As reported by Ameet Sachdev, of the Chicago Tribune, a jury found an employer responsible for the actions of its investigators who obtained a former employee’s phone records through “pretexting.” Of the $1.8 million awarded to the former employee for breaches of her privacy, the jury awarded $1.75 million in punitive damages. Regardless of whether this verdict survives on appeal, the lesson for employers is to be mindful of their internal investigatory techniques, but also those of their hired investigators.

Pretexting “is the act of creating and using an invented scenario (the pretext) to persuade a targeted victim to release information or perform an action.” As in many cases, the pretexting in Lawlor v. N. Amer. Corp. of Ill., Ill. Cir. Ct., No. 08 L 5931 (jury verdict rendered 9/19/09) involved use of the telephone to obtain telephone records. This case involved a key company saleswoman who, during a dispute over her compensation, was about to land a significant new account for the company. Concerned that Lawlor would take this new account to a competitor magnified the dispute and a company investigation ensued. The jury found one of the investigators hired by the employer called Lawlor’s telephone carriers and pretended to be her.

Both the federal and state governments have taken action to prevent pretexting. In 2006, the Telephone Records and Privacy Protection Act of 2006 (HR 4709) was enacted. This federal law criminalizes a number of actions related to pretexting. For example, it is a crime for a person to knowingly and intentionally obtain, or attempt to obtain, certain phone records under false pretenses. Violations of this law can result fines and/or imprisonment for up to 10 years. A number of states also have laws prohibiting pretexting. In 2006, the Consumer Communication Records Privacy Act became law in New York which provides similar protections against pretexting.

Employers frequently conduct investigations involving issues such as theft of company assets or trade secrets, disability fraud, harassment, and other sensitive matters where phone records and other information can be critical to obtain. Given how much sensitive information can now be obtained electronically, it is critical to understand the methodologies and techniques of third-party vendors and to ensure there are appropriate representations and indemnity provisions in service agreements.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.