United States: Hit The Pause Button: The Implications Of Recording In The Workplace

Workplace recordings have made headlines in recent weeks. For example, Omarosa Manigault-Newman publicly played a recording of a meeting with her then-boss, White House Chief of Staff John Kelly, to bolster her claim that he threatened her during the meeting. White House officials quickly fired back that the recording was a breach of protocol and possibly illegal. Given the controversies in the news, employers might be wondering when recording is legal and what policies they can lawfully implement on recording in the workplace.

Although recordings can be useful to resolve disputed facts about a conversation, surreptitious recording in the workplace can create both legal and business risks for employers. Both employers and employees may violate state and federal wiretap laws by recording without consent. Even with consent, employers should hesitate before taping employees, because pervasive surveillance in the workplace can put workers on edge and damage their morale. Similarly, employee recording may discomfit employees and customers, and put the employer's confidential information at risk.

Some employers respond to these risks by outright prohibiting recording in the workplace. Recording bans carry their own risks, however, particularly with respect to the National Labor Relations Act. Thus, employers must be careful in how they address workplace recording and implement no-recording rules. Below is an overview of considerations for employers related to recording in the workplace.

Legal Risks to Recording – Wiretap Laws

All-Party Consent Wiretap Laws

Depending on the state, secretly recording a conversation with a co-worker may violate state wiretap laws. Twelve states prohibit recording a conversation without the consent of all parties to the conversation. In these states, for example, an employee could violate state wiretap law if she covertly taped her discussion with a co-worker. Moreover, the employer also could potentially be liable under state wiretap law for the employee's recording. Under the doctrine of respondeat superior, an employee's actions can be attributed to the employer if those actions are performed for the purpose of serving the employer and in the scope and course of employment. For example, the company could potentially be liable for a supervisor's wiretapping if it directed the supervisor to do so.

What if an employee records another employee, such as her supervisor, in violation of wiretap law? In that case, although the supervisor could sue the employee for recording, the employer could not. As a third party, the employer would lack standing to sue. The employer potentially could, however, fund the recorded individual's lawsuit by paying the legal fees if that individual chose to sue.1

All-party consent statutes generally recognize an exception for recording an in-person conversation in which there is no expectation of privacy. For example, Illinois prohibits the recording of a "private conversation" without the consent of all parties. The applicable statute defines a private conversation as one in which one or more of the parties to the conversation "intend[s] the communication to be of a private nature under circumstances reasonably justifying that expectation."2 In other words, one of the parties must have a reasonable expectation of privacy in the conversation. Thus, if a conversation occurs in a common area and is audible to anyone that walks by, it might not be deemed a "private conversation" and recording the conversation without the consent of all involved may be permissible in an all-party consent state.

Notably, employers should not assume that employees lack a reasonable expectation of privacy on company premises. To the contrary, employees likely have a reasonable expectation of privacy in some areas of the workplace, such as changing rooms or their offices. In addition, workplace privacy claims are highly fact-specific and the outcome can be hard to predict. This can result in expensive litigation because disposing of such claims in a motion to dismiss and even summary judgment can be challenging.

Employers should also be aware that all-party consent wiretap laws may reach beyond state borders if the subject communication is between individuals in different states. In Kearney v. Solomon Smith Barney, Inc., the California Supreme Court held that California's Wiretap Act and its all-party consent requirement applied to the surreptitious tape-recording of telephone calls between a Georgia stockbroker and his California clients even though the stockbroker's actions were perfectly legal under Georgia's one-consent wiretap statute (and the federal Wiretap Act).3 In reaching its decision, the court applied traditional conflict-of-laws theories. The court reasoned that California had the greater interest in having its dual-consent law applied, and Georgia's privacy interests would also be upheld through application of the California statute. The Kearney case illustrates the importance of examining the pertinent state wiretap statutes prior to conducting any monitoring, particularly if the communications cross state lines.

Violating all-party consent wiretap laws can result in both criminal and civil liability. As with many privacy-related claims, actual damages can be difficult to prove. However, wiretap laws often address this challenge by allowing for statutory damages. For example, a plaintiff who prevails under California's wiretap law could win the greater of either $5,000 or three times the amount of actual damages.4 As a result, damages can mount quickly for a company that maintains a practice of recording employees in California without consent.

One-Party Consent Wiretap Laws

The majority of state wiretap laws and the federal Wiretap Act allow recording with the consent of only one party to the recorded communication. This does not mean, however, that employers or employees can record secretly in the workplace with impunity in these states. For example, in one-party consent states, a supervisor could surreptitiously tape her conversation with an employee without violating wiretap laws. However, if the supervisor taped her subordinate's phone calls with a co-worker, or installed an audio/video camera in her subordinate's office, the supervisor would likely run afoul of state and federal wiretap laws because she would be recording conversations to which she is not a party without consent. The same would apply if an employee secretly recorded discussions among other co-workers or customers.

