According to a report by Deutsche Welle, the German Federal Labor Court held that employers may monitor employees only when they have concrete suspicions of wrongdoing that are based on fact. In the U.S., the standards for engaging in monitoring employees may not be quite that high, but employers should be thinking about whether a decision to take that step is reasonable and defensible.

In the case before the German court, the employer engaged a private investigator when suspicions arose concerning the reasons for the secretary’s sick leave. The suspicions were due mainly to the secretary’s change in the reasons for her leave and the healthcare providers she was using – initially she claimed bronchial ailments, and later claimed back pain. The investigator commenced video surveillance which captured the employee with her family outside her home and in her neighborhood. Evidence was presented that the employee was acting in a manner not consistent with the reasons she gave for her leave.

Nonetheless, because the court found that the employer did not have a sufficient level of suspicion to commence the surveillance in the first place, it upheld an award of damages equal to €1,000, albeit less than the €10,500 claimed. The court opined further that damages for unjustified surveillance would still be appropriate even if it was shown that the employee was lying about the basis for the leave.

In the U.S., monitoring can take place for a variety of reasons – customer service, compliance, productivity, physical and informational security, as well as whether claims under benefit plans are being paid appropriately. In some states, employees are entitled to notification of certain types of electronic monitoring (see, e.g., Connecticut and Delaware). In most cases, it is a good practice to manage employees’ expectations and let them know of the potential for monitoring, at least at the “workplace.” Of course, given the mobility of the workplace these days, that can get a little tricky.

Reasonableness is key, as is shown by a 2001 case, Dishman v. UNUM Life Ins. Co., involving facts similar to the case discussed above. There, the company’s disability insurer questioned an employee’s claim that migraines made him unable to work. The carrier engaged in extensive surveillance to investigate. According to the case, the employee claimed that the investigators –

Claim[ed] to be a bank loan officer endeavoring to verify information he had supplied; … elicited personal information about him from neighbors and acquaintances by representing that he had volunteered to coach a basketball team…sought and obtained personal credit card information and travel itineraries by impersonating him…falsely identified themselves when caught photographing his residence…repeatedly called his residence and either hung up or else dunned the person answering for information about him

The disability plan was an employee welfare benefit plan subject to the Employee Retirement Income Security Act (ERISA) and, as such, enjoyed broad protections from certain state laws that related to the plan under ERISA’s preemption doctrine. The privacy claims by the employee in this case might have been preempted by ERISA had the investigatory tactics been more reasonable and in the usual and customary course of plan administration. In this case, however, the court determined that the actions went far beyond that and did not depend on benefit claim. Accordingly, the state claims survived ERISA preemption.

Whatever the reason for monitoring, companies need to proceed cautiously, and make sure their managers are doing so as well. At a minimum, employers should have reasonable basis to commence monitoring, consider of the kinds of information the monitoring might access and collect (and whether they want that information), who should conduct the monitoring, and what tactics can and should be used. It is prudent to develop internal guidelines that prompt thinking about these and other issues.