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.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with…

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently leads the firm’s Privacy, e-Communication and Data Security Practice, 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, Mr. Lazzarotti 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 – Mr. Lazzarotti 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 – Mr. Lazzarotti’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.

Mr. Lazzarotti 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.

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