wake up and sit up straight. Here comes the King.

Labels: attorney, Employment, law, retaliation claim

  5:20 PM •  0 Comments • Links to this post

Get out of the School Daze – Sharpen Your Volunteer Student Intern IQ Signs on area roadways warn, “School is in Session! Watch for Students!” I could say the same to my clients. With the school year under way, many employers welcome volunteer students into their offices or shops. They’re called volunteers, clerks, interns, externs. Whatever they’re called, don’t let their flip-flops fool you. They may be casual, but you shouldn’t be. Whether your student underling is working for credit, experience or both, if you’re not careful, unpaid student workers could land you in the Commissioner of Labor and Industry’s detention center. Gulp.

Follow a few key rules and using students as volunteer staff is both a good deed and a good deal that will not get you sent to the principal’s office. But get it right, because Maryland’s Wage Payment and Collection Act is more than just a schoolyard bully. It packs a punch of treble damages and attorneys’ fees.

Take the Student Intern IQ Test:

Q: A hard working student could help finish that customer project – and pass on the savings to your balance sheet, right?

A: Wrong. Maryland law requires that an employer pay wages if the employer gains “an immediate advantage” from a worker’s performance. What’s an “immediate advantage?” A classic example is billing the customer. If you charge your customer for work done by a volunteer worker, that’s an immediate advantage in your pocket. In order to qualify as a volunteer worker, the work performed by your student intern must primarily be an educational experience.

Q: That young and eager college student is running circles around your old, complacent staff. What a great opportunity – cut the fat and save the wages!

A: Try again. This is a double whammy. Not only is this a potential violation of Maryland’s wage and hour laws, you may be liable for age discrimination. Displacement of a regular employee with a volunteer is a key factor the Commissioner and the courts look at to determine whether a volunteer is a legitimate volunteer – that is, a worker an employer is entitled not to pay wages. And if you terminate an employee forty years or older because the youngin’ can do the job for free, you’re asking for an age discrimination lawsuit. Courts tend to disfavor the explanation that the young replacement is just as good and cheaper (or free, as the case may be) as a defense to a charge of age discrimination. It’s generally accepted that employers get what they pay for, so a justification that you canned the old bird for the young chick to save money may not fly.

Q: That design student is really good with computers and is happy to help. Instead of assigning her to shadow your senior designer, why not use her to fix that problem you’ve been having with your system, right? Those IT vendors are a bloody fortune!

A: Forget it. The Commissioner and the courts look closely at the tasks assigned to “volunteers.” The work performed by your volunteer student should be a logical extension of the student’s course of study and should benefit the student by providing valuable professional or trade experience. Using student workers to clean out the junkyard that no one else wants to work on will only pass muster if your intern is majoring in Junkyard Dog.

Q: When you interviewed the student, you said you would pay him a stipend at the end of the internship, depending on what was left in the budget. You’re only trying to look out for him and be fair, and you didn’t tell him how much, right?

A: Woops! This is a toughie. In order to qualify as a volunteer (and in order to entitle you to avoid paying wages without running afoul of Maryland’s wage and hour laws), you should make it crystal clear to your intern that he is not entitled to any pay for the time spent in the internship. Ideally, put this in writing and provide it to the intern on his first day or before he begins the internship. If, at the close of the internship, you give him a gratuitous stipend, that’s likely fine under Maryland’s wage and hour laws, so long as no promises or assurances have been made that any wages or pay would come of his internship. But don’t ignore potential tax consequences of the payment. It’s likely income and you can wind up in trouble if you don’t report it. Get your CPA involved and do it right.

Q: A month into the internship, to encourage a hard-working volunteer, you pat her on the back and say, “Keep it up, kiddo. With performance like this, I may have a full-time job for you.” Hey, she’s doing great – why shouldn’t you encourage her with the possibility of a job, right?

A: Ix-nay on the Ob-jay. Promising future employment – even conditionally – is a sure-fire way to disqualify the intern as a volunteer. The Commissioner and the courts indicate that holding out a promise of future employment is a way of sapping work for free while you can. It’s not allowed. This doesn’t mean you can’t offer a job to your intern after the internship has ended, but the internship should not be built on a promise of future employment.

So, how’d did you do on this test? Did you ever guess that such a benign looking arrangement could have such consequences? Welcoming a student volunteer into the workplace is supposed to benefit the student, not to offer a frugal employer the chance to get free work from a willing neophyte. You can avoid these issues entirely by offering student-level workers minimum wage pay. Another upside to this alternative is that unpaid workers are not typically covered under workers’ compensation insurance, so an injured unpaid intern could look to you for medical bills and damages (and sue you too). Putting your intern on the payroll at minimum wage shores up this potential liability. And, chances are, overtime won’t be a problem, because student interns aren’t likely to work enough hours.

