United States: Preparing For The Worst Part 2: Accessing The Data You Need, When You Need It

Last Updated: December 4 2013
Article by Andrea L. Ward

Following on from Part 1 of this article, in the last edition of this journal, this second article looks at how to put in place effective policies and procedures to ensure that companies who need to can access their data when they need it, regardless of where it is held.

The need to access data

There are a variety of situations in which companies need to access or recover their data, for example, during legal proceedings, for the purposes of obtaining legal advice, or simply for day to day business needs.

Information which is relevant to a legal dispute will often be compulsorily disclosable and the parties will be required to conduct searches to obtain and preserve that information, pending disclosure. In many cases, information will be held in multiple locations, by many employees and senior individuals, all of whom should be required to produce relevant documents, emails and records, without amendment, or deletion, usually to the legal department or external counsel.

The task of recovering any evidence is increased when the data are held not just on company servers, but also by employees on their own devices, such as laptops, tablets and smartphones.

Employees' own devices — BYOD

Many companies have not yet introduced a Bring Your Own Device ('BYOD') policy which could address the company's need to access data held on these devices. For this and other reasons, they should create one to ensure that data ownership and access rights are clearly established from the start.

Making it a condition of BYOD use that employees must surrender their devices for company audits, or to enable documents to be retrieved without delay, are important terms, among others, to be included in any BYOD policy.

Another important issue to be aware of is the fact that company investigations and searches for evidence involving employees' company owned PCs and smartphones is likely to involve the processing of 'personal data' and sometimes 'sensitive personal data', as defined by European data protection law (implemented in the UK by the Data Protection Act 1998 ('DPA')).

As a reminder, sensitive personal data are data that relate to race/ ethnicity; political opinions; religious beliefs; membership of a trade union; physical or mental health; sex life and commission or alleged commission of any offence, or proceedings for the same.

Where such data are involved, companies need to ensure that they can satisfy the data protection principles and show an appropriate condition for the fair and legal processing of the data.

Fair processing of data

In some situations, employees may consent to the processing, but this consent must be freely given, specific and informed. It must also be capable of being withdrawn at any time, which makes it less reliable in the employment context.

Other options for fair processing of personal data, which may be relied on by the company, include necessity for compliance with a legal obligation to which the company ('data controller') is subject, or for the purposes of legitimate interests pursued by the data controller (except where the processing is unwarranted in any particular case by reason of prejudice to the rights and freedoms or legitimate interests of the employee ('data subject')).

Where any personal data are likely to be transferred overseas, as part of an investigation, or response to a legal, or regulatory requirement, companies should also be aware of the prohibition on transfers of personal data, outside the European Economic Area (EEA), (which includes the 28 member states of the EU plus Norway, Iceland and Liechtenstein), unless further conditions are in place, such as Safe Harbor (if the intended transfer is to the US), Model Contracts, or Binding Corporate Rules, all of which require careful consideration.

For a detailed article on the data protection issues that are raised by BYOD, see Privacy & Data Protection, Volume 13 Issue 4 (www.pdpjournals.com)

Action in respect of ex-employees

As well as dealing with data held by current employees, companies can encounter problems when employees leave their employment and take confidential, proprietary information with them, in breach of contract.

Recovering this type of data and preventing the former employee from using it depends on the terms of the contract, including the existence of any restrictive covenants, and the company's legitimate business interests in protecting that information. Companies may suspect employees, or ex-employees of such wrongdoing, but will usually conduct some investigation to establish basic facts, before taking any action such as seeking an injunction.

Investigations might reveal suspicious activity evidenced by large numbers of emails sent and received by the employee, or volumes of material downloaded to a memory device on a particular date.

Employers have certain rights to access and use this type of data, but should make staff aware that their use of company IT systems is for the benefit of the business and their personal use should be limited, and clearly marked as such. Any monitoring of employees' IT usage by an employer should be equally limited and must be justified by the circumstances, balancing the needs of the business against the rights of the employee.

Employees should be informed about any monitoring, or company access to their data (which may include personal data), in advance. There may be times when informing the employee, or seeking their consent to access their data, is not advisable, but having proper procedures in place to enable the company to act decisively at the relevant time, without having to debate the issues at that time, is a good start.

Recovering data from employees and others

Dealing with ex-employees presents another challenge for companies, as once they have left, it is more difficult to establish what damage they may have done. The copying of confidential information, or theft of business contacts, or trade secrets can be difficult to prove, especially if nothing is revealed by the employee's company emails, or on the server, though that will be the first place to check.

However, companies may have another source of evidence in professional social media platforms, such as LinkedIn.

The now well-known UK case of Hays Specialist Recruitment (Holdings) Ltd. and another v Ions and another [2008] EWHC 745 (Ch) illustrates the risks faced by ex-employees who utilise social networking to develop future business in competition with their former employers, without considering the trail of evidence they may leave.

In this case, Mr Ions left Hays to start his own recruitment business and was thought to have copied and retained information concerning clients and contacts of Hays, to use in competition with them. Hays was able to access Mr Ions' company email account, which appeared to show that he had invited clients and contacts to join his network on LinkedIn. When he was asked about this, as part of Hays' application for pre-action disclosure, Mr Ions said he had deleted his LinkedIn account and could not provide a copy of the contacts he had held.

In response, Hays contacted the US operator of LinkedIn, to preserve all the evidence, including Mr Ions' whole account. Mr Ions argued unsuccessfully that he was encouraged by Hays to make contacts using LinkedIn and that once requests were accepted, they were no longer confidential, as others could see them.

The High Court found that even if Hays had given him authority to invite clients and contacts to connect with him on LinkedIn, it was unlikely this authority extended beyond his employment. Ultimately, Mr Ions was ordered to disclose the LinkedIn contacts he had gathered during his employment, including emails sent and received from contacts and all other documents showing his use of LinkedIn and business received as a result.

