May 2011 / Volume 9, No. 1

PROTECTING COMPANY INFORMATION IN A DIGITAL WORLD

Doing business effectively today often requires employees to have the ability to communicate and research quickly and efficiently, sometimes on a 24 hour, 7 day a week basis.  Employers, therefore, often provide employees with a wide variety of electronic technologies, such as computers, laptops, internet access, email, personal digital assistants (PDAs) and smart phones. In addition, employers often allow, and sometime encourage, employees to use business and social networking internet sites in connection with their jobs.  While such technology and access provide greater efficiency, they also increasingly result in blurring the distinction between personal and professional use.   

The blurring of use, however, can lead to disputes between employers and employees.  Despite employee objections, employers have legitimate reasons for monitoring all employee communications—even ones that an employee would consider private. First is productivity.  While on the job, employees are supposed to be working, and monitoring is one way to ensure that employees are using work technology appropriately.  A second concern is data security.  Many employees are given access to confidential information, which can easily be improperly transferred or disclosed using today’s technology.  A third issue is liability/litigation.  Informal emails and text messages can often come back to haunt employers years later in a lawsuit against the company.  One court has cautioned that “the abuse of access to workplace computers is so common (workers being prone to use them as media of gossip, titillation, and other entertainment and distraction) that reserving a right of inspection is so far from being unreasonable that the failure to do so might well be thought irresponsible.”

Disputes over privacy of communication on employer-provided technology are becoming more common.  Lawsuits by employees have been brought under Federal laws, such as the Electronic Communications Privacy Act of 1986 ("ECPA"), which generally prohibits the intentional interception or disclosure of electronic communications, state laws, like theIllinois Eavesdropping Statute, or the common law on invasion of privacy.

Generally, the deciding issue in these types of cases is whether the employee expressly or impliedly consented to monitoring of the alleged private communications.  In determining whether consent has been given, the Courts examine whether: (1) the company has a clearly articulated policy; (2) the company enforces the policy and generally monitors the use of its technologies; (3) the company has access to all communications; and (4) the company notified the employee about this policy.  

To avoid disputes and litigation, an employer should adopt a written, clearly defined policy, which should:

  • Notify employees that all employer equipment may be monitored.  Employees should be told that monitoring may include employer provided technology--computers, laptops, PDAs, cellular phones, and voice mail, whether used on company property, at a home office, or at another remote location.
     
  • Clearly describe the type of media covered. The policy should specifically address anything an employee might reasonably consider to be private, such as personal e-mail accounts, social networking sites, chat services, text messages, blogs, or other websites. The policy should be open-ended and applicable to future technology.
     
  • Alert employees that deleted information may be recovered. Explain that information the employee may believe has been deleted may, in fact, be retained by the company and can continue to be accessed.
     
  • Advise employees that all information is company property.  State unequivocally that the employee has no reasonable expectation of privacy over any information or communications that he or she accesses using company-based resources, including the items discussed above, and that these items may be monitored or retained by the company indefinitely and accessed at any time, without notice.
     
  • Advise employees of the reason for the policy. Explain that such information may be disclosed for purposes of investigation, litigation, internal dispute resolution, or the like (regardless of whether that particular employee is directly involved), in addition to other legitimate business purposes, as defined by the company as the issues arise.
     
  • Provide for no exceptions.  Explicitly state that the policy can only be changed in writing by a specific high level employee (name the employee or position), and that any modifications to the policy from other employees or managers of the company will have no effect.

By William R. Klein


THE DUTY TO PRESERVE EVIDENCE

An area of litigation overlooked by many businesses is the preservation of evidence. In Illinois and other jurisdictions throughout the country, courts impose upon a party an obligation to preserve evidence even before litigation commences. A party’s failure to preserve favorable evidence can cost it the ability to prove its claim or defeat an opposing one.  The proliferation of digital devices and the ability to store significant and vast amounts of information on such devices only makes the pitfall all the more dangerous. Businesses must therefore gain an appreciation of their obligation to preserve evidence.       

What Is a Party’s Obligation?

A party has an obligation to preserve evidence when both of the following two conditions are met: (a) a relationship has been established, whether through an agreement, pursuant to a statute, by voluntarily assuming the duty, or by way of special circumstances; and (b) it is reasonably foreseeable that the evidence would be relevant in litigation. Pared down to its essence, a party has an obligation to safeguard evidence in its possession or control that it reasonably knows would be relevant in potential litigation. The obligation does not depend on a court order, but begins when litigation is reasonably foreseeable.

What Steps Can a Business Take Now?

By the time a party finds itself in a dispute heading toward litigation, it may be too late to implement a plan to preserve material evidence. To illustrate, many companies in the ordinary course of business maintain a policy of disposing of files, documents, emails, and other records on a periodic basis. Unless a business is fully cognizant of its document destruction policies, relevant evidence may very well be caught up in the routine disposal of records. Taking the three following steps can help avoid trouble before it surfaces.

First, businesses should develop a document retention/destruction policy. A well thought-out policy will identify types of documents and files maintained by the company, their location and the person responsible for maintaining them. The policy should also identify the periods, if any, of routine document disposal or deletion. Developing a policy and documenting it in writing provides a solid basis on which to begin preserving evidence should litigation become foreseeable.

Second, since an obligation to preserve evidence may arise prior to the filing of a lawsuit, companies should be sensitive to disputes which signal potential litigation. As is known from common experience, not every dispute ends in a lawsuit. Likewise, not every pre-litigation dispute gives rise to a duty to preserve evidence. However, some indicators that suggest litigation is foreseeable are employee and customer complaints, demand letters, and other threats to file suit. If the dispute is serious enough to warrant a telephone call to an attorney, it is time to start preserving relevant evidence.

Third, once litigation becomes foreseeable, preserve relevant evidence. Suspend the routine disposal or deletion of files, determine what documents and records will be relevant to the claim, and locate and quarantine them. Companies should also communicate with their employees, advising them of the need to preserve evidence. Likewise, when litigation is on the horizon, the company should contact its litigation counsel to review the facts of the dispute and obtain the litigation attorney’s input relating to the kinds of records that will be relevant to the claim.   

By preserving evidence, in addition to strengthening its case, a company can reduce the likelihood of defending against an evidence spoliation claim and sanctions by a court.

By Richard M. Goldwasser


Schoenberg Finkel Newman & Rosenberg, LLC (312) 648-2300

This newsletter is not intended to be legal or tax advice and is not a substitute for obtaining legal or tax advice. This Newsletter is deemed to be advertising material by the Illinois Supreme Court.