Labels: intern, Student, volunteer

  5:24 PM •  0 Comments • Links to this post

Is Coke All Flat? Unless you’re living under a rock, you’ve heard the buzz about Coca-Cola trade secrets being stolen by a secretary and being offered for sale to Pepsi by one of her genius ex-con accomplices. Pepsi blew the whistle – and now they’re sitting pretty with good press as the do good competitor. Kudos to the PR agency. But I digress. After the “oohs” and “aahs” subsided – these are, after all, the two giants of the Cola Wars – I thought to myself, heads must be rolling at Coke. How could this have happened? The formula for Coke is legendary for its trade secret status. It instantly springs to mind when you hear the phrase “trade secret.” Everyone knows it – lawyers and non-lawyers alike. So how the heck could a secretary gain repeated access to and steal Coke trade secrets apparently without detection? (They only got nabbed because Pepsi didn’t take the bait.)

It’s a safe bet that Coke requires every employee to sign a non-disclosure agreement that was drafted with more care than the United States Constitution. That’s all well and good, but if Coke failed to take other steps to guard its trade secrets, it may find itself out of luck on a trade secret misappropriation claim. The three defendants face criminal charges of wire fraud and unlawful theft and sale of Coke trade secrets. Coke could also sue them for trade secret misappropriation in civil court and seek an injunction to force them to return or destroy the stolen information. Putting aside the issue of damages (and whether Coke would have an ice cube’s chance in hell of collecting from these three), the primary question is whether Coke could even establish that the stolen items constitute trade secrets. “Heresy!” Dare I throw my drink at the legendary Coca-cola trade secret? You decide. Read on.

Non-disclosure agreements are an elementary building block of trade secret protection. But simply having your employees sign an NDA and stuffing it in your files is not enough. An NDA doesn’t actually keep your information secret and it may not be enough to afford you legal protection when it matters. You need to do more. Loosely defined, a trade secret is any business information that is valuable by virtue of it not being generally known and … here’s the kicker … that is subject to reasonable efforts to keep secret. If you don’t take reasonable steps to keep your information secret, you don’t have a trade secret or get the legal protection that goes with it. An executed and enforceable (read: well drafted) NDA is one example of secrecy measures that courts consider when evaluating a plaintiff’s claim of trade secret misappropriation. But it’s only one step. The business owner who cautiously heeds his lawyer’s advice to get employees to sign an NDA, but leaves sensitive files in the general file pool or otherwise fails to restrict access to trade secret information may find himself out of luck when it comes time to pursue a claim of trade secret misappropriation when a rogue employee (or a competitor) like Coke’s Joya Williams makes off with company trade secrets.

How do you satisfy the requirement of “reasonable measures?” That all depends on the circumstances of your business and the type of information you are trying to protect. Absolute secrecy is not required, but you must make efforts that are reasonable in light of the type of information you are trying to protect and the conditions of your workplace and industry competition. Computer files should be password protected, possibly encrypted; hard files should be under lock and key; employees should be given access on a need-to-know basis. You get the idea. In the case of Coke, unless Williams’ role as secretary necessitated access to sensitive files and new product samples, Coke may have been too lax in its secrecy measures. (No one claims she stole the key to the locked file room or product lab.) Williams’ lawyer, Wanda Jackson, hit the nail on the head when she rhetorically inquired, “Why would they leave a product in an office that was easily accessible?”

An NDA is at once protective and remedial – it identifies those things the business owner considers confidential, puts employees on notice of their duties regarding secrecy and describes what relief the harmed business owner is entitled to if the employee violates its terms. It’s a great tool, but it’s no substitute for a lock and key. An NDA doesn’t actually keep the darn stuff private, and the business owner who takes care to get his employees to sign those NDAs but gets lazy about information management is making an expensive mistake. In response to my more is more slant, a colleague reminded me that courts tend to protect business information in the face of a thief in the midst like Williams, but as far as I’m concerned, unless you’re Virgin’s Richard Branson, why be a risk taker?

Don’t get me wrong. I’m not suggesting that NDAs aren’t worth the effort or that they aren’t effective. They are. They are a key step in trade secret protection. But that’s all they are. They don’t provide actual protection. That’s up to you. If you fail to manage your business information on a day-to-day basis, that NDA offers little protection when it really counts. Take a lesson from the big grand daddy of them all – don’t fall flat when it comes to your trade secrets.

Labels: NDA, non-disclosure agreement, trade secret

  5:28 PM •  0 Comments • Links to this post

Workplace Monitoring: Mind the Store or Mind Your Own Business? I’m in month four of what promises to be a long, expensive case. All of it could have been avoided if my client had monitored an employee’s email records. My client, a regional graphic design firm, was eaten from the inside out by a trusted employee who formed a competing business in secret and then poached my client’s best accounts while happily collecting a paycheck every two weeks. When enough accounts had been secured through promises of lower rates and equal quality work, the employee quit. He had my client’s best accounts and all their business documents in tow. As suspected, a scrub of the employee’s workplace computer revealed emails that created a paint-by-numbers picture of the months leading up to the end. The CEO says he’d suspected the employee was planning on leaving and was worried that accounts might jump ship, but felt helpless to do anything about it. The employee was a trusted and key player and my client was afraid to confront him. When I asked why no one had checked into the employee’s email use, my client responded, “Is that legal? I didn’t have any proof he was doing anything.”

Yes, it’s legal. And these days, the savvy employer doesn’t wait for proof, he goes and gets it. A good faith business reason is enough. And if you don’t do it because furtive measures make you feel like a snoop, you may find yourself in my client’s shoes -- sitting next to the court reporter at your deposition.

The concept of workplace privacy is extremely broad -- covering everything from telephone and email monitoring to lie detector tests and video surveillance. Most employers are concerned with what I call the Triumvirate: telephone, email and internet use. When used appropriately, monitoring the Triumvirate secures your most important business assets -- your customers and your data, whether it be pricing structures, manufacturing methods, marketing plans or something else. The bottom line is employers are entitled to control the workplace without liability for invasion of employee privacy, provided a balance is struck between an employer’s right to control and an employee’s right not to have his privacy unreasonably compromised. The right to control the terms and conditions of the workplace includes the right to monitor employees’ telephone, email and internet use for legitimate business reasons without employee consent. As a practical matter, though, getting your employees to consent in writing is ideal, but isn’t generally required, so long as the monitoring is done for a legitimate business reason in the ordinary course of business. I’ll get to what that means in a moment. Let’s start from the start.

It all begins with the expectation of privacy. As an employer, thing number one on the to-do list is to lower the expectation of employee privacy. Your employee handbook (and, if you don’t have one, I’m wagging my finger at you to get one) ought to contain a policy about the email, telephone and computer systems in the workplace. The policy should spell out in clear, direct words that these systems and equipment are the property of the employer and that employees should have no expectation of privacy when they use them -- that all communications, documents created, documents received and internet searches and use are subject to monitoring for legitimate business purposes. (If you don’t have an employee manual, a memo to employees setting forth this policy will do the trick.) Require that employees sign a document acknowledging receipt of the manual or the memo. Most courts accept a signed receipt of the policy as implied, and sometimes express, consent to monitoring, which goes a long way toward defeating after the fact claims of invasion of employee privacy. Once your employees’ expectation of privacy is earthbound, you have set the proper framework for lawful employee monitoring.

Workplace monitoring doesn’t mean playing Big Brother or Peeping Tom. What it does mean is that you have the right to confirm suspicions that your employee is searching for a job while at work, that he’s sending discriminatory emails, that he’s wasting half the day shopping on-line, that he’s soliciting your customers’ business for his start-up competitor, or that he’s downloading company files or private client data to a CD to take with him when he leaves. These are classic examples of a “legitimate business reason” I referred to earlier. Workplace monitoring is about securing assets --your customers, your information, your employee pool. It’s about assuring that your employees are living up to their end of the bargain. And it also has the potential to protect you from liability. Your customers have a reasonable expectation that you will protect the confidentiality of their business information. Failure to monitor those employees with access to client information exposes you to potential liability for failure to protect that information.

Now, the flip side. Despite a “no expectation of privacy” policy, employees do retain certain privacy rights and employers must take care not to cross the line. Workplace monitoring is not an invitation to be a voyeur. Monitoring for curiosity may be an unlawful invasion of privacy. Sometimes, the boundary is intuitive -- if a monitored telephone conversation turns private, cease monitoring. Sometimes, it isn’t so intuitive -- the Electronic Communications Privacy Act makes it unlawful to intercept wire, oral or electronic communications intentionally -- including email. What does this mean? Most courts have held that “intentional interception” means interception contemporaneous with transmission -- diverting the email before it lands in the employee’s inbox. Most courts have insulated from liability the employer who retrieves an email already stored in an employee’s inbox. And what about third parties? Remember that Maryland law prohibits recording telephone conversations absent consent of both parties, so even though your employee may have consented, if the person on the other end of the line hasn’t, you’ve committed a big no-no.

As technology continues to outpace the law, and it likely always will, the dividing line between lawful monitoring and invasion of privacy will continue to be a moving target, so, before you begin monitoring employees, consider consulting your attorney to assure you achieve a lawful and practical balance between your interests as the employer and your employees’ interests in privacy. Regardless of the state of technology, however, one rule of thumb will likely prevail: employers have the right to mind the store, but if you’re not monitoring to mind the store, mind your own business.

Labels: email monitoring, legitimate business reason, workplace privacy

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