In the recent case of Fairstar Heavy Transport N.V. v Adkins and another [2013] EWCA Civ 886, the Court of Appeal ruled that companies are entitled to require former agents to produce business emails stored on their personal computers or other devices, for inspection and copying.

The defendant in this case, Mr Adkins, had acted as the CEO of the company ("Fairstar"), but provided his services through a service company and was therefore not an employee.

During his appointment Fairstar arranged for emails to Mr Adkins to be automatically forwarded to his private email address. The emails were then apparently deleted from the Fairstar server, unfortunately without copies being retained by the company.

Emails sent on behalf of Fairstar by Mr Adkins were sent from his personal computer, so unless copied to someone at Fairstar, no copies of such emails reached Fairstar's server.

After his appointment as CEO was terminated, the company found that it needed access to the emails and requested these from Mr Adkins. When he refused to provide them, Fairstar applied to the court to prevent Mr Adkins (and his own service company) from knowingly deleting or otherwise interfering with emails sent of received by him whilst acting on behalf of the company.

After a High Court hearing, which held that the emails were 'information' and not 'property' that can be legally owned, the Court of Appeal eventually found in favour of Fairstar, and Mr Adkins was required to allow the company access to the emails. In this case, there was no suggestion of any wrong-doing by Mr Adkins and no breach of fiduciary duty or restrictive covenants (given the terms of his appointment).

The court reasoned that the main issue was Mr Adkins' duties as a former agent towards his principle (the company). After the termination of any agency agreement, there is a legal duty on the agent to produce and deliver up records held for the purpose of the agency relationship.

This included emails sent or received on behalf of the company. It did not matter that the emails were held on Mr Adkins' personal computer.

If Mr Adkins had been an employee, it would probably have been easier to recover the emails from him, as his contract of employment and company policies would have expressly provided that all work-related emails belonged to his employer.

Requests for the release of employees' personal data

Companies are mostly familiar with employee's rights to access their own personal data, under the DPA. To assist them, the UK regulator, the Information Commissioner's Office ('ICO') has recently introduced a Subject Access Code of Practice, which contains updated guidance and is helpful in dealing with routine requests from individuals and employees, (available at http://www.pdpjournals.com/docs/99000)

However, employers may be more concerned when they receive requests from third parties for the disclosure of personal data belonging to employees and they are right to respond with caution, taking legal advice if necessary.

Many would assume that they are obliged to respond immediately to requests from third parties such as law enforcement agencies, and must provide the data without hesitation. However, employers act as data controllers with respect to their employees' personal data and have obligations to protect that data and maintain confidentiality. They must also comply with the relevant data protection legislation and any applicable employment or workforce agreements.

Given the variance in approaches to employee data protection in Europe, it is wise to consider any such requests very carefully.

The general approach to requests for disclosure of information about employees (or 'workers') in the UK is that the information should not be disclosed unless, after taking into account the employee's interests, there is a legitimate reason for doing so, or there is a statutory or other legal obligation on the company to do so.

Exemptions from non-disclosure rule

The DPA includes certain exemptions from the non-disclosure rule (provided sensitive personal data are not involved in the request), where there may be legitimate reasons to respond to requests for data. These include:

  • where the disclosure is required by law (whether as a statutory requirement or in response to a court order), under s.35(1), DPA;
  • where the disclosure is needed for legal proceedings or prospective proceedings or for obtaining legal advice, under s.35(2), DPA; or
  • where a failure to disclose would be likely to prejudice the prevention or detection of crime, the apprehension or prosecution of offenders, or the assessment or collection of tax, under s.29 (3), DPA.

One or all of these exemptions could apply to a request from a law enforcement agency, such as the police, or the Serious Fraud Office.

The exemptions do not impose a positive obligation on the data controller to disclose the data, but they allow a disclosure to be made without breaching the DPA provided the necessary conditions are satisfied.

If the request presents a statutory obligation to disclose the data, then the company must comply. Alternatively, the company could ask the requesting party to obtain a court order requiring the company to comply with the request. Either circumstance would enable the company to rely on the exemption in s.35(1), DPA.

No statutory requirement or court order

If there is no statutory requirement or court order, the company will need to consider the request and whether either of the other exemptions apply and/or look at whether the request can be satisfied in a different way (so as to avoid the DPA entirely).

Anonymisation of the data may achieve this, but each request should be considered carefully, as it may involve numerous employees and sets of data.

There is guidance from the ICO, which is helpful, but keeping a record of the company's decision making process and taking advice is vitally important.

It is always a good idea to plan ahead for such eventualities and prepare an action plan to deal with any requests to access personal data.

Designating an appropriate person within the company to deal with requests should be considered and keeping the data protection principles in mind, data processing should be limited, as far as possible, so that the request can be answered without prejudicing the rights and freedoms of individuals.

Top tips – summary

  • Reserve the right to access data, including e-mails and confidential information, in the employment contract (or service agreement);
  • Prepare suitable employment policies which deal with access rights for both parties, especially when BYOD is permitted;
  • Explain the company's needs to access data from time to time, for the purposes of investigations, audits and to comply with regulatory requirements;
  • Balance the needs of the business and the rights of employees, when it comes to monitoring at work and accessing personal data;
  • Know where data are kept, who has the data, and how to get access when needed;
  • Make sure that employees return all company property and information on leaving, including information held on personal devices; " Be cautious when responding to requests for data from third parties and consider any request carefully;
  • Consider the company's justifications for any data processing, including data transfers and check whether prior approvals are needed from relevant jurisdictions.

Originally published by pdp Journals.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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