Notably, statutory damages under the federal wiretap are particularly high. Prevailing plaintiffs can win the greater of a fine of $100/day of violation or $10,000 per violation.5

Consent to Recording

Consent is one of the principal defenses to a claim under the federal Wiretap Act. Prior notice is central to proving consent, and is also critical to a successful monitoring program. However, employers should be aware that wiretap laws' consent exception is strictly construed against employers. For example, in Smith v. Mike Devers & Mike Devers Insurance Agency, Inc., the employer claimed it had distributed a handbook that explained the employer's use of telephone monitoring equipment.6 The employee, nonetheless, survived summary judgment by denying she had received the handbook and contending, therefore, that she was not on notice of the employer's monitoring.7 The employer could not establish either express or implied consent because the employer did not present evidence of a signed handbook or policy acknowledgment.

To bolster the strength of the consent defense, employers should ensure that they obtain informed authorization from employees by explaining in clear terms exactly what the monitoring will entail. In addition, to reduce the risk of an argument like that in Smith, the employer should make sure that all employees subject to monitoring provide signed consent.

Non-Wiretap Risks to Workplace Recording

Employer Recording

Even if recording is legal, employers should carefully assess whether the benefits of recording outweigh the non-legal risks. Employees may not be happy to learn that their employer has secretly recorded their conversations. The resulting sense of violation could damage employee morale and result in a loss of trust. Even recording employees with their consent may harm morale by creating an environment in which employees feel uncomfortable because they are under constant surveillance. Employers should carefully weigh these non-legal considerations when determining whether or how to monitor their workforce.

Employee Recording

The chief non-wiretap risk of allowing employees to record in the workplace is that they may put confidential business information at risk. For example, employees may capture trade secrets, such as conversations about business strategies or videos of proprietary manufacturing processes. Even if the employee records the proprietary information without malicious intent, the information could be compromised if, for example, the smartphone containing the recording is lost or stolen.

Employees may also violate customer privacy by recording in the workplace. The risks of recording customers are particularly high in some settings, such as hospitals, where recording could violate the Health Insurance Portability and Accountability Act (HIPAA). Finally, allowing employees to tape while on the job can create an environment in which employees feel that they cannot speak candidly and must watch their every word.

Prohibiting Recording in the Workplace

Due to the risks of employee recording, many employers wish to prohibit employees from recording in the workplace altogether. The National Labor Relations Board (NLRB), when controlled by appointees of President Obama, ruled that blanket bans on employee recording at work generally violated the National Labor Relations Act (NLRA).

In December 2017, however, the NLRB, now controlled by appointees of President Trump, reversed the Obama-era ruling by holding in The Boeing Company, that such bans on recording are generally lawful.8 The NLRB reasoned that employers' substantial legitimate interests in preventing recording outweigh the "small risk that the rules would interfere with peripheral NLRA-protected activity..."9

However, employers can still violate the NLRA in the way that they promulgate and enforce no-recording rules. The NLRB's new approach on recording bans only applies to rules that are facially neutral. In other words, a no-recording rule that explicitly states that its purpose is to prevent labor organizing activities will be found to violate the NLRA. Similarly, employers may violate the NLRA by enforcing no-recording policies with the aim of suppressing protected concerted activity.10

Takeaway

While recording is legally permissible in the workplace with appropriate consent, employers should carefully consider if and how to allow such monitoring. If a company decides to prohibit recording altogether, it should do so by developing a consistent policy that describes the company's legitimate reasons for banning recording. In addition, employers must be careful to implement the policy in a manner that does not interfere with employees' rights under the NLRA.

Footnote

1 Some states have laws restricting the extent to which a third party may fund a lawsuit.

2 Ill. Comp. Stat. 5/14-1,-2.

3 39 Cal. 4th 95 (2006); see also Kight v. CashCall, Inc., 200 Cal. App. 4th 1377, 1399 (2011); Cal. Penal Code § 632.

4 See Cal. Penal Code § 637.2(a).

5 See 18 U.S. Code § 2520.

6 2002 U.S. Dist. LEXIS 1125 (M.D. Ala. Jan. 17, 2002).

7 Id. at *11.

8 365 NLRB No. 154 (Dec. 14, 2017).

9 Office of the General Counsel, MEMORANDUM GC 18-04 June 6, 2018 p. 6.

10 Id. at p. 3.